On Jul 6, 2013, Zacks Investment Research downgraded the
global consumer products company,
Helen of Troy Limited
), to a Zacks Rank #5 (Strong Sell). The downgrade was based on
the company's disappointing outlook for fiscal 2014 and tough
macroeconomic conditions and higher costs lying ahead for the
Why the Downgrade?
On Apr 29, 2013, at its fourth-quarter fiscal 2013 conference
call Helen of Troy provided a conservative fiscal 2014 guidance
due to a tough retail environment and a conservative approach to
the cold/cough/flu season. Further, management expects that the
product costs will increase across all segments during fiscal
We expect that the company will incur high costs as it
transitions to the new 1.3 million square foot distribution
facility in Olive Branch, MS, to accommodate anticipated future
Further, in the Personal Care segment Helen of Troy expects sales
to decrease in fiscal 2014 due to the stiff competition in the
liquids area. Some of its major competitors have launched shampoo
lines that are competing directly with those of Helen of Troy. In
fact, the Personal Care segment has been consistently reporting
sluggish growth for several quarters mainly due to difficult U.S.
retail sales environment in the grooming, skin care and hair care
Estimates mostly moved downwards following the discouraging
guidance provided by the company for the fiscal 2014. The Zacks
Consensus Estimate for fiscal 2014 fell 7.9% to $3.55 over the
last 90 days. Similarly, the Zacks Consensus Estimate for fiscal
2015 fell 18.0% to $3.27 over the same period.
The company has missed estimates in two of the past four
quarters. Moreover, though it beat the Zacks Consensus Estimate
in the fourth quarter it was only because of tight cost control.
The top line results were not strong enough - thus signaling lack
Other Stocks to Consider:
Others players in the same industry which look attractive at the
current levels include
Inter Parfums Inc.
Elizabeth Arden Inc.
Nu Skin Enterprises Inc.
). While Inter Parfums carries a Zacks Rank #1 (Strong Buy),
Elizabeth Arden and Nu Skin Enterprises hold a Zacks Rank #2
HELEN OF TROY (HELE): Free Stock Analysis
INTER PARFUMS (IPAR): Free Stock Analysis
NU SKIN ENTERP (NUS): Free Stock Analysis
ELIZABETH ARDEN (RDEN): Free Stock Analysis
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