HELE Beats on Q3 Earnings, Keeps View - Analyst Blog

By Zacks Equity Research,

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Share prices for consumer product company Helen of Troy Limited ( HELE ) rose 10.3% on Jan 10, 2013 after it posted better-than-expected third quarter fiscal 2014 results. Last week, global consumer products company Helen of Troy posted third-quarter 2014 earnings of $1.16 per share, which was lower than year-ago results by 1.6% due to higher cost of sales.

However earnings beat the Zacks Consensus Estimate of $1.09 by 6.4% as unfavorable foreign exchange translation was more than offset by higher revenues and operating income.

Revenues and Margins

During the quarter, total revenue increased 1.6% year over year to $380.7 million backed by strong sales in the House wares segment. Positive product mix and innovations also backed sales gain during the quarter. Total sales were in line with the Zacks Consensus Estimate.

Gross margin shrank 80 basis points (bps) to 38.8% due to product cost increase, higher promotional programs and unfavorable foreign exchange translation. Operating income margin inflated 40 bps to 12.9% due to lower selling, general and administrative expenses during the quarter.

Segment Details

Housewares: Sales in the Housewares category climbed 10.3% to $74.8 million compared with the year-ago period, backed by innovation in product and design, and strong sales in kitchen tools and gadgets, baking, cleaning and dry food storage.

Personal Care: Sales in this category slipped 5.7% year over year to $140.2 million in the quarter due to challenging industrial conditions and promotional retail environment.

Healthcare Environment: This category climbed 4.8% year over year to $165.7 million in the reported quarter, reflecting better product mix and product introductions supported by effective marketing. Air purification product category contributed to sales gain during the quarter.

Other Financial Details

Cash and cash equivalents at the end of the third quarter of fiscal 2014 stood at $28.8 million compared with $10.1 million in the prior quarter ended Aug 2013. Total debt went up to $194.0 million from $108.4 million in the prior quarter ended Aug 2013.


Helen of Troy expects higher product costs and a difficult retail condition in the coming quarters. The company maintained its earnings guidance range of $3.50 to $3.60 per share for fiscal 2014. The Zacks Consensus Estimate is pegged at $3.57 which is in line with the management's guidance range.

It also maintained its fiscal 2014 net sales guidance range of $1.29 billion to $1.32 billion. It expects capital expenditures in the range of $40 million to $45 million.

Other Stocks to Consider

Currently, Helen of Troy holds a Zacks Rank #3 (Hold). A better ranked stock in the same industry that looks attractive at the current levels is Nu Skin Enterprises Inc. ( NUS ) carrying a Zacks Rank #1 (Strong Buy). Other consumer staple stocks worth considering include The Men's Wearhouse, Inc. ( MW ) and Shoe Carnival Inc. ( SCVL ), both carrying a Zacks Rank #2 (Buy).

HELEN OF TROY (HELE): Free Stock Analysis Report

MENS WEARHOUSE (MW): Free Stock Analysis Report

NU SKIN ENTERP (NUS): Free Stock Analysis Report

SHOE CARNIVAL (SCVL): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
Referenced Stocks: HELE , MW , NUS , SCVL

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