For the third quarter, Helen of Troy beat a Wall Street estimate, although net income and sales declined.
According to Helen of Troy, the diluted earnings per share decrease primarily arose from lower adjusted operating income in Beauty & Wellness and an increase in the adjusted effective income tax rate, partially offset by higher adjusted operating income in Home & Outdoor, lower interest expense and lower weighted average diluted shares outstanding.
An analyst consensus estimate from Zacks Investment Research called for adjusted diluted earnings per share of $2.61 and revenues of $530.1 million.
Consolidated net sales were $530.7 million versus $549.6 million in the year-prior quarter, driven by a decline in Beauty & Wellness, partially offset by gains in Home & Outdoor, the company reported.
Consolidated operating income was $75.1 million compared to $106.9 million versus the year-earlier quarter, while adjusted operating income was $87.9 million versus $89.8 million.
Home & Outdoor segment net sales increased 4.3%, to $246.1 million year over year, Helen of Troy maintained. The increase emerged from net gains in retailer distribution in the insulated beverageware and home categories, higher international sales due to new and expanded retailer distribution in insulated beverageware and strong demand for technical packs, as well as an increase in club channel insulated beverageware sales, partially offset by softer overall consumer demand, lower replenishment orders from retail customers, a decrease in home category club channel sales and continued competition in the insulated beverageware category. Home & Outdoor operating income decreased to $40.3 million from $49.5 million year over year, while adjusted operating income increased to $45.3 million from $39.8 million.
Beauty & Wellness net sales decreased 9.3% to $284.6 million, the company indicated. A weak winter and illness season hurt sales, as did revenue declines in hair appliances and water filtration, net distribution decline, and increased competition, partially offset by advances in prestige hair liquids and fans. Beauty & Wellness operating income decreased to $34.8 million from $57.4 million year over year, while adjusted operating income decreased to $42.6 million from $50.1 million.
In announcing the financial results, Noel Geoffroy, Helen of Troy CEO, said, “Our third quarter results were within our top and bottom-line expectations even as we continued to navigate a difficult consumer spending environment. We made progress on both our long-term strategic and near-term reset and revitalize objectives. Our efforts to improve the health of our brands and our operating performance delivered growth in Home & Outdoor and International. Beauty & Wellness was negatively impacted by a weak illness season globally, including the weakest in the U.S. in the past eight years, excluding the COVID anomaly year of 2020-2021 and continued softness in Beauty. Fiscal year to date through November, seven of our key categories grew or maintained market share in the U.S. and we improved market share in multiple ‘must win’ international markets, driven by incremental distribution gains, innovation, improved marketing and increased growth investment.”
She said the company’s Project Pegasus restructuring initiative “continues to be on track, driving significant gross margin expansion and generating fuel to increase investment in our brands and business.”
Geoffroy added, “Subsequent to the end of the quarter, we enhanced our portfolio with the acquisition of Olive & June, a high growth and high margin leading nail care brand that we expect to be immediately accretive to Helen of Troy. Overall, I remain optimistic about the opportunities ahead of us. We believe we are building a stronger, more collaborative, data-driven and disciplined Helen of Troy that is better positioned to maximize the potential of our brands globally and ultimately to deliver consistent long-term growth and increased value for our stakeholders.”
