Helen of Troy Limited cited year-over-year sales growth from its Housewares and Beauty segments and a decline from Home & Health in reporting its fiscal second-quarter results.
Helen of Troy develops markets such as home and housewares brands including Oxo kitchenware, Hydro Flask beverageware, Revlon beauty appliances, PUR water filters, Honeywell home environment appliances, Vicks humidifiers and Braun thermometers.
Helen of Troy’s Housewares group net sales in the quarter increased year over year by $13.4 million, or 6.6%, to $215.2 million, compared to $201.9 million. The company attributed the growth to an increase in brick-and-mortar sales for the Oxo and Hydro Flask brands because of strong demand and the favorable comparative impact of COVID-19 related store closures, reduced store traffic and a soft back-to-school season in the prior-year period, higher sales in the closeout channel and growth in international sales. These factors were partially offset by a year-over-year decrease in online sales.
Operating income in the second quarter for the Housewares group was $41.9 million, compared to $45.4 million in the year-earlier period. Helen of Troy cited a less favorable channel mix, higher inbound freight expense due to rising freight rates and container supply shortages, increased distribution costs and an increase in marketing expense.
Helen of Troy’s Beauty group reported core products, includes appliances, grew year over year in the quarter by $16.4 million, or 13.9%. The growth reflected higher appliance sales due to an increase in brick-and-mortar sales, growth in the volumizer franchise due to continued high consumer demand, expanded distribution primarily in the club channel and higher international sales. Total Beauty segment net sales revenue increased $1 million to $118.5 million, compared to $117.5 million, in part reflecting the sale of its non-core North America Personal Care business during the second quarter of fiscal 2022.
Beauty group operating income during the quarter was $20.6 million, compared to $20.1 million a year earlier. Operating margin was mitigated, the company reported, by higher inbound freight expense.
Helen of Troy’s Health & Home segment reported a 33.1% sales decline in the second quarter of $70 million to $141.5 million, compared to $211.5 million for the prior-year period. The company cited, among a few factors a decline in brick-and-mortar and online sales of water filtration, air filtration and humidification products because of Environment Protection Agency packaging compliance concerns and related stop shipment actions; and a decline in sales of thermometers due to stronger COVID-19 driven demand for healthcare products in the comparative prior period. These factors were partially offset by an increase in sales of heaters and new product introductions, according to Helen of Troy.
Helen of Troy in July of this year disclosed it was in discussions with the U.S. Environmental Protection Agency regarding the compliance of packaging claims on certain air and water filtration products, as well and some humidifiers. Noting the EPA did not raise product quality, safety or performance issues, Helen of Troy said it resolved the matter with modest changes to product labeling, and it began executing repackaging plans for the bulk of the affected products. The company expects to ramp up to normalized shipping activity for most of the affected products at various timeframes during the third quarter.
Quarterly operating income from the Health & Home group was $4.8 million, compared to $33.8 million a year earlier., or 16.0% of segment net sales revenue. The company noted EPA compliance costs of $3.0 million, higher inbound freight expense and higher distribution costs.
Julien R. Mininberg, Chief Executive Officer, stated:
“The second quarter exceeded our expectations. We are pleased to see our diversified portfolio once again deliver, with Housewares and Beauty both topping last year’s especially strong sales growth, and Health & Home declining less than expected due to a favorable resolution of the EPA matter. International also grew over the high growth in its year-ago base. We generated adjusted diluted EPS of $2.65 despite the significant impact of widespread inflation affecting nearly all input costs, including materials, labor, and transportation, and despite the lower Health & Home sales in the quarter due to the EPA matter… On a two-year stack, the results are even more compelling across many of our key measures. Our flywheel investments across the Company continue to pay off as we drive our Leadership Brands ahead, work hard to mitigate the current inflationary costs, continue to delight consumers with innovative new products, and make further improvements to our global shared services to power the back half of Phase II.”
Mininberg continued: “Looking ahead to the balance of the fiscal year, we are raising our full fiscal year outlook based on the better than expected second-quarter results, positive trends in Beauty and Housewares, as well as the more favorable than expected EPA resolution. Including the EPA matter, the high end of our core revenue outlook range implies slight growth over the 25.1% growth last year, and our core adjusted diluted EPS outlook range implies growth of 0.2% to 2.9% over last year’s 26.5% growth.”
