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Helen of Troy (HELE) Hurt by Cost Inflation, Down 24% in 3 Months
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Escalated cost inflation has been marring Helen of Troy Limited’s (HELE - Free Report) performance for a while. The consumer products player is grappling with supply chain-related challenges. Escalated selling, general and administration (SG&A) expenses are a hurdle for Helen of Troy. These were reflected in HELE’s first-quarter fiscal 2023 results, with the top and the bottom line declining year over year.
Shares of the Zacks Rank #5 (Strong Sell) stock have plunged 24% in the past three months against the industry’s growth of 17.1%. Let’s delve deeper
Image Source: Zacks Investment Research
Dismal Q1 Numbers & Lowered View
In the first quarter of fiscal 2023, Helen of Troy’s adjusted earnings of $2.41 per share declined 30.7% year over year. The metric was hurt by operating loss in the Health & Wellness unit, reduced operating income in the Beauty segment and increased interest expense. Consolidated net sales of $508.1 million declined by 6.1%. The downside was caused by a 15.5% fall in organic business due to net sales revenue drop in Non-Core business stemming from the divestiture of the Personal Care business and some unfavorable year-over-year comparisons. Soft sales in the Health & Wellness unit owing to solid COVID-19-driven demand for healthcare and healthy living products in the year-ago quarter were a downside. The metric was also hurt by the drab Beauty segment hair appliances category and home-related categories in the Home & Outdoor unit, thanks to reduced consumer demand and shifts in consumer spending patterns.
During its first-quarter fiscal 2023 earnings release, management lowered fiscal 2023 sales and earnings guidance to reflect the impact of headwinds like a shift in consumer buying patterns, inflation, supply-chain disruptions, unfavorable currency rates and rising interest rates. Helen of Troy anticipates fiscal 2023 consolidated net sales between $2.15 billion and $2.20 billion, suggesting a decline of 3.3%-1% and a Core business decline of 1.8-0.5%. Management had anticipated consolidated net sales between $2.38 billion and $2.42 billion, indicating consolidated growth of 6.8-8.8% and a Core business increase of 8.5-10.5%.
The company now expects fiscal 2023 adjusted earnings per share (EPS) in the range of $9.85-$10.35. This indicates the consolidated adjusted EPS decline of 20.3-16.3% and the Core adjusted EPS drop of 19.2-15.1%. Earlier, management had expected consolidated adjusted EPS in the range of $12.73-$13.03, indicating a consolidated adjusted EPS increase of 3.0-5.4% and the Core adjusted EPS increase of 4.5-7.0%.
Cost Hurdles
During the first quarter of fiscal 2023, Helen of Troy's adjusted operating margin fell 3.9 percentage points to 13.6%. The downside was caused by unfavorable operating leverage and increased marketing expenses. The adverse impact of reduced Beauty unit sales in the consolidated net sales revenue and the net diluted impact of inflationary expenses and related customer price hikes were also headwinds. Adjusted operating margin decreased across all segments during the quarter.
During the quarter, the company’s SG&A expense came in at $177.2 million, up from $155.8 million reported in the year-ago quarter. The consolidated SG&A expense ratio increased 6.1 percentage points to 34.9% due to increased personnel expense, higher marketing cost and greater distribution expense. Increased share-based compensation expenses and acquisition-related costs, among others, also hurt the metric.
Wrapping Up
Helen of Troy is making major investments in key areas to continue driving growth. To this end, it is focused on investing in consumer-centric innovation, digital marketing and media, new packaging, enhanced production and distribution capacity and direct-to-consumer channels among others. Management is focused on making solid investments in its Leadership Brands, which is a portfolio of market-leading brands. Helen of Troy is on track with cost savings endeavors to counter the impacts of inflation and supply chain disruptions.That being said, let’s see if these upsides can help the company counter the aforementioned hurdles.
Inter Parfums is engaged in the manufacturing, distribution and marketing of a wide range of fragrances and related products. IPAR currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Inter Parfums’ current financial-year sales and EPS suggests growth of 14.9% and 18.6%, respectively, from the year-ago period’s reported figures. IPAR has a trailing four-quarter earnings surprise of 31.1%, on average.
e.l.f. Beauty, a cosmetic company, currently has a Zacks Rank #2 (Buy). ELF has a trailing four-quarter earnings surprise of almost 77%, on average.
The Zacks Consensus Estimate for e.l.f. Beauty’s current financial-year sales and EPS suggests growth of 16.8% and 4.8%, respectively, from the year-ago period’s reported figures.
United Natural Foods distributes natural, organic, specialty, produce and conventional grocery and non-food products. UNFI currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for UNFI’s current financial year sales suggests 7.6% growth from the year-ago period’s reported figures. United Natural Foods has a trailing four-quarter earnings surprise of 29.9%, on average.
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Helen of Troy (HELE) Hurt by Cost Inflation, Down 24% in 3 Months
Escalated cost inflation has been marring Helen of Troy Limited’s (HELE - Free Report) performance for a while. The consumer products player is grappling with supply chain-related challenges. Escalated selling, general and administration (SG&A) expenses are a hurdle for Helen of Troy. These were reflected in HELE’s first-quarter fiscal 2023 results, with the top and the bottom line declining year over year.
Shares of the Zacks Rank #5 (Strong Sell) stock have plunged 24% in the past three months against the industry’s growth of 17.1%. Let’s delve deeper
Image Source: Zacks Investment Research
Dismal Q1 Numbers & Lowered View
In the first quarter of fiscal 2023, Helen of Troy’s adjusted earnings of $2.41 per share declined 30.7% year over year. The metric was hurt by operating loss in the Health & Wellness unit, reduced operating income in the Beauty segment and increased interest expense. Consolidated net sales of $508.1 million declined by 6.1%. The downside was caused by a 15.5% fall in organic business due to net sales revenue drop in Non-Core business stemming from the divestiture of the Personal Care business and some unfavorable year-over-year comparisons. Soft sales in the Health & Wellness unit owing to solid COVID-19-driven demand for healthcare and healthy living products in the year-ago quarter were a downside. The metric was also hurt by the drab Beauty segment hair appliances category and home-related categories in the Home & Outdoor unit, thanks to reduced consumer demand and shifts in consumer spending patterns.
During its first-quarter fiscal 2023 earnings release, management lowered fiscal 2023 sales and earnings guidance to reflect the impact of headwinds like a shift in consumer buying patterns, inflation, supply-chain disruptions, unfavorable currency rates and rising interest rates. Helen of Troy anticipates fiscal 2023 consolidated net sales between $2.15 billion and $2.20 billion, suggesting a decline of 3.3%-1% and a Core business decline of 1.8-0.5%. Management had anticipated consolidated net sales between $2.38 billion and $2.42 billion, indicating consolidated growth of 6.8-8.8% and a Core business increase of 8.5-10.5%.
The company now expects fiscal 2023 adjusted earnings per share (EPS) in the range of $9.85-$10.35. This indicates the consolidated adjusted EPS decline of 20.3-16.3% and the Core adjusted EPS drop of 19.2-15.1%. Earlier, management had expected consolidated adjusted EPS in the range of $12.73-$13.03, indicating a consolidated adjusted EPS increase of 3.0-5.4% and the Core adjusted EPS increase of 4.5-7.0%.
Cost Hurdles
During the first quarter of fiscal 2023, Helen of Troy's adjusted operating margin fell 3.9 percentage points to 13.6%. The downside was caused by unfavorable operating leverage and increased marketing expenses. The adverse impact of reduced Beauty unit sales in the consolidated net sales revenue and the net diluted impact of inflationary expenses and related customer price hikes were also headwinds. Adjusted operating margin decreased across all segments during the quarter.
During the quarter, the company’s SG&A expense came in at $177.2 million, up from $155.8 million reported in the year-ago quarter. The consolidated SG&A expense ratio increased 6.1 percentage points to 34.9% due to increased personnel expense, higher marketing cost and greater distribution expense. Increased share-based compensation expenses and acquisition-related costs, among others, also hurt the metric.
Wrapping Up
Helen of Troy is making major investments in key areas to continue driving growth. To this end, it is focused on investing in consumer-centric innovation, digital marketing and media, new packaging, enhanced production and distribution capacity and direct-to-consumer channels among others. Management is focused on making solid investments in its Leadership Brands, which is a portfolio of market-leading brands. Helen of Troy is on track with cost savings endeavors to counter the impacts of inflation and supply chain disruptions.That being said, let’s see if these upsides can help the company counter the aforementioned hurdles.
Stocks to Consider
Some better-ranked stocks are Inter Parfums (IPAR - Free Report) , e.l.f. Beauty (ELF - Free Report) and United Natural Foods (UNFI - Free Report) .
Inter Parfums is engaged in the manufacturing, distribution and marketing of a wide range of fragrances and related products. IPAR currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Inter Parfums’ current financial-year sales and EPS suggests growth of 14.9% and 18.6%, respectively, from the year-ago period’s reported figures. IPAR has a trailing four-quarter earnings surprise of 31.1%, on average.
e.l.f. Beauty, a cosmetic company, currently has a Zacks Rank #2 (Buy). ELF has a trailing four-quarter earnings surprise of almost 77%, on average.
The Zacks Consensus Estimate for e.l.f. Beauty’s current financial-year sales and EPS suggests growth of 16.8% and 4.8%, respectively, from the year-ago period’s reported figures.
United Natural Foods distributes natural, organic, specialty, produce and conventional grocery and non-food products. UNFI currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for UNFI’s current financial year sales suggests 7.6% growth from the year-ago period’s reported figures. United Natural Foods has a trailing four-quarter earnings surprise of 29.9%, on average.