Helen of Troy Limited
) first-quarter fiscal 2015 adjusted earnings of 83 cents lagged
the Zacks Consensus Estimate of 95 cents by 12.6% due to lower than
expected revenue. Earnings managed to inch past last year's results
Revenues and Margins
Helen of Troy, a designer and marketer of consumer products,
reported modest revenue growth in the first quarter. Revenues of
$311.8 million went up 2.4% from the year-ago quarter due as higher
sales in housewares and healthcare categories offset the decline in
Personal care category. Sales however missed the Zacks Consensus
Estimate of $314 million by about 1%.
Gross margin shrank 120 basis points (bps) to 38.3% due to
product cost increase, unfavorable product mix and higher
promotional programs. Adjusted operating income margin increased 80
bps to 7.5% due to lower selling, general and administrative
expense ratio during the quarter.
Sales in the Housewares category increased 5.1% to $66.8 million
compared with the year-ago period, backed by strong performance of
the OXO brand. The company further expects strong demand for the
new product scheduled to be launched in fiscal 2015.
Sales in this category slipped 11.1% year over year to $102.5
million in the quarter due to a challenging retail environment
primarily in the hair care solutions category where competition
resulted in lower pricing and promotional discounts and loss of
This category increased 13.4% year over year to $142.5 million in
the reported quarter as sales of medicines increased due to a
severe cold and flu season which came early and persisted for a
Other Financial Details
In Jul 01, 2014, Helen of Troy acquired U.S.-based retailer and
health publisher Healthy Directions, LLC and its subsidiaries for a
cash transaction of $195 million. This takeover will facilitate
Helen of Troy's entry into the vitamins, minerals and supplements
The Healthy Directions acquisition is expected to be accretive
to revenues by more than 10% on an annualized basis and also affect
cash flow, adjusted EBITDA and adjusted earnings per share
Additionally, Helen of Troy has recently entered into a
licensing agreement with the pioneer of healthy non-stick cookware
- The Cookware Company.
Under the agreement, Cookware will launch three high-quality
cooking utensil made from its premium materials, best-in-class
Perfluorooctanoic (PFOA)-free coatings through advanced
manufacturing and forging processes and bearing Helen of Troy's
flagship brand name OXO Good Grips.
Fiscal 2015 Outlook
For fiscal 2015, the company continues to expect earnings in the
range of $4.30 to $4.40 per share and sales in the range of $1.325
to $1.375 billion. The Zacks Consensus Estimate is pegged at $4.02
per share, well below management's guidance range. It also expects
capital expenditures in the range of $8 to $10 million for fiscal
Helen of Troy expects to deliver sustainable organic growth by
investing in human resource and solid innovation program, brand
building advertising and improving its market position. The company
is also focused on driving productivity and paying dividends, going
ahead. However, the company continues to expect higher product
costs and a difficult retail environment in the coming
Other Stocks to Consider
Helen of Troy currently has a Zacks Rank #3 (Hold). Other stocks
in the cosmetics and toiletries sector worth considering include
Estee Lauder Inc.
Nu Skin Enterprises Inc.
). All these stocks sport a Zacks Rank #2 (Buy).
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