Earnings and revenue slipped at Helen of Troy year over year but still beat Wall Street estimates amid the company’s restructuring efforts.
Net income for the quarter was $36.2 million, or $1.50 per diluted share, versus $39.8 million, or $1.64 per diluted share, in the year-prior quarter. Adjusted for one-time charges, net income was $48.5 million, or $2.01 per diluted share, versus $60.8 million, or $2.51 per diluted share in the year-earlier period.
Helen of Troy beat a Zacks Investment Research earnings estimate of $1.88 and a revenue estimate of $456.2 million.
Net revenue was $484.6 billion versus $582 million in the year-before quarter. Operating income was $53.7 million versus $50.4 million in the year-previous period, while adjusted operating income was $66.7 million versus $72.6 million, the company reported.
For the full fiscal year, net income was $143.3 million, or $5.95 per diluted share, versus $223.8 million, or $9.17 per diluted share, in the year prior. Adjusted net income was $227.7 million, or $9.45 per diluted share, versus $301.8 million, or $12.36 per diluted share, in the year earlier.
Net revenue was $2.07 billion versus $2.22 billion in the year before. Operating income was $211.8 million versus $272.6 million in the year previous, while adjusted operating income was $309.9 million versus $355.1 million, the company stated.
With the financial numbers, Helen of Troy noted that it was proceeding with its previously announced global restructuring plan intended to expand operating margins through initiatives to improve efficiency and reduce costs collectively referred to as Project Pegasus. The initiative involves multiple workstreams to further optimize the company’s brand portfolio, streamline and simplify the organization, accelerate cost of goods savings projects, enhance the efficiency of its supply chain network, optimize its indirect spending and improve cash flow and working capital.
Helen of Troy expects the initiatives to create operating efficiencies and provide a platform to fund future growth investments. In executing Project Pegasus, the company announced three major changes to its organizational structure. One is combining the beauty and health and wellness businesses into a single reportable segment that will be referred to and reported as beauty and wellness. The second is the establishment of a North America regional market organization responsible for sales and go to market strategies for all categories and channels the company operates in the United States and Canada. The third is further centralization of specified functions under shared services, especially in operations and finance to better support the business segments and RMOs.
The new structure will reduce the size of the global workforce by about 10%, Helen of Troy noted. The majority of the role reductions were completed by March 1. Nearly all of the remaining role reductions should be completed before the end of fiscal year 2024, the company noted. The result will focus business segment resources on brand development, consumer-centric innovation and marketing, and the RMOs on sales and go to market strategies, as well as shared services on respective areas of expertise while also creating a more efficient and effective organizational structure.
In announcing the financial results, Julien Mininberg, Helen of Troy CEO, said, “I am pleased to report that our fourth quarter financial performance, including our sales and adjusted EPS, was better than expected in what has been one of the most unpredictable and challenging years in memory. We expanded our adjusted operating margin and generated strong free cash flow. We used that cash flow and faster-than-expected progress on the inventory reduction initiative to accelerate our debt pay down in the quarter. Our ending inventory is now below fiscal year 2021 despite recent retailer inventory corrections and our Osprey and Curlsmith acquisitions.
“Operationally, we also made significant progress,” Mininberg continued. “We began shipping from our new state-of-the-art Tennessee distribution facility, which has already been instrumental in consolidating several ancillary facilities and is a key part of our multi-year plan to optimize our distribution footprint and efficiency. With Fiscal 2023 marking the fourth year of Phase II, our core net sales grew at a 9.1% CAGR, well ahead of the target set at the Phase II starting point in fiscal year 2019, and Core adjusted EPS grew at a 6.8% CAGR despite the many challenges to profitability in our industry and the macro environment.”
