NEW YORK (AP) -- Shares of Tumi Holdings Inc. soared Tuesday after the high-end luggage maker reported a second-quarter profit that handily beat Wall Street expectations and a Credit Suisse analyst upgraded the stock.
THE SPARK: The South Plainfield, N.J.-based company reported after the market closed Monday said that it earned $6.5 million, or 10 cents per share, for the three months ended June 24. That's compared with $2.3 million, or 4 cents per share, in the year-ago period. Not including one-time items, the company said it earned 18 cents per share.
Analysts, on average, expected a profit of 13 cents per share, according to FactSet.
Tumi said net sales rose by 22 percent, while direct-to-consumer sales at established North American stores rose 8.4 percent during the quarter. That's on top of the 32 percent increase in the year-ago period. Sales at stores open at least a year are a key metric because they strip out the volatility of newly opened and closed locations.
THE BIG PICTURE: Tumi made its debut as a public company in April. The company, founded in 1975, began by importing leather bags from South America but became best known for its line of travel bags and business cases that it began making in 1983. The company sells its products in company-owned stores and through other retailers in 65 countries.
THE ANALYSIS: In a note to investors, Credit Suisse analyst Christian Buss said that Tumi's strong global brand isn't reflected in its distribution, and that the company has only reached about 30 percent of its potential penetration.
Following the sustained customer demand demonstrated in the second-quarter, Buss said he has "increasing conviction that longer-term market share capture and margin expansion trends are playing out." He said he expects Tumi to continue to gain market share for the next five years.
Buss raised his rating on the stock to "Outperform" from "Neutral," and boosted his price target to "$25 from $23.
SHARE ACTION: In afternoon trading, Tumi shares added $3.73, or 20.2 percent, to $22.25. The stock has traded between $14.44 and $28.70 since its initial public offering at $26.
- Credit Suisse