Helen of Troy Limited
) recently reported its fourth quarter and fiscal 2014 results.
Adjusted earnings of 84 cents lagged the Zacks Consensus Estimate
of 88 cents by 4.5% and the prior-year quarter by 14.3%.
Weaker-than-expected revenues, currency headwinds and margin
contraction led to the decline in earnings.
Revenues and Margins
Helen of Troy, a designer and marketer of consumer products,
reported sluggish revenues in the fourth quarter of fiscal 2014.
Revenues of $312.5 million declined 4.1% from the year-ago
quarter and also missed the Zacks Consensus Estimate by 0.5% due
to weak performance by all the three segments in the quarter.
Gross margin shrank 20 basis points (bps) to 40.2% due to
product cost increase, unfavorable product mix, higher
promotional programs and unfavorable foreign exchange
translation. Adjusted operating income margin declined 100 bps to
11.2% due to higher selling, general and administrative expense
ratio during the quarter.
Sales in the Housewares category declined 0.6% to $66.0 million
compared with the year-ago period, reflecting soft reorder volume
due to a decline in retail traffic. However, the company expects
a strong demand for new product introductions in fiscal 2015.
Sales in this category slipped 8.2% year over year to $102.8
million in the quarter due to a challenging retail environment
primarily in the hair care solutions product category where
competition resulted in pricing and promotional discounts and
loss of distribution. Foreign currency negatively impacted
segment sales by approximately $1.1 million.
This category plummeted 2.7% year over year to $143.7 million in
the reported quarter due to a severe cold and flu season, which
came early and persisted for a long time.
Fiscal 2014 Results
In fiscal 2014, Helen of Troy reported adjusted earnings of
$3.54 per share, which lagged the Zacks Consensus Estimate of
$3.56 by 0.6% and the prior-year earnings by 2.2%. Earnings
declined due to currency fluctuations and increase in costs.
Earnings were within management's guided range of $3.50 to $3.60
per share. Revenues of $1.317 billion, however, increased 2.2%
from the prior-year. It was in line with the Zacks Consensus
Estimate and towards the higher end of the company's guided range
of $1.29 billion to $1.32 billion.
Other Financial Details
Cash and cash equivalents at the end of the fourth quarter of
fiscal 2014 stood at $70 million compared with $28.8 million in
the third quarter. Total debt was $192.6 million at the end of
fourth quarter as against $194.0 million in the prior
Fiscal 2015 Outlook
For fiscal 2015, the company expects earnings in the range of
$4.30 to $4.40 per share and sales in the range of $1.325 billion
to $1.375 billion. The Zacks Consensus Estimate is pegged at
$4.02, which is well below management's guidance range. It also
expects capital expenditures in the range of $8 million to $10
million for fiscal 2015.
Helen of Troy expects to deliver sustainable organic growth by
making investments in talent and resources, solid innovation
program, brand building advertising and increasing its market
positions. The company is also focused on driving productivity
and paying dividends in the future years. However, the company
continues to expect higher product costs and a difficult retail
environment in the coming quarters.
Helen of Troy currently holds a Zacks Rank #1 (Strong
Other Stocks to Consider
Some other players in the consumer staples sector worth
B&G Foods Inc.
McCormick & Co, Inc
Treehouse Foods, Inc.
). While B&G Foods holds a Zacks Rank #1, McCormick and
Treehouse hold a Zacks Rank #2 (Buy).
B&G FOODS CL-A (BGS): Free Stock Analysis
HELEN OF TROY (HELE): Free Stock Analysis
MCCORMICK & CO (MKC): Free Stock Analysis
TREEHOUSE FOODS (THS): Free Stock Analysis
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