Helen of Troy stock rallies on profit forecast; CEO to retire next year

By Bill Peters

'Our sales outlook reflects our expectation that the economy, consumers, and several of our categories will continue to experience macro financial pressure,' CEO says

Shares of Helen of Troy Ltd. rose after hours on Wednesday after the designer of home and wellness products released a full-year profit forecast and fourth-quarter results that came in above Wall Street's expectations.

The company -- which sells products like Revlon cosmetics, Pur water filters and Oxo food-storage containers, as well as things like humidifiers -- also announced that its chief executive, Julien Mininberg, plans to retire on Feb. 29, 2024, and that its board had appointed Noel Geoffroy, currently chief operating officer, to succeed Mininberg on March 1, 2024.

Helen of Troy in March said that its chief financial officer would resign. The company has also made efforts to cut costs, including through a roughly 10% staff reduction that was largely completed last month, after consumers grew more cautious on spending following decades-high inflation.

Shares rose 4% after hours. The company will hold its earnings conference call on Thursday.

Helen of Troy (HELE) said it expected full-year adjusted earnings per share of between $8.50 and $9, above FactSet forecasts for $8.43. The company forecast sales over that time of $1.965 billion to $2.015 billion, below FactSet estimates for $2.022 billion.

"Our sales outlook reflects our expectation that the economy, consumers, and several of our categories will continue to experience macro financial pressure," Mininberg said in a statement.

However, he said that he expected margins and earnings per share to grow in the back half of the year. Falling freight costs and prestige beauty brands would also help margins, Mininberg said.

For its fiscal fourth quarter, Helen of Troy reported net income of $36.2 million, or $1.50 a share, compared with $39.8 million, or $1.64 a share, in the same quarter last year. Revenue came in at $484.6 million, compared with $582 million in the prior-year quarter.

Adjusted for EPA compliance costs, restructuring charges and amortization, Helen of Troy earned $2.01 a share, down from $2.51 a share in the prior-year quarter.

Analysts polled by FactSet expected adjusted earnings per share of $1.88, on revenue of $458 million.

Helen of Troy owns brands like Oxo, backpack maker Osprey, Pur and haircare-product maker Drybar. Its licensed brands include Revlon, Vicks and Honeywell.

Some analysts have said that demand for beauty products has held up, even as retailers struggle to sell other goods, helped by self-care trends and a return to pre-pandemic life.

But during Helen of Troy's third-quarter earnings call in January, Mininberg said that as retailers pulled back on purchases in response to weaker customer demand, the company's price cuts "were slightly elevated" in its beauty, health and wellness categories. The holiday season, it said, started off slower than expected.

The company, however, tries to offer products that are also in-demand when people get sick. And Mininberg said in January that as the cold and flu season took hold, demand for inhalants, thermometers and humidifiers had been strong.

"While it was still early in the season during our third quarter, we are seeing elevated incidents of these conditions from colds, flu and the latest omicron COVID subvariants," he said. "Symptoms this year have further been raised by a surge of other respiratory infections in both children and adults. The result has been strong sell-through of our thermometers, humidifiers, and inhalants under the Vicks and Braun brands."

-Bill Peters

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04-27-23 0730ET

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