Helen Of Troy Stock Crushes Q2 Expectations Despite Beauty & Wellness Setback

Helen Of Troy Ltd (NASDAQ: HELE ) shares surged after the company reported better-than-expected second-quarter results, reaffirming its FY25 sales and EPS outlook .

The company reported a second-quarter sales decline of 3.5% year-over-year to $474.221 million, beating the analyst consensus of $458.237 million.

The decrease in sales was primarily driven by a decline in Beauty & Wellness due to lower sales of hair appliances, air purifiers, and humidifiers.

Total net sales revenue for the Home & Outdoor segment increased 0.8% year over year, while Beauty & Wellness declined 7.7%.

Adjusted EPS declined 34.1% YoY to $1.21, beating the consensus estimate of $1.04.

The gross profit margin decreased by 116 bps to 45.6%. The operating margin contracted 220 basis points to 7.3%, and operating income for the quarter declined 25.6% to $34.85 million.

Adjusted operating income decreased 25.5% to $46.4 million, and the margin fell to 9.8% from 12.7% year over year.

Non-GAAP adjusted EBITDA decreased 22.2% to $55.8 million, with the margin down to 11.8% compared to 14.6%.

As of August end, the company held $20.14 million in cash and equivalents. Operating cash flow for the six months totaled $69.92 million, compared to $157.73 million a year ago. Free cash flow totaled $55.89 million.

Inventory was $469.6 million, compared to $435.7 million in the second quarter of 2024.

Noel M. Geoffroy, CEO, commented: “We are pleased to report second quarter results that were above expectations and we are reaffirming our annual outlook for net sales, adjusted EPS, and adjusted EBITDA. During the quarter, we took decisive actions toward our long-term strategic initiatives, including strengthening the core and further shaping our growth portfolio.”

2025 Outlook: Helen Of Troy continues to expect consolidated net sales revenue in the range of $1.885 billion – $1.935 billion versus the consensus of $1.896 billion and adjusted EPS of $7.00 – $7.50 versus the consensus of $7.12.

The company continues to expect adjusted EBITDA of $287 million to $297 million, which implies a decline of 14.6% to 11.8%, as benefits from Project Pegasus are reinvested for growth.

HELE updates its free cash flow guidance to $180 million – $200 million, compared to the previous range of $200 million – $240 million. It now expects a net leverage ratio of 1.90x to 1.80x, compared to the prior range of 1.60x to 1.50x.

The company mentioned that Project Pegasus remains on track to achieve savings of $26 million to $30 million.

For the third quarter, the company expects a decline in net sales of 4.5% to 1% and adjusted EPS decline of 10% to 3%.