Helen of Troy Outlook Weakened as Net Sales Down

Helen of Troy’s net sales for the second quarter of fiscal year 2017 is down 0.3 percent from the same period last year to $368.17 million, as the company announced its second quarter’s earnings report on October 6th.

After the company released the quarter report, shares of Helen of Troy plunged 7 percent in the following day. Over the past 12 months, the stock price had fallen 22 percent. The consumer-products company also reported a surprising sales decline in its August quarter.

The beauty sector had the worst performance, whose net sales has declined 22.3 percent including anticipated declines of 5.3 percent and 3.7 percent respectively from the company’s Venezuelan and U.S. personal care businesses.

The company believes the headwinds of the sector is in some way due to the overall weakness of the retail environment, therefore lowering the expectation of the segment to decline between 17 percent and 20 percent for fiscal year 2017. Earlier this year, Helen of Troy said it expected the beauty business to retreat between 7 percent and 12 percent.

Revenue of the Nutritional Supplements sector also drops 13 percent. The company remains focusing on improving this segment’s sales and profit trajectory by investing in the multi-year strategic transition from offline channels to online, as well as system upgrades and new marketing initiatives to attract and convert a broader base of consumers, as mentioned in the earnings report. The Health & Home Sector has seen mild growth in the past quarter compared to the same period last year.

The beauty sector’s soft performance is partially offset by the significant growth in the Housewares sector. The Housewares sector, which has seen a 34.4 percent increase in the reported August quarter, is mainly fueled by the staggering growth of the subsidiary brand Hydro Flask, which contributed $29.1 million of revenue during the quarter. The Hydro Flask acquisition drives the company’s sales in 2017, estimated to range between $85.0 and $90.0 million.

Three days before the company issued the second quarter earnings report, Hydro Flask launched its “My Hydro” program, the customized program that allows consumers to design their own bottles.

“Consumers can now build their own unique Hydro Flask through color combinations that resonate with them individually, creating a bottle that expresses their style and inspires them in their daily activities,” said Hydro Flask, Vice President of Product David Visnack.

Consolidated gross profit margin has increased 4.2 percent, in which 2.6 percent is attributed to the core business, while sales remained relatively flat year-over-year. “Increase in gross margin reflects accretion from the Hydro Flask’ acquisition and our efforts to sweeten the mix and reduce our costs,” as stated CEO Julien R. Mininberg.