Helen of Troy Limited HELE reported first-quarter fiscal 2027 results, wherein both top and bottom lines beat the Zacks Consensus Estimate. While net sales increased, earnings decreased from the year-ago period’s actuals. Management raised net sales guidance for fiscal 2027.
HELE’s Quarterly Performance: Key Metrics & Insights
Helen of Troy posted adjusted earnings of 17 cents per share, beating the Zacks Consensus Estimate of 2 cents. However, the bottom line declined 58.5% from 41 cents reported in the year-ago period.
Helen of Troy Limited Price, Consensus and EPS Surprise
Helen of Troy Limited price-consensus-eps-surprise-chart | Helen of Troy Limited Quote
The company reported net sales of $402.1 million, which beat the Zacks Consensus Estimate of $375 million. The top line increased 8.2% from $371.7 million posted in the year-ago period, driven by growth across both business segments. Home & Outdoor benefited from strong international demand for packs, successful new product launches and a favorable comparison to the prior year due to tariff-related order timing. Beauty & Wellness growth was led by strong sales of nail care products, fans and thermometers.
The consolidated gross margin decreased 110 basis points to 46% in the quarter, primarily due to the net unfavorable impact of tariffs, higher inventory obsolescence costs compared with the prior year and a less favorable customer mix within Home & Outdoor. We estimated a 47.5% gross margin.
The consolidated SG&A ratio decreased to 31% from 45.1% posted in the year-ago period, reflecting a $54.9 million pre-tax gain from the sale of a distribution facility, lower outbound freight costs, reduced depreciation and amortization, favorable operating leverage and the absence of $3.5 million in CEO succession costs incurred in the prior-year period.
The adjusted operating income remained flat at $16.1 million, while the adjusted operating margin decreased 30 bps to 4%. The margin compression was primarily caused by tariff-related cost pressures, a less favorable inventory obsolescence impact year over year and an unfavorable customer mix within Home & Outdoor, partially offset by reduced outbound freight costs and favorable operating leverage. We expected an adjusted operating margin of 3% for the quarter.
HELE’s Segmental Performance
Net sales in the Home & Outdoor segment increased 9.5% to $194.9 million, driven by strong international demand for technical, lifestyle and travel packs, new product launches, expanded distribution in the home and insulated beverageware categories, and a favorable comparison to the prior year due to tariff-related order timing. These gains were partially offset by lower international sales in the home and insulated beverageware categories.
Home & Outdoor adjusted operating income increased 39.2% to $12.3 million, while the segment adjusted operating margin increased 130 bps to 6.3%.
Net sales in the Beauty & Wellness segment gained 7% to $207.2 million, driven by growth in nail care from new and expanded distribution, higher fan and thermometer sales benefiting from an easier comparison against prior-year tariff-related direct import cancellations and disruptions in the China thermometry market, and incremental sales from new Wellness product launches.
Beauty & Wellness adjusted operating income declined 48.2% to $3.8 million, while the segment adjusted operating margin decreased 190 bps to 1.8%.
HELE’s Financial Position
Helen of Troy ended the quarter with cash and cash equivalents of $21.7 million and total short and long-term debt of $716.1 million. Net cash used by operating activities for the fiscal first quarter was $0.6 million. The free cash flow for the same period was negative $6.4 million.
HELE’s Outlook
For fiscal 2027, the company raised its net sales guidance to $1.759-$1.831 billion, from the previous range of $1.751-$1.822 billion. The updated outlook includes Home & Outdoor sales of $859-$884 million (previously $854-$882 million) and Beauty & Wellness sales of $900-$947 million (previously $897-$940 million).
Adjusted earnings are still expected in the range of $3.25 to $3.75 per share, with adjusted EBITDA of $190 million to $197 million and free cash flow of $85 million to $100 million.
Management expects continued inflationary pressures, weak discretionary demand, cautious retailer inventory management and a highly promotional environment. The outlook assumes current tariff rates remain in place, includes $9.2 million in Phase 1 tariff refunds and excludes potential future refunds due to uncertainty. It also factors in higher product and freight costs, unfavorable Chinese yuan movements, and ongoing geopolitical and supply-chain risks that may increase input costs and disrupt supply.
This Zacks Rank #3 (Hold) company has gained 50.5% in the past three months compared with the industry’s growth of 15.4%.
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Helen of Troy Limited (HELE): Free Stock Analysis Report
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