Tumi Holdings Inc. Earnings: Global Expansion Fuels Profit Growth

By Markets Fool.com

Image Source: Tumi Holdings

Continue Reading Below

Tumi Holdings reported fourth-quarter results on Wednesday . The high-end luggage company is moving forward with its global expansion strategy and enjoying record sales and earnings, despite foreign exchange headwinds.

Tumi Holdings results: The raw numbers

Metric

Q4 2015

Q4 2014

Growth (YOY)

Sales

$167.661 million

$163.815 million

2.3%

Net Income

$25.051 million

$23.720 million

5.6%

Earnings Per Share

$0.37

$0.35

5.7%

Source: Tumi Holdings Q4 2015 earnings press release.

What happened with Tumi Holdings this quarter?
Net sales increased 2.3% (4.4% on a constant-currency basis) year-over-year to $167.7 million, as Tumiopened six new stores during the fourth quarter and a total of 27 in 2015. However, total comparable-store sales for all direct-to-consumer channels, including company-owned websites, decreased 4.6%.

Continue Reading Below

In Tumi'sdirect-to-consumer North America segment, a 5.6% decline in full-price comparable-store sales and a 14.8% fall in e-commerce comps offset a 6% increase in outlet comps.

Tumi's internationaldirect-to-consumer division, when measured in euros, saw full-price comparable-store sales rise 7%, outlet comps increase 11.6%, and e-commerce website sales jump 35.1%. However, when translated to U.S. dollars, its full-price comps decreased 6.9%, outlet comparable-store sales fell 2.9%, and e-commerce sales increased 18.4%.

Despite the subdued sales performance, Tumi continued to improve the profitability of its operations. Gross profit increased 6.6% to$100.7 million, as gross margin improved to 60.1%, up from 57.7% in the fourth quarter of 2014. Excluding certain acquisition-related expenses and other special items, adjusted operating income rose 8.4% to$40 million, with adjusted operating margin rising to 23.9% from 22.5% in Q4 2014. And on a constant-currency basis, operating margin increased 12.3%.

All told, adjusted constant-currency net income, aided by a lower effective tax rate, rose 12.5% to$26.7 million. And adjusted constant-currency earnings per share, boosted by stock repurchases, increased 12.7% to$0.39.

"In fiscal 2015, we delivered revenue growth on a constant currency basis of 6.7%, adjusted EPS growth on a constant currency basis of 17.2%, drove significant gross margin expansion while protecting our brand in a promotional environment, and continued to push forward on our multiple growth initiatives," said CEO Jerome Griffith in a press release.

Looking forward
Management expects net sales to increase between 4% and 6% for fiscal 2016, but noted foreign currency exchange issues could impact these estimates. Tumi expects to open between 15 and 20 stores this year, but total comparable-store sales growth for all direct-to-consumer channels is projected to be flat. And earnings per share are anticipated to be in the range of$0.93 to $0.97.

"Looking ahead, we will continue to make strategic investments to support our long-term growth initiatives and remain deeply committed to creating innovative products with exceptional quality and functionality for the global citizen," said Griffith. "We are also committed to growing our direct-to-consumer distribution worldwide through store openings, particularly in the international markets, as well as through the expansion of our global e-commerce platform."

The article Tumi Holdings Inc. Earnings: Global Expansion Fuels Profit Growth originally appeared on Fool.com.

Joe Tenebruso has no position in any stocks mentioned. The Motley Fool recommends Tumi. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.