“The IPO luxury market has been very strong,” says Linda Killian of Renaissance Capital. ”The companies that have gone public have been very exciting growth stories.”
That’s a contrast to last year when the IPO market was quiet and many of the private-equity backed companies had no growth. This year, Killian says, there has been a whole host of growth PE-deal names in the U.S.
The luxury market had a fabulous year in 2011, with its fastest sales growth rate in the last 15 years at around 20 percent, according to Thomas Chauvet, a Citigroup analyst, who does not cover either Tumi or Kors shares. Chauvet, who covers mostly European luxury goods companies, expects the upward trend to continue in 2012.
As for Tumi, the London-based private equity firm, Doughty Hanson, will begin exiting its control of the iconic luggage company, which it acquired eight years ago for $276 million.
Doughty has had to wait eight years to recoup its investment, which is longer than is usually the case for PE firms. That fact may raise a red flag with some investors, who might wonder whether the stock has some hidden baggage.
“I think that Tumi is getting a bit of Kors’ afterglow,” says Killian. “It’s not a Kors, it’s not a fast-growth story and it’s not apparel. It’s focused on business and travels, but they have improved their product line incredibly.”
Last month, Tumi teamed up with Dror Benshetrit, a collection that has been seeing high demand. If the new launch proves successful, it may lessen the company's dependence on its signature line, which tallies as much as 86 percent of the company's total sales.
But some say Tumi's strength is the customer loyalty the brand has established. Founded in 1975, Tumi takes its name from a Peruvian god, and harkens back to the founders’ Peace Corps days in South America. Thirty-seven years later, Tumi has more than 50 stores worldwide, including ones in New York, London, Paris and Tokyo. Its revenues grew 31 percent to $330 million in 2011 from $252 million the year before, according to the company's S-1 filing with the Securities and Exchange Commission.
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