Why Helen Of Troy Shares Are Surging Today

Helen Of Troy Ltd HELE reported a first-quarter FY24 sales decline of 6.6% year-on-year to $474.67 million, beating the analyst consensus of $465.36 million.

The decrease in sales was primarily driven by a decrease from organic business of $39.0 million, or 7.7%, due to lower sales in seasonal fan, hair appliance, air filtration, humidification, insulated beverage, and houseware categories.

Total net sales revenue for the Home & Outdoor segment fell 7.3% Y/Y, and, Beauty & Wellness decreased 5.9%.

Adjusted EPS of $1.94 beat the analyst consensus of $1.60.

Gross profit margin increased 380 basis points to 45.4%. The operating margin expanded 190 basis points to 8.6%, and operating income for the quarter increased 19.8% to $40.6 million.

The company held $38.9 million in cash and equivalents as of May 31, 2023. Net cash provided by operating activities for the quarter was $121.1 million, with a free cash flow of $109.2 million.

Inventory was $433.9 million versus $613.6 million in Q3 2022. Adjusted EBITDA fell 4.2% Y/Y to $72.4 million.

Restructuring Plan: The company previously announced a global restructuring plan called Project Pegasus, which was proposed to improve efficiency and reduce costs.

The company continues to expect targeted annualized pre-tax operating profit improvements of approximately $75 million to $85 million to begin in fiscal 2024 and be substantially achieved by the end of fiscal 2026.

The company's estimated cadence of the recognition of the savings will be approximately 25% in fiscal 2024, approximately 50% in fiscal 2025, and approximately 25% in fiscal 2026.

The company looks for total profit improvements to be realized approximately 60% through reduced cost of goods sold and 40% through lower SG&A.

Outlook: Helen Of Troy continues to expect FY24 revenue of $1.965 billion - $2.015 billion against the consensus of $2 billion.

The company's sales outlook, which implies a decline of 5.2% to 2.8%, reflects what it believes will be a continued slower economy and uncertainty in spending patterns, especially for some discretionary categories. 

The company sees FY24 adjusted EPS of $8.50 - $9.00 versus the consensus of $8.49.

Price Action: HELE shares are trading higher by 9.29% at $123.00 in premarket on the last check Monday.