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Helen of Troy's (HELE) New Revlon License to Boost Beauty Business

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Helen of Troy Limited (HELE - Free Report) has been on wheels to strengthen its Beauty business, which formed nearly 22% of its top line in the second quarter of fiscal 2021. The company took a bold step in the Beauty realm, as it unveiled that via its subsidiaries, it has entered into an extended and altered Trademark License Agreement with Revlon to license the trademark for hair care appliances and tools of the latter (the "Revlon License").

Per the amended Revlon License, Helen of Troy enjoys a unique, fully-paid and worldwide license to leverage the Revlon trademark, in order to produce, distribute and sell licensed merchandise till December 2060. Also, the company has the option to renew the license for three more 20-year periods. Notably, this solid global license for a 100-year period came at a one-time, up-front license fee of $72.5 million, which is likely to be sponsored by Helen of Troy in cash. Apart from this, the company is not entitled to pay any further ongoing royalties.

Incidentally, Helen of Troy’s global hair appliance business has more than doubled in recent times, as part of its overall transformation efforts. This business, which has seen considerable market share and profit improvements, has been largely benefiting from the Revlon brand, which has gained solid traction in the United States, Europe, Canada and Latin America.

Further, management went on to state that its robust Beauty brand portfolio is now leading in market share in the online U.S. hair appliance category and certain big U.S. brick-and-mortar customers. In fact, the Beauty brand portfolio is witnessing accelerated growth across all key channels.

Helen of Troy Strengthens Beauty Business

The abovementioned Revlon License marks another step in Helen of Troy’s efforts to bolster its Beauty business and strengthen its brand portfolio. In the last reported quarter, sales in the company’s Beauty segment jumped 34.6% to $117.5 million, thanks to contributions from the buyout of Drybar Products along with organic business growth stemming from strength in the appliance category, expansion in distribution and higher international sales. Adjusted operating income in the segment surged significantly to $22.9 million.

The extension of Revlon will be an addition to the company’s owned brands such as HOT TOOLS, Drybar and Gold ‘N Hot and is likely to fuel growth at its global hair appliances. Talking of brand enhancement, the company has long been focused on making solid investments in its “Leadership Brands,” which is a portfolio of market-leading brands. These brands account for a significant chunk of the company’s sales and generate solid margins and volumes. During the fiscal second quarter, sales from the company’s eight Leadership Brands grew 30.3%.   

All said, we expect the extended Trademark License Agreement with Revlon to add new leaves to Helen of Troy’s growth story, especially in the Beauty space. Markedly, shares of this Zacks Rank #3 (Hold) company have rallied % so far this year compared with the industry’s growth of %.

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