Helen Of Troy’s Earnings Call: Mixed Results Amid Challenges

Helen Of Troy ((HELE)) has held its Q4 earnings call. Read on for the main highlights of the call.

Helen Of Troy’s recent earnings call painted a mixed picture for investors. The company showcased strong performance in its Wellness business and international sales growth, yet faced significant challenges due to tariffs, impairment charges, and a downturn in the Beauty segment. In response to these hurdles, Helen Of Troy is implementing defensive strategies to brace for further economic uncertainties.

Wellness Business Performance

The Wellness business exceeded expectations in the fourth quarter, largely due to a late surge in flu cases and increased demand for air purification products following the Los Angeles wildfires. Notably, Braun and Vicks maintained their leadership as the top brands in US thermometry, contributing to the segment’s robust performance.

International Sales Growth

Helen Of Troy reported a 5.3% growth in international sales for fiscal 2025. This growth was fueled by expanded distribution channels and enhanced collaboration between brand and sales teams, highlighting the company’s successful global strategy.

Project Pegasus Savings

Project Pegasus played a crucial role in improving the company’s financial health, contributing to a 60 basis point increase in gross margin. This initiative also generated resources to boost growth investments by approximately 160 basis points, underscoring its strategic importance.

Olive & June Acquisition

The acquisition of Olive & June proved to be a strategic success, with the brand outperforming expectations by achieving $23 million in sales. The expansion of its retail presence, notably in CVS and Walmart, further solidified its market position.

Uncertainty Due to Tariffs

Global trade policies and tariffs have introduced significant uncertainty and disruption, preventing Helen Of Troy from providing fiscal 2026 guidance. This uncertainty underscores the challenges posed by the current macroeconomic environment.

Drybar Business Impairment

The company recorded non-cash asset impairment charges of $51.5 million for the Drybar business, primarily due to a decline in stock price. This reflects the broader challenges faced in the Beauty segment.

First Quarter Revenue Pressure

Retailers have paused direct import shipments from China, and a decline in international revenue from China is anticipated, adding pressure to the company’s first-quarter revenue outlook.

Challenges in Beauty Segment

The Beauty segment experienced a tough year, marked by soft point-of-sale figures and category declines. The operating margin for Beauty & Wellness dropped by 220 basis points, highlighting the segment’s struggles.

Forward-Looking Guidance

In light of the volatile macroeconomic environment and significant uncertainties in global trade policies, Helen Of Troy refrained from providing specific fiscal 2026 guidance. Despite these challenges, the company reported net sales and adjusted EPS for the fourth quarter that aligned with expectations, driven by strong performances in segments like Wellness and OXO. CEO Noel Geoffroy emphasized the company’s strategic measures to mitigate tariff impacts, including supply chain diversification and cost control. CFO Brian Grass detailed efforts to offset a substantial portion of the anticipated tariff impact for fiscal 2026, while maintaining a cautious approach to spending and focusing on cash flow preservation.

In conclusion, Helen Of Troy’s earnings call reflected a blend of optimism and caution. While the company demonstrated strength in its Wellness business and international sales, it faces ongoing challenges from tariffs and a struggling Beauty segment. The company’s strategic initiatives and defensive measures aim to navigate these uncertainties, positioning it for resilience in the face of economic volatility.