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Helen of Troy Q2 Earnings Beat Estimates, Sales Decline 9% Y/Y
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Key Takeaways
Helen of Troy's Q2 adjusted EPS of $0.59 beat estimates but fell 51% y/y.
Net sales declined 8.9% y/y to $431.8M, hurt by lower Beauty and Wellness, and Home and Outdoor demand.
Olive and June boosted results, though tariffs and cost pressures weighed on margins and view.
Helen of Troy Limited ((HELE - Free Report) ) experienced a sharp 25% drop in its share price during Thursday's after-hours trading following the second-quarter fiscal 2026 results. The company’s revenues and earnings declined year over year but beat the Zacks Consensus Estimate.
HELE’s second-quarter performance showed signs of progress but continued to face challenges, including business disruptions and cost pressures. The company emphasized a consumer-centric approach and investment in innovation to drive sustainable growth. Net sales and adjusted earnings per share (EPS) came in at the higher end of guidance, reflecting efforts to enhance execution, operational efficiency and go-to-market effectiveness. HELE remains focused on product-driven growth, maintaining brand health, optimizing productivity and navigating a difficult environment.
Helen of Troy posted adjusted earnings of 59 cents per share. The metric beat the Zacks Consensus Estimate of 54 cents per share. The bottom line declined 51.2% from $1.21 in the year-ago period due to lower adjusted operating income and elevated interest expenses. These were partly offset by a reduction in adjusted income tax expenses.
Helen of Troy Limited Price, Consensus and EPS Surprise
HELE reported net sales of $431.8 million, which beat the Zacks Consensus Estimate of $419 million. The top line decreased 8.9% from $474.2 million in the year-ago period. This decline was caused by a $76.1-million or 16% decrease in the Organic business. The decline reflected lower demand in the Beauty & Wellness segment, particularly for thermometers, heaters and hair appliances, as well as reduced home and insulated beverage sales in the Home & Outdoor segment. The decline in Organic sales was partially offset by a $33.4-million or 7% contribution from the acquisition of Olive & June, and strong domestic demand for technical, travel and lifestyle packs in Home & Outdoor.
The consolidated gross profit margin contracted 140 basis points (bps) to 44.2% compared with 45.6% in the prior year. The decrease was primarily caused by the adverse impacts of higher tariffs on the cost of goods sold, which reduced the margin by about 200 bps and by increased retail trade and promotional spending year over year. These factors were partially offset by the positive impacts of the Olive & June acquisition in Beauty & Wellness, and lower commodity and product costs, aided by cost savings from Project Pegasus initiatives and improved inventory obsolescence expenses. We estimated a 46.1% gross margin.
The consolidated SG&A ratio increased 310 bps to 41% due to higher share-based compensation expenses, increased outbound freight costs, the impacts of the Olive & June acquisition, and unfavorable operating leverage resulting from lower net sales. These factors were partly offset by the favorable year-over-year comparison to elevated distribution center expenses in the prior period, which had been affected by additional costs and efficiency losses related to automation startup issues at the company’s Tennessee distribution facility.
The adjusted operating income declined 41.9% to $26.9 million, while the adjusted operating margin decreased 360 bps to 6.2%. We expected an adjusted operating margin of 7.2% for the quarter.
HELE’s Segmental Performance
Net sales in the Home & Outdoor segment declined 13.7% to $208.7 million due to lower replenishment orders from retail customers in the insulated beverageware and home categories, partly reflecting retailer inventory rebalancing amid softer demand trends. Additional pressures included heightened competition, a year-over-year net distribution loss and the cancellation of direct import orders due to higher tariffs in the insulated beverageware category. The segment also faced lower club channel sales in both the insulated beverageware and home categories, as well as reduced closeout channel activity. These headwinds were partially offset by strong demand for technical, travel and lifestyle packs, expanded distribution in the home category, and incremental sales from an insulated beverageware product launch.
Net sales in the Beauty & Wellness segment fell 4% to $223.1 million due to a $42.3-million, or 18.2%, drop in the Organic business's sales. This was primarily due to weaker international thermometry demand in China, a decline in Beauty primarily due to softer consumer demand, increased competition, net distribution losses and the cancellation of direct import orders from China in response to higher tariffs. Additionally, heater sales declined due to reduced direct import orders, while water filtration sales fell amid weaker consumer demand and intensified promotional activity. These headwinds were partially offset by a $33.4-million contribution from the Olive & June acquisition.
HELE’s Financial Position
Helen of Troy ended the second quarter with cash and cash equivalents of $22.4 million, and total short- and long-term debt of $893.2 million. Net cash provided by operating activities for the first six months of fiscal 2026 was $47.9 million. The free cash flow for the same period was $23 million.
HELE’s Outlook
The company expects fiscal 2026 consolidated net sales between $1.739 billion and $1.780 billion, indicating a decline of 8.8-6.7% from that reported in the prior fiscal year.
By segment, Home & Outdoor sales are projected to decline 11.8% to 9.7%, while Beauty & Wellness sales are expected to decrease 6.2% to 4%, including an incremental $109-$112 million contribution from the Olive & June acquisition.
This sales outlook reflects ongoing consumer spending softness, increased macroeconomic uncertainty, a more promotional environment and an increasingly stretched consumer base. It also factors in tariff-related order pullbacks, the shift from cross-border e-commerce to localized distribution in China, heightened competition and lapping prior-year tariff-related demand. The company also anticipates the impacts of recent price increases, muted consumer demand, trade-down behavior and cautious retailer inventory management.
Management expects the GAAP loss per share for fiscal 2026 between $29.40 and $29.90. It projects an adjusted EPS of $3.75-$4.25, indicating a year-over-year decline of 47.7-40.7%.
Headwinds include pressures from a more promotional environment, consumer trade-down behavior and an unfavorable product mix. It also considers elevated commodity and product costs, partially offset by Project Pegasus initiatives and strategic price increases in September, as well as investments in growth and product development. Additionally, the outlook factors in the prior-year impacts of automation startup inefficiencies at the Tennessee distribution facility and unfavorable operating leverage from lower revenues.
The company anticipates third-quarter net sales revenues between $491 million and $512 million, suggesting a decline of 7.5-3.5% from that reported in the same period in fiscal 2025. Segment expectations include a 12.8-8.7% decrease in Home & Outdoor net sales, and a 2.9% decline to 1% growth in Beauty & Wellness net sales, which incorporate an incremental contribution of $36-$39 million from the Olive & June acquisition.
The company also expects a third-quarter fiscal 2026 GAAP EPS of $1.85-$2.05 and an adjusted EPS of $1.55-$1.80, implying an adjusted EPS decline of 41.9-32.6% from the prior-year period's actual.
This Zacks Rank #3 (Hold) company has lost 13.5% in the past three months against the industry’s growth of 6%.
Image Source: Zacks Investment Research
Stocks to Consider
United Natural Foods, Inc. ((UNFI - Free Report) ) distributes natural, organic, specialty, produce and conventional grocery and non-food products in the United States and Canada. At present, United Natural sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for United Natural’s current fiscal-year sales and earnings implies growth of 2.4% and 167.6%, respectively, from the year-ago reported figures. UNFI delivered a trailing four-quarter earnings surprise of 416.2%, on average.
Village Farms International, Inc. ((VFF - Free Report) ) produces, markets and distributes greenhouse-grown tomatoes, bell peppers, cucumbers and mini-cukes in North America. It flaunts a Zacks Rank #1 at present. VFF delivered a trailing four-quarter earnings surprise of 122.2%, on average.
The Zacks Consensus Estimate for Village Farms’ current fiscal-year earnings indicates an upsurge of 137.5% from the prior-year reported level.
Vital Farms ((VITL - Free Report) ) packages, markets and distributes shell eggs, butter and other products in the United States. It carries a Zacks Rank #2 (Buy) at present. Vital Farms delivered a trailing four-quarter earnings surprise of 35.8%, on average.
The Zacks Consensus Estimate for Vital Farms’ current fiscal-year sales and earnings implies increases of 27.3% and 14.4%, respectively, from the prior-year reported levels.
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Helen of Troy Q2 Earnings Beat Estimates, Sales Decline 9% Y/Y
Key Takeaways
Helen of Troy Limited ((HELE - Free Report) ) experienced a sharp 25% drop in its share price during Thursday's after-hours trading following the second-quarter fiscal 2026 results. The company’s revenues and earnings declined year over year but beat the Zacks Consensus Estimate.
HELE’s second-quarter performance showed signs of progress but continued to face challenges, including business disruptions and cost pressures. The company emphasized a consumer-centric approach and investment in innovation to drive sustainable growth. Net sales and adjusted earnings per share (EPS) came in at the higher end of guidance, reflecting efforts to enhance execution, operational efficiency and go-to-market effectiveness. HELE remains focused on product-driven growth, maintaining brand health, optimizing productivity and navigating a difficult environment.
HELE’s Quarterly Performance: Key Metrics & Insights
Helen of Troy posted adjusted earnings of 59 cents per share. The metric beat the Zacks Consensus Estimate of 54 cents per share. The bottom line declined 51.2% from $1.21 in the year-ago period due to lower adjusted operating income and elevated interest expenses. These were partly offset by a reduction in adjusted income tax expenses.
Helen of Troy Limited Price, Consensus and EPS Surprise
Helen of Troy Limited price-consensus-eps-surprise-chart | Helen of Troy Limited Quote
HELE reported net sales of $431.8 million, which beat the Zacks Consensus Estimate of $419 million. The top line decreased 8.9% from $474.2 million in the year-ago period. This decline was caused by a $76.1-million or 16% decrease in the Organic business. The decline reflected lower demand in the Beauty & Wellness segment, particularly for thermometers, heaters and hair appliances, as well as reduced home and insulated beverage sales in the Home & Outdoor segment. The decline in Organic sales was partially offset by a $33.4-million or 7% contribution from the acquisition of Olive & June, and strong domestic demand for technical, travel and lifestyle packs in Home & Outdoor.
The consolidated gross profit margin contracted 140 basis points (bps) to 44.2% compared with 45.6% in the prior year. The decrease was primarily caused by the adverse impacts of higher tariffs on the cost of goods sold, which reduced the margin by about 200 bps and by increased retail trade and promotional spending year over year. These factors were partially offset by the positive impacts of the Olive & June acquisition in Beauty & Wellness, and lower commodity and product costs, aided by cost savings from Project Pegasus initiatives and improved inventory obsolescence expenses. We estimated a 46.1% gross margin.
The consolidated SG&A ratio increased 310 bps to 41% due to higher share-based compensation expenses, increased outbound freight costs, the impacts of the Olive & June acquisition, and unfavorable operating leverage resulting from lower net sales. These factors were partly offset by the favorable year-over-year comparison to elevated distribution center expenses in the prior period, which had been affected by additional costs and efficiency losses related to automation startup issues at the company’s Tennessee distribution facility.
The adjusted operating income declined 41.9% to $26.9 million, while the adjusted operating margin decreased 360 bps to 6.2%. We expected an adjusted operating margin of 7.2% for the quarter.
HELE’s Segmental Performance
Net sales in the Home & Outdoor segment declined 13.7% to $208.7 million due to lower replenishment orders from retail customers in the insulated beverageware and home categories, partly reflecting retailer inventory rebalancing amid softer demand trends. Additional pressures included heightened competition, a year-over-year net distribution loss and the cancellation of direct import orders due to higher tariffs in the insulated beverageware category. The segment also faced lower club channel sales in both the insulated beverageware and home categories, as well as reduced closeout channel activity. These headwinds were partially offset by strong demand for technical, travel and lifestyle packs, expanded distribution in the home category, and incremental sales from an insulated beverageware product launch.
Net sales in the Beauty & Wellness segment fell 4% to $223.1 million due to a $42.3-million, or 18.2%, drop in the Organic business's sales. This was primarily due to weaker international thermometry demand in China, a decline in Beauty primarily due to softer consumer demand, increased competition, net distribution losses and the cancellation of direct import orders from China in response to higher tariffs. Additionally, heater sales declined due to reduced direct import orders, while water filtration sales fell amid weaker consumer demand and intensified promotional activity. These headwinds were partially offset by a $33.4-million contribution from the Olive & June acquisition.
HELE’s Financial Position
Helen of Troy ended the second quarter with cash and cash equivalents of $22.4 million, and total short- and long-term debt of $893.2 million. Net cash provided by operating activities for the first six months of fiscal 2026 was $47.9 million. The free cash flow for the same period was $23 million.
HELE’s Outlook
The company expects fiscal 2026 consolidated net sales between $1.739 billion and $1.780 billion, indicating a decline of 8.8-6.7% from that reported in the prior fiscal year.
By segment, Home & Outdoor sales are projected to decline 11.8% to 9.7%, while Beauty & Wellness sales are expected to decrease 6.2% to 4%, including an incremental $109-$112 million contribution from the Olive & June acquisition.
This sales outlook reflects ongoing consumer spending softness, increased macroeconomic uncertainty, a more promotional environment and an increasingly stretched consumer base. It also factors in tariff-related order pullbacks, the shift from cross-border e-commerce to localized distribution in China, heightened competition and lapping prior-year tariff-related demand. The company also anticipates the impacts of recent price increases, muted consumer demand, trade-down behavior and cautious retailer inventory management.
Management expects the GAAP loss per share for fiscal 2026 between $29.40 and $29.90. It projects an adjusted EPS of $3.75-$4.25, indicating a year-over-year decline of 47.7-40.7%.
Headwinds include pressures from a more promotional environment, consumer trade-down behavior and an unfavorable product mix. It also considers elevated commodity and product costs, partially offset by Project Pegasus initiatives and strategic price increases in September, as well as investments in growth and product development. Additionally, the outlook factors in the prior-year impacts of automation startup inefficiencies at the Tennessee distribution facility and unfavorable operating leverage from lower revenues.
The company anticipates third-quarter net sales revenues between $491 million and $512 million, suggesting a decline of 7.5-3.5% from that reported in the same period in fiscal 2025. Segment expectations include a 12.8-8.7% decrease in Home & Outdoor net sales, and a 2.9% decline to 1% growth in Beauty & Wellness net sales, which incorporate an incremental contribution of $36-$39 million from the Olive & June acquisition.
The company also expects a third-quarter fiscal 2026 GAAP EPS of $1.85-$2.05 and an adjusted EPS of $1.55-$1.80, implying an adjusted EPS decline of 41.9-32.6% from the prior-year period's actual.
This Zacks Rank #3 (Hold) company has lost 13.5% in the past three months against the industry’s growth of 6%.
Image Source: Zacks Investment Research
Stocks to Consider
United Natural Foods, Inc. ((UNFI - Free Report) ) distributes natural, organic, specialty, produce and conventional grocery and non-food products in the United States and Canada. At present, United Natural sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for United Natural’s current fiscal-year sales and earnings implies growth of 2.4% and 167.6%, respectively, from the year-ago reported figures. UNFI delivered a trailing four-quarter earnings surprise of 416.2%, on average.
Village Farms International, Inc. ((VFF - Free Report) ) produces, markets and distributes greenhouse-grown tomatoes, bell peppers, cucumbers and mini-cukes in North America. It flaunts a Zacks Rank #1 at present. VFF delivered a trailing four-quarter earnings surprise of 122.2%, on average.
The Zacks Consensus Estimate for Village Farms’ current fiscal-year earnings indicates an upsurge of 137.5% from the prior-year reported level.
Vital Farms ((VITL - Free Report) ) packages, markets and distributes shell eggs, butter and other products in the United States. It carries a Zacks Rank #2 (Buy) at present. Vital Farms delivered a trailing four-quarter earnings surprise of 35.8%, on average.
The Zacks Consensus Estimate for Vital Farms’ current fiscal-year sales and earnings implies increases of 27.3% and 14.4%, respectively, from the prior-year reported levels.