Helen of Troy Limited
), posted better-than-expected earnings of 82 cents per share in
the first quarter of fiscal 2014, breezing past the Zacks
Consensus Estimate of 69 cents by 18.8% and the prior-year
earnings of 74 cents by 10.8%. The upswing in the results was due
to higher sales and product innovation.
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During the quarter, total sales increased 1.4% year over year to
$304.5 million. The increase driven by sales increase in
Housewares and Healthcare/Home Environment segments. Total sales,
however, lagged the Zacks Consensus Estimate of $310 million.
Gross margin shrank 90 basis points (bps) to 39.5% due to
increased promotional expenses, higher product cost across all
segments. Operating income climbed 4.9% to $32.7 million backed
by tight expense management. Operating margin increased 30 bps to
10.7%, driven by lower selling, general and administrative
Housewares: Sales in the Housewares category climbed 5.4% to
$63.5 million compared with the previous-year period, reflecting
double-digit organic sales growth due to the addition of new
products under the OXO brand, expanded shelf space at key
retailers and new customer distribution.
Personal Care: Sales in this category declined marginally by 1.8%
to $115.4 million in the quarter. Soft results in the domestic
retail appliance and grooming, skin care and hair care solution
product categories offset improvement in professional appliance,
brushes, combs and accessory in international markets.
Healthcare Environment: This category witnessed the highest sales
growth with an increase of 2.6% to $125.6 million in the reported
quarter, reflecting gains in the water filtration category.
Other Financial Details
Cash and cash equivalents at the end of the first quarter of
fiscal 2014 stood at $12.1 million compared to $12.8 million in
the prior quarter. Total debt stood at $224.8 million compared to
$324.7 million in the prior quarter.
Despite strong first-quarter earnings, Helen of Troy expects
higher product costs in the coming quarters. Therefore, the
company lowered its earnings guidance for fiscal 2014 to the
range of $3.13 to $3.23 from previously announced range of $3.50
to $3.60 per share. The company, however, maintained its fiscal
2014 net sales guidance range of $1.29 billion to $1.32 billion.
Helen of Troy holds a Zacks Rank #5 (Strong Sell).
Other Stocks to Consider
Others players in the same industry which look attractive at the
current levels include
Flower Foods Inc.
), both carrying a Zacks Rank #1 (Strong Buy) and
Fortune Brands Inc.
) which carries a Zacks Rank #2 (Buy).