Helen of Troy Limited HELE saw its share price decrease 12% in Thursday after-hours, following the dismal fourth-quarter fiscal 2025 results. The company’s top and bottom lines decreased year over year. Earnings missed the Zacks Consensus Estimate.
Due to evolving global tariff policies and the resulting business and macroeconomic uncertainty, the company is not providing a fiscal 2026 outlook at this time. It is currently evaluating the incremental impact of tariffs along with the full scope and timing of potential mitigation strategies. As part of its response, the company is accelerating efforts to diversify production outside of China to regions with lower tariff exposure and costs, with a goal of reducing China tariff-related cost of goods sold to under 20% by the end of fiscal 2026.
That being said, the company remains focused on factors within its control. With prudent steps to preserve margins, reduce debt and strengthen cash flow, the company believes it is well-positioned to navigate a dynamic environment while delivering value to consumers and stakeholders.
Helen of Troy Limited Price, Consensus and EPS Surprise
Helen of Troy Limited Price, Consensus and EPS Surprise
Helen of Troy Limited price-consensus-eps-surprise-chart | Helen of Troy Limited Quote
HELE’s Quarterly Performance: Key Metrics and Insights
The company posted adjusted earnings of $2.33 per share, which includes an unfavorable impact from foreign currency of nearly 11 cents. The metric missed the Zacks Consensus Estimate of $2.34. Moreover, the bottom line declined 4.9% from $2.45 reported in the year-ago period, due to lower adjusted operating income and higher interest expense. These were somewhat countered by a reduced adjusted effective income tax rate and lower weighted average diluted shares outstanding. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
The company reported net sales of $485.9 million, surpassing the Zacks Consensus Estimate of $480 million, while decreasing 0.7% from $489.2 million posted in the year-ago period. This decline was caused by a $23.9 million or 4.9% decrease in Organic business sales. This was mainly due to lower Beauty hair appliance sales in the Beauty & Wellness segment and a drop in insulated beverageware sales within the Home & Outdoor segment. The decline in Organic sales was partially offset by a $23 million or 4.7% contribution from the acquisition of Olive & June.
The consolidated gross profit margin contracted 40 basis points (bps) to 48.6% due to a less favorable product mix across segments and an unfavorable customer mix within the Home & Outdoor segment. These factors were partially offset by lower inventory obsolescence expense and reduced commodity and product costs, partly driven by Project Pegasus initiatives.
The consolidated SG&A ratio increased 120 basis points (bps) to 35.9, driven by acquisition-related expenses associated with the Olive & June transaction and increased marketing investments as the company reinvested in its brands. These increases were partially offset by lower overall personnel costs, primarily due to reduced annual incentive and share-based compensation expenses.
The adjusted operating income declined 9.9% to $75 million, while the adjusted operating margin decreased 160 bps to 15.4%. We expected an adjusted operating margin of 16.5% for the quarter.
HELE’s Segmental Performance
Net sales in the Home & Outdoor segment declined 1.6% to $219.8 million, primarily due to softness in the insulated beverageware category. This was caused by continued competitive pressure, weaker overall consumer demand, reduced replenishment orders from retailers, lower closeout channel sales and decreased club sales in the home category.
These were partially offset by growth in packs and the home category. Also, higher international sales across all categories, increased online sales in the home category and expanded retailer distribution in both the insulated beverageware and home categories aided the performance.
Net sales in the Beauty & Wellness segment rose 0.1% to $266.1 million. The increase was primarily due to the contribution from the acquisition of Olive & June. This growth was partially offset by a $21.2 million or 8% decline in Organic business, largely due to lower demand for hair appliances and prestige hair liquids amid softer consumer demand, heightened competitive pressures and a net distribution decline.
These declines were partially mitigated by growth in the Wellness category across most product lines, including air purification, heaters, humidifiers, fans, and thermometry. However, water filtration sales declined, impacted by the previously disclosed expiration of an out-license relationship and category softness.
HELE’s Financial Position
Helen of Troy ended 2025 with cash and cash equivalents of $18.9 million and total short and long-term debt of $916.9 million. Net cash provided by operating activities for fiscal 2025 was $113.2 million. The free cash flow for the same period was $83.1 million.
This Zacks Rank #4 (Sell) company has lost 56.5% in the past three months compared with the industry’s decline of 32.8%.
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