by Zach | October 3, 2013 7:00 am
Not all luxury brands are created equal. Tumi Holdings (TUMI) lowered full-year earnings and sales guidance in August. This Zacks Rank #5 (Strong Sell) is expected to grow earnings only 6.6% in 2013.
Tumi operates 200 stores globally and sells premium travel and business products including totes, handbags and luggage.
Missed by 10% in Q2
On Aug 7, Tumi reported second quarter results and missed the Zacks Consensus by 2 cents. Earnings were 18 cents per share compared to the Zacks Consensus of 20 cents per share. Revenue jumped 13% to $108.2 million from the year ago quarter.
However, comparable store sales comps came in at just 4.6% compared to 16.4% in the first quarter and 8% in the year ago second quarter. The comparable store sales included e-commerce sales.
Domestic store traffic slowed “modestly.” This brought Direct-to-Consumer North America comparable store sales, excluding e-commerce, down to an increase of just 1.7% from 7.2% in the second quarter of 2012.
Full Year Guidance Revised Down
While Tumi maintained a positive outlook for the year, it also reduced both its earnings and revenue guidance.
Revenue growth is now expected at 16%-18% compared to its previous guidance of 18% to 20%.
Earnings guidance was revised down to a range of 76 cents to 82 cents from 82 cents to 86 cents with some of the revision due to the expense of redesign of the web site.
Four estimates were lowered in the last 60 days for 2013 as the analysts moved to get in-line with the new guidance. The Zacks Consensus Estimate fell to 81 cents from 87 cents in that time.
Shares Near 1-Year Low
Shares dropped on the earnings miss and guidance revision but they haven’t yet recovered. They’re attempting to test the 52-week low.
Despite the share pullback, they’re not altogether cheap. Tumi trades with a forward P/E of 25.3 which is pricey for a stock with single digit growth.
However, the Zacks Rank is a short term recommendation of just 1 to 3 months. Double digit growth is expected to return in 2014.
Investors might want to consider other stocks in the luxury space instead. Michael Kors (KORS) is a Zacks Rank #1 (Strong Buy) and is expected to grow earnings by 40% in 2013.
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TUMI HLDGS INC (TUMI): Free Stock Analysis Report
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