Helen Of Troy Shares Plunge After FY23 Outlook Cut

Helen Of Troy Ltd HELE reported second-quarter FY23 sales growth of 9.7% year-on-year to $521.40 million, marginally beating the consensus of $521.11 million.
Core business net sales increased 11.1% Y/Y and 34% compared to Q2 FY20.
The increase was primarily due to the contribution from the acquisitions of Osprey of $47.4 million and Curlsmith of $10.2 million.
Total net sales revenue for the Home & Outdoor segment rose 11.8% Y/Y, Health & Wellness increased 27.6%, and Beauty declined 15.4%.
Adjusted EPS of $2.27 beat the analyst consensus of $2.21.
The gross profit margin decreased 180 basis points to 42.5%. The operating margin contracted 520 basis points to 9%, and operating income for the quarter declined 30.2% to $46.9 million.
The company held $39.7 million in cash and equivalents as of August 31, 2022. Net cash used by operating activities for the six months was $(75.5) million. Inventory was $643.2 million.
Adjusted EBITDA fell 9.6% Y/Y to $78.8 million.
"Although we reported results in-line with our expectations for the quarter, we see consumers increasingly adjusting their spending patterns in response to rising inflation and the impact of higher interest rates, particularly in our premium segments in some categories," said CEO Julien Mininberg.
The company's Project Pegasus restructuring plan target annualized savings of $75 million-$85 million.
Outlook: Helen Of Troy lowered FY23 sales guidance to $2.0 billion - $2.05 billion from $2.15 billion - $2.20 billion against the consensus of $2.16 billion.
The company cut the FY23 adjusted EPS outlook to $9.00 - $9.40 from $9.85 - $10.35 versus the consensus of $10.06.
The company predicts a mid-teen percent sales decline in Q3 and a high-teen sales decline in Q4.
Price Action: HELE shares are trading lower by 15.19% at $87.00 in premarket on the last check Wednesday.

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