NEW YORK — Tumi Holdings Inc. experienced growth in all parts of its business except for North American wholesale operations as the accessories and travel product firm narrowly exceeded analysts’ expectations for third-quarter profits.
In the three months ended Sept. 29, the South Plainfield, N.J.-based company boosted net income 15.2 percent to $12.1 million, or 18 cents a diluted share, 1 cent higher than the consensus estimate of analysts. Year-ago profits were $10.5 million, or 15 cents.
Revenues accelerated 13.6 percent, to $108.9 million from $95.9 million, as gross margin expanded to 58.8 percent of sales from 57.6 percent a year ago.
By business segment, North American direct-to-consumer sales rose 16.6 percent to $47.2 million and international DTC was up 26 percent to $6.1 million. While international wholesale operations advanced 23.6 percent to $31.6 million, North American wholesale revenues declined 3.9 percent, to $24 million.
Michael Mardy, chief financial officer, told analysts on a Thursday afternoon conference call that some of the decline in North American wholesale was part of a series of “limitations” the company had placed on its business with retailers on the continent to combat unauthorized resale and diversion.
“This has become a more significant issue as brand awareness and the desirability of the Tumi brand have grown in [Asian] markets,” he said. “In addition, we had fewer off-price sales in the quarter.”
He estimated that self-imposed limits on North American wholesale subtracted about $2.5 million in revenue, partially offset by growth in U.S. department stores and increases in the company’s Canadian wholesale business.
Jerome Griffith, president and chief executive officer, noted that the company had introduced its Global Citizen marketing campaign in August and backed it with a push in the New York market beginning in October. “We’re getting great feedback on the campaign,” he said, “as it utilizes both traditional and social media but, more importantly, we see this as the long-term strategy to build brand awareness and loyalty for the brand and our broader product offering.”
The new campaign nudged Tumi’s marketing spend up about 40 percent in the third quarter. “And we anticipate this trend and spending to continue into the fourth quarter,” Griffith said. “Going beyond that, we believe just focusing on speaking about our brand directly with our consumer more often...will help us effectively cement our position as the travel lifestyle brand.”
In the first three quarters of the year, net income rose 70.2 percent to $33.8 million, or 50 cents a diluted, share, as revenues grew 17.8 percent, to $320 million.