Helen of Troy Q2 Earnings Top, Beauty & Wellness Sales Decline Y/Y

Helen of Troy Limited HELE posted second-quarter fiscal 2025 results, wherein both the top and bottom lines declined year over year. However, both metrics beat the Zacks Consensus Estimate.

During the quarter, management advanced its long-term strategies by strengthening the core business and reshaping the growth portfolio. Despite ongoing macroeconomic challenges, the company achieved early success with its 'Reset and Revitalize' initiative, driven by stronger brand fundamentals, refined marketing and innovation efforts and expanded distribution.

HELE's Q2 in Detail

Adjusted earnings of $1.21 per share surpassed the Zacks Consensus Estimate of $1.08, delivering a positive surprise of around 12%. However, the bottom line declined 30.5% year over year due to reduced adjusted operating income and higher tax rates. These were somewhat countered by lower interest expenses and shares outstanding.

HELE's Segmental Performance

Net sales in the Home & Outdoor segment rose 0.8% to $241.9 million, fueled by greater insulated beverageware category sales and international sales. These were countered by weaker consumer demand, reduced replenishment orders from retail customers, and continued sluggishness in technical packs and related accessories.

Net sales in the Beauty & Wellness segment declined 7.7% to $232.3 million. The decline was mainly caused by reduced sales of hair appliances stemming from softer consumer demand, changes in consumer spending habits and increased competition. Lower sales of humidifiers and air purifiers were due to lower orders from retail customers. There was also a decrease in water filtration product revenues due to the expiration of a licensing agreement. Nevertheless, these challenges were partly balanced by an increase in fan and thermometer sales. We expected Beauty & Wellness net sales to decline 6.8% in the second quarter.

Other Details

Helen of Troy ended the quarter with cash and cash equivalents of $20.1 million and total short and long-term debt of $713.2 million. Net cash provided by operating activities for the first six months of fiscal 2025 was $69.9 million.  The free cash flow for the same period was $55.9 million.

What to Expect From HELE in FY25?

For fiscal 2025, HELE anticipates consolidated net sales revenues to range between $1.885 billion and $1.935 billion, indicating a decline of 6% to 3.5% year over year. This sales outlook reflects ongoing concerns about persistent inflation and continued softness in consumer spending, particularly in certain discretionary product categories. The forecast also considers anticipated challenges in operational performance at the Tennessee distribution facility, along with heightened macroeconomic uncertainty. Management also anticipates a more competitive promotional environment and increased vigilance from retailers in managing their inventory levels.

In the Home & Outdoor segment, net sales growth is now expected to range between a 2.3% decline and 1.4% growth compared to the earlier view of a 3-1% decline. The revised guidance includes shipping disruption impacts in the company's Tennessee distribution facility.

For the Beauty & Wellness segment, net sales are projected to decline 9-7.5% now compared with an 8-5% decline expected before.

The company still envisions fiscal 2025 adjusted EPS to range from $7.00 to $7.50, indicating a decline of 15.8% to 21.4%. It expects adjusted EBITDA in the range of $287-$297 million, suggesting a fall of 11.8-14.6%. GAAP EPS is still expected between $4.69 and $5.45 in fiscal 2025.

The free cash flow is expected in the band of $180-$200 million now, down from the earlier view of $220-$240 million.

For the third quarter of fiscal 2025, the company expects sales to decline 1-4.5%. Management anticipates adjusted EPS to decline by 3-10% in the fiscal third quarter.

Shares of this Zacks Rank #3 (Hold) company have risen 1% in the past three months compared to the industry's 12.1% decline.

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