Tumi Holdings Q1 gross profit lifts 8.7% to $63.1mn

10 May '14

5 min read

Balance Sheet Highlights as of March 30, 2014:

Cash and cash equivalents were $17.8 million as of March 30, 2014, compared with $37.6 million as of December 31, 2013. In the first quarter of 2014, the Company paid down $6.0 million on its revolving credit facility, and as of March 30, 2014 had an outstanding balance of $2.0 million. Inventories were $83.8 million, compared with $80.0 million as of December 31, 2013.

Jerome Griffith, Chief Executive Officer, President and Director, commented, “While overall 2014 sales got off to a slightly slower start than we anticipated, it certainly is not a clear demonstration of the health of the business. Our Direct-to-Consumer channels were very solid despite the adverse weather across most of North America. Additionally, the launch of our new Alpha 2 product line was incredibly well-received by consumers.

"Looking ahead, we continue to make key investments in the business and expand our retail footprint, as we work to launch our new e-commerce platform in the second half of this year. We also remain focused on developing innovative and premium quality products that lead our industry. Overall, we feel very good about the balance of the year, and are making great progress on our growth initiatives and will continue to position ourselves as the go-to global premium travel lifestyle brand.”

Outlook

The Company is revising its guidance for 2014 to reflect the results in the first quarter, and now expects net sales to increase between 12% and 15% for the full year. This estimate assumes total comparable store sales growth in the mid-single digits.

As previously discussed, 2014 will be a year of higher than normal investment and expenses driven primarily by transitioning e-commerce in-house. It is estimated that the Company will spend approximately $2.5 million to $3.5 million for operator fees to the old platform provider while also incurring additional expenses of approximately $1.0 million to $2.0 million on migrating to the new platform during the first half of 2014.

Additionally, the Company expects to continue to invest in its logistics capabilities, design resources, product management, IT infrastructure and human resource base. Therefore, diluted EPS for 2014 is now expected to be between $0.88 to $0.92. This estimate assumes diluted weighted average common shares outstanding of approximately 68.1 million, and a revised weighted GAAP tax rate of 37.4%.

The Company expects to open 18 to 22 new stores with the store opening cadence to be heavily weighted toward the back end of the year. In the second quarter, we plan to open 6 stores, and plan to renovate / relocate a total of 3 stores. Capital expenditures for fiscal 2014 are expected to be in the range of $40.0 million to $45.0 million.

Tumi Holdings

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