Helen Of Troy’s Earnings Beat Isn’t Enough To Wow Investors

Helen Of Troy’s Earnings Beat Isn’t Enough To Wow Investors

Helen of Troy (NASDAQ: HELE), a global consumer products company, reported its second quarter earnings results after Thursday’s market close which failed to impress investors.

The company said that it earned $1.31 per share in the second quarter on revenue of $368.17 million.  Wall Street analysts were expecting the company to earn $1.48 per share on revenue of $371.24.  Net income for the quarter improved to $28.4 million from $24.5 million in the same quarter a year ago.

Sales for the quarter actually fell by 0.3 percent on a year-over-year basis due to foreign exchange changes and business rationalization.

The company saw a 34.4 percent growth in sales within its Housewares unit while Health & Home was nearly unchanged.  On the other hand, sales of Beauty products fell the most by 22.3 percent and Nutritional Supplements sales fell by 13 percent.

Investor concern over a poor performance in the company’s Beauty and Supplements segment extends beyond the quarter.  The company now expects its Beauty sales to fall by 17 percent to 20 percent for the full fiscal year 2017.  In additional, the Nutritional Supplements segment is expected to record a year-over-year decline of 14 percent to 16 percent in its sales.

Despite the poor outlook, the company is maintaining its earnings per share outlook for the full fiscal year to be in a range of $5.85 to $6.35.

Helen of Troy also noted that it saw an improvement in gross margins in the quarter which reflects the contribution of the Hydra Flask acquisition.  In fact, sales from the Hydra Flask line contributed $29.1 million of net sales and helped fuel the strong growth in the Housewares segment.

“The retail environment has been weaker than expected in some of our categories and we have seen softness in Beauty and Nutritional Supplements,” Julien R. Mininberg, Chief Executive Officer, stated.  “We remain strongly committed to increasing shareholder value by investing in our business to drive product innovation, maintaining and growing market share, and delivering further improvements in margin.”
Not including Thursday’s after-market decline, shares of Helen of Troy are lower by nearly 8 percent since the start of 2016.  On the other hand, shares of Helen of Troy are higher by nearly 250 percent over the past five years.