Helen of Troy (HELE, Financial) saw a significant turnaround in Q2, with shares rising 19%. The company reversed its Q1 earnings miss, achieving revenue growth thanks to its "Reset and Revitalize" restructuring plan. Helen of Troy, known for brands like Oxo and Vicks, is also progressing with "Project Pegasus," aiming for $26-30 million in savings this year and $75-80 million by FY27. The company has paused divestment discussions due to undervalued offers.
- HELE operates in two segments: Home & Outdoor and Beauty & Wellness, each contributing about half of its revenue.
- Home & Outdoor sales increased by 1% year-over-year, with notable performance from Oxo and Hydro Flask. Oxo expanded into over 3,000 Walmart (WMT, Financial) locations and saw strong demand in the EMEA region. Hydro Flask launched new products at Costco (COST, Financial).
- Beauty & Wellness saw an 8% decline in sales, mirroring industry trends affecting companies like Ulta Beauty (ULTA, Financial) and L'Oreal (LRLCY, Financial). However, wellness brands Braun and Vicks exceeded expectations as illness rates rose in the U.S.
- Adjusted operating margins fell by 270 basis points year-over-year to 15.0%, impacted by higher expenses from promotional and marketing efforts. Automation issues at the Tennessee plant also affected margins but have been resolved. Despite these challenges, HELE achieved a double-digit earnings beat.
HELE maintained its FY25 guidance for EPS and revenue at $7.00-7.50 and $1.89-1.94 billion, respectively, due to ongoing challenges like increased promotional activity and softer retail replenishment. While lower interest rates are expected to help, benefits may take time to reach consumers.
Investors remain optimistic, focusing on the company's recovery from Q1 setbacks. HELE's strong brand portfolio is expected to support continued improvement.
