Tumi IPO: Pricey, Like All Luxury Purveyors, But Sales Growth Encouraging

High-end luggage maker Tumi (TUMI) Holdings is hitting the market at what seems to be the right time for the luxury sector of the retail market.

The maker of expensive leather luggage and business brief cases plans to raise about $320 million by selling 18.8 million shares to the public between $15 and $17 a share. The IPO values Tumi at $1.15 billion.

Choosing the mid-point of the anticipated range, $16, gives Tumi a rather pricey PE ratio of 66.7 based on 2011 financials. Tumi may have the growth to back it up. The company had net income in 2011 of $16.6 million, compared with a paltry profit of $104,000 in 2010 and a net loss of $16 million in 2009, according to its S-1 filing.

Revenue last year rose 30% to $330 million, after gaining about the same in 2010 versus 2009. Consumers are snapping up $395 crossbody bags, $495 leather backpacks and $595 hard exterior rollerboards.

Tumi’s bigger and more mid-market rival Samsonite saw net sales rise 34.4% in 2011 to $1.57 billion, while adjusted net income gained almost 57% to $136.8 million. It has a trailing PE of 32, and trades on the Hong Kong Exchange.

After going public last June, Samsonite said recently that Tumi would be a ‘natural fit’, according to a story in Bloomberg.

Even if the IPO is a defensive measure for Tumi, the luxury end has been the sweet spot in the retail sector so far this year, with sales gains almost double those of general retail sales.

Shares in such high-end purveyors as Michael Kors (KORS), Coach (COH), Lululemon Athletica (LULU) and Limited Brands (LTD) and Ralph Lauren (RL) have all beat the S&P 500 so far this year.

KORS Chart

KORS data by YCharts

Tumi has been compared to luxury designer Michael Kors, which went public in December at $20 and has a market capitalization of $8.3 billion, as two companies tapping into the higher-end of the retail market.

Michael Kors has a higher trailing PE of 66, according to Yahoo Finance, but it also has stronger revenue and earnings growth. According to the chart above, Michael Kors has had the best performance so far this year.

It may be time for Tumi to jump in before investors leave the luxe.

Michael McHugh is an editor for the YCharts Pro Investor Service which includes professional stock charts, stock ratings, stock screener and portfolio strategies.



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