On its first day of its initial public offering on the New York Stock Exchange today, Tumi (TUMI) saw prices of its shares jump nearly 50% in early trading, raising $338 million, ahead of projections.
Tumi has said Wednesday night that it would offer 18.8 million shares for the initial public offering, and said it expected to receive net proceeds of $264.1 million. (Even after its IPO, Tumi will still be controlled by Doughty Hanson, the London-based private equity group that owns 61% of it.)
But Tumi’s stock shot up to above $26 a share from an $18 a share price on Wednesday evening. Earlier this month, Tumi predicted a price range of $15 to $17 a share.
According to Dealogic, Tumi’s IPO is the ninth largest deal this year and the biggest in the retail sector since Michael Kors Holdings Ltd. in December. At its high trading this morning of $27.85, Tumi would have a valuation of about $2.2 billion including debt.
“That’s about 31 times 2011 earnings before interest, taxes, depreciation and amortization, compared with the 13 times leather-handbag maker Coach Inc. traded at yesterday,” Bloomberg News reported.
Founded in 1975, South Plainfield, NJ-based Tumi said the company plans to increase its own retail stores both in North America and internationally, adding eight to 15 new doors in the next three years.
Accessories Expansion Planned
Additionally the company plans to expand its wholesale distribution, including lighter weight luggage and more line extensions into accessories.
Tumi estimates that accessories have grown from representing about 8% of net sales in 2008 to 14% of net sales in 2011. Additionally, Tumi has seen an increase in the relative percentage of net sales derived from its premium product line, and a decrease in the relative percentage of net sales derived from its core product line in recent years.
Tumi expects to receive proceeds of about $264.1 million from the offering and intends to use them to repurchase all of its preferred stock and a portion of its common stock owned by Doughty Hanson, which purchased Tumi in 2004.
In 2011, Tumi posted a net sales increase of 31% to $330 million with net income of $17 million compared with income of $104,000 in 2010. The company has 1,600 points of distribution in more than 70 countries, and its global distribution network is enhanced by the use of three logistics facilities located in the United States, Europe and Asia.
Goldman, Sachs & Co. and Credit Suisse Securities (USA) LLC, along with J.P. Morgan Securities LLC, are acting as joint book-running managers, and William Blair & Company, L.L.C. and Jefferies & Company, Inc. are acting as co-managers for the offering.
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