NEW YORK — Tumi Holdings Inc., appears to be the latest beneficiary of the Michael Kors Effect.
This story first appeared in the April 20, 2012 issue of WWD. Subscribe Today.
Tumi went public on the New York Stock Exchange Thursday and shares of the upscale luggage and accessories firm climbed 61.7 percent to $29.10 in intraday trading before closing at $26.50, still a 47.2 percent jump from the opening price of $18 a share.
The $18 opening price, which was set Wednesday night, was higher than the expected offering range of $15 and $17. Selling nearly 18.8 million shares, the initial public offering raised $338 million, giving the firm a valuation of $1.79 billion.
For the year ended Dec. 31, net sales and operating income were $330 million and $60.4 million, respectively.
The company trades under the symbol “TUMI.”
Tumi’s public debut follows on the heels of Michael Kors’ IPO in December, which raised $944 million. Shares of Michael Kors Holdings Ltd., which were priced at $20 each, have doubled since their debut. Shares of Kors closed Thursday at $41.90, down 2.5 percent, on a day when the Dow Jones Industrial Average dipped 0.5 percent to 12,964.10 and the S&P Retail Index inched down 0.6 percent to 621.21.
Even though its shares have slipped slightly, Kors still has a market capitalization of nearly $9 billion. The success of Kors’ IPO has firms and their investment banking advisers eyeing the public markets and rethinking how much brands are worth, as well as wondering if they, too, can grab a share of the public equity pie.
Tumi and Kors are the latest in a series of fashion firms accessing the public markets worldwide.
Ferragamo went public in June in Milan. Its stock closed Thursday at 15.33 euros, or $20.09, above the closing price of 9.95 euros on their first day of trading. All conversions to U.S. dollars are at current exchange.
Prada SpA also went public in June in Hong Kong. The firm’s shares closed Thursday at 51.75 Hong Kong dollars, or $6.67, above their debut at 39.50 Hong Kong dollars.
Tumi’s closest competitor is Luxembourg-based Samsonite International SA, which went public in early June, also in Hong Kong. Samsonite raised $1.25 billion, after pricing its shares at 14.50 Hong Kong dollars at the bottom of a revised price range due to a weaker global market then. The stock closed Thursday at 15.12 Hong Kong dollars, or $1.95.
Next up is Brunello Cucinelli SpA, which on Monday kicked off its road show. Sources in Milan said the offering has already been twice oversubscribed. The company is expected to begin trading on the Milan Stock Exchange on May 3, offering a 30 percent stake in the company with an aim to raise 151 million euros, or $198.4 million. Based on a pricing range of 6.75 euros, or $8.87 at current exchange, and 7.75 euros, or $10.20, that would value the company at between 405 million and 465 million euros, or $532.3 million to $611.2 million.
Fashion isn’t the only sector tapping stock markets. Since the beginning of the year, more than 30 firms have gone public in the U.S., and more are on the horizon. The biggest one waiting in the wings is Facebook, expected in mid-May. Founded in 2004, the social network site is hoping to raise at least $5 billion and, according to press reports, could be valued at up to $104 billion.
According to a Securities and Exchange Commission filing last month, arts and crafts chain Michaels Stores Inc. is looking to raise $500 million in an IPO expected later this year. Michaels Stores was taken private by Bain Capital and Blackstone Group in 2006.
Private equity firm Carlyle Group LP is said to be looking to raise between $701.5 million and $762.5 million. May 1 is when the IPO is expected to price. In a regulatory filing, Carlyle said it plans to sell 10 percent of the company, or 30.5 million shares priced at between $23 and $25 each. That range would value Carlyle at more than $7 billion.
On Thursday, though, the focus was on Tumi. Founded in 1975, the company was incorporated in Delaware in September 2004, in connection with its acquisition by funds managed by London-based private equity firm Doughty Hanson.
Based in South Plainfield, N.J., Tumi is known for its innovative use of ballistic nylon, the same used by law enforcement agencies for SWAT gear and cargo bags, and has positioned itself as a prestige brand. A deluxe wheeled leather brief with laptop case under its Alpha line sells for $995. A women’s leather Nicols everyday tote from its Sloane collection retails for $495; although a fabric tote, the Toulon pocket tote from the Voyageur line, is priced at $295.
Travel products comprised 46 percent of net sales in 2011; business cases 40 percent, and accessories were 14 percent. The company said in a regulatory filing in December, when it first filed its plans to go public, “We have grown at a compound annual growth rate of 12 percent in net sales and 16 percent in operating income from 2005 through the last 12 months ended Sept. 25, 2011.” The company distributes its products in more than 70 countries through 1,600 points of distribution.
Boosting the strength of the luxury sector has been a rising equity market and, in the case of Tumi, an upswing in tourism. According to the latest data from Nycgo.com, tourism in New York City alone rose to 48.8 million visitors in 2010, up from the 45.6 million in 2009.