Helen of Troy Limited (HELE - Free Report) is focused on enhancing its Beauty business, evident from its deal to acquire Drybar Products LLC for roughly $255 million in cash. The acquisition includes the Drybar trademark, along with other intellectual property assets related to Drybar’s products. The buyout, which is expected to close on Jan 31, 2020, also includes various associated production assets and working capital.
Further, as part of the agreement, Helen of Troy will allow Drybar Holdings LLC to continue using the Drybar trademark in the Drybar salons worldwide. Notably, Drybar is an innovative and fast-growing hair care and styling brand, which will strengthen Helen of Troy’s Beauty segment. Drybar products include superior and on-trend appliances, accessories and liquids, and the business has more than doubled (in size) over the past three years.
Apart from its salons, Drybar products continue to gain traction across major retailers like Macy’s (M - Free Report) , Nordstrom (JWN - Free Report) , Sephora and Ulta Beauty (ULTA - Free Report) . Clearly, Drybar Products is likely to be a solid fit for Helen of Troy. Management at Helen of Troy sees tremendous growth potential in Drybar Products, given the expertise of the former in product launches, beauty, appliances, marketing, international growth and category development.
In fact, Drybar Products will be Helen of Troy’s eighth Leadership Brand, which is a portfolio of market-leading brands like OXO, Honeywell, Braun, PUR, Hydro Flask, Vicks and Hot Tools. These brands are positioned well to enhance market share and account for a significant chunk of the company’s sales. Its constant investments in these brands, which are considered most productive, have been delivering robust results. Evidently, during the second quarter of fiscal 2020, Leadership Brands improved 3.8%.
The Drybar Products acquisition is anticipated to immediately augment Helen of Troy’s rate of consolidated sales growth, gross margin, adjusted EBITDA margin, bottom line and cash flow from operations. Further, the buyout is expected to boost the Beauty segment’s comparable operating metrics in particular. Sales in the Beauty segment improved 8.8% to $87.3 million in the last reported quarter, owing to solid demand and new products in the appliance business, and strong online and international sales.
All said, Drybar Products is set to solidify Helen of Troy’s portfolio and add new leaves to its growth story. Markedly, this Zacks Rank #3 (Hold) stock has rallied 26.3% in the past six months, outpacing the industry’s growth of 9.1%
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