Helen of Troy Limited Beats Market Expectations with $1.21 EPS in Q2 Fiscal 2025
Helen of Troy Limited (NASDAQ: HELE) reported its second-quarter fiscal 2025 results, highlighting a consolidated net sales revenue of $474.2 million.
This figure represents a 3.5% decline from the previous year’s $491.6 million. The decline was primarily attributed to a decrease in the Beauty & Wellness segment, which saw reduced sales in hair appliances, air purifiers, and humidifiers. However, this was somewhat offset by growth in the Home & Outdoor segment, which reported an increase in sales, particularly in the insulated beverageware category and higher international sales.
The company’s gross profit margin decreased by 110 basis points to 45.6%, compared to 46.7% in the prior year. This decline was largely due to a less favorable product and customer mix within the Home & Outdoor segment and increased inventory obsolescence expenses. Despite these challenges, Helen of Troy managed to increase its cash flow from operations to $44.6 million, an increase of $7.9 million from the previous year. Free cash flow also rose by $11.7 million to $39.7 million.
In terms of earnings, Helen of Troy reported a GAAP diluted EPS of $0.74, down from $1.14 in the previous year. On a non-GAAP basis, adjusted diluted EPS was $1.21, a decrease from $1.74. The drop in earnings per share was primarily due to lower operating income and a higher effective income tax rate. However, the company did benefit from lower interest expenses and a reduced number of weighted average diluted shares outstanding.
Helen of Troy Reports Better than Expected Fiscal Q2, with $1.21 EPS
Helen of Troy’s performance exceeded market expectations for the quarter, with an adjusted diluted EPS of $1.21 compared to the forecasted $1.04.
This outperformance was acknowledged by CEO Noel M. Geoffroy, who expressed satisfaction with the company’s results amid challenging macroeconomic conditions. The company also reported a revenue figure of $474.2 million, surpassing the anticipated $458.86 million.
Despite the decline in net sales, the company’s strategic initiatives, including Project Pegasus, which aims to deliver cost savings and improve operational efficiencies, contributed to better-than-expected results. The project has already started to yield benefits, particularly in reducing commodity and product costs. Moreover, the company successfully expanded its distribution channels and optimized its marketing strategies, which helped mitigate some of the adverse impacts on its sales revenue.
The Beauty & Wellness segment, despite its decline, showed signs of resilience with increased sales in fans and thermometers. Meanwhile, the Home & Outdoor segment demonstrated growth, driven by international sales and expanded retailer distributions. These factors played a crucial role in helping Helen of Troy surpass the expectations set for the quarter.
Helen of Troy Maintains Fiscal 2025 Outlook
Helen of Troy maintained its fiscal 2025 outlook, expecting consolidated net sales revenue to be in the range of $1.885 billion to $1.935 billion, implying a decline of 6.0% to 3.5%. The company also reaffirmed its guidance for GAAP diluted EPS to be between $4.69 and $5.45, with adjusted diluted EPS projected at $7.00 to $7.50. This guidance reflects the company’s anticipation of ongoing macroeconomic challenges, including inflation and consumer spending softness.
The company continues to expect adjusted EBITDA to be between $287 million and $297 million. Project Pegasus is expected to play a significant role in achieving these targets, with anticipated annualized pre-tax operating profit improvements of $75 million to $85 million by the end of fiscal 2027. The plan aims to streamline operations, optimize the brand portfolio, and enhance supply chain efficiency.
Helen of Troy also updated its free cash flow expectations, now projected to be between $180 million and $200 million, down from the previous range of $200 million to $240 million. This adjustment reflects the company’s strategic reinvestment into growth initiatives and the impact of its restructuring efforts. The net leverage ratio is expected to end fiscal 2025 between 1.90x and 1.80x, indicating a focus on reducing debt levels and improving financial stability.
Disclaimer: The author does not hold or have a position in any securities discussed in the article.
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