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Helen of Troy Limited (NASDAQ: HELE) has reported its first-quarter fiscal 2025 results, presenting a mixed performance characterized by several challenges and some bright spots. The company’s consolidated net sales revenue for the quarter was $416.8 million, marking a 12.2% decline from the previous year’s $474.7 million. GAAP diluted EPS stood at $0.26, a significant drop from $0.94 in the same period last year, while adjusted diluted EPS was $0.99, down from $1.94. Despite these declines, the company noted a gross profit margin expansion of 330 basis points to 48.7%, up from 45.4% the previous year, indicating improved cost management and favorable segment mix.
Operating income for the quarter was $30.8 million, or 7.4% of net sales revenue, compared to $40.6 million, or 8.6% of net sales revenue, in the prior year. This decline was primarily attributed to an increase in the SG&A ratio, which rose by 560 basis points to 40.9% due to higher marketing expenses, automation startup issues at the Tennessee distribution facility, and other operational inefficiencies. Despite these setbacks, the company generated $25.3 million in cash flow from operations, with free cash flow amounting to $16.2 million.
Helen of Troy Limited Double Miss on Fiscal Q1 2025 Earnings
When comparing the current performance against expectations, Helen of Troy’s results fell short. The market had anticipated an EPS of $1.59 and revenue of $445.85 million for the quarter. The actual EPS of $0.26 and adjusted EPS of $0.99 were notably below these expectations, reflecting the impact of the various challenges faced by the company. The revenue shortfall, with actual sales of $416.8 million, also highlights a gap of approximately $29 million from expectations.
The company attributed the revenue decline to several factors, including a decrease in sales of hair appliances, prestige hair care products, and humidifiers in the Beauty & Wellness segment, as well as lower replenishment orders from retail customers in the Home & Outdoor segment. The shipping disruption at the Tennessee distribution facility further exacerbated these issues, affecting small retail customer and direct-to-consumer orders. Despite these hurdles, the gross profit margin improvement suggests that Helen of Troy has managed to control costs effectively, partly due to Project Pegasus initiatives aimed at reducing commodity and product costs.
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Helen of Troy Ltd. Lowers Full-Year Forecast After Worse-than-Expected Earnings
Looking ahead, Helen of Troy has updated its fiscal 2025 outlook, reflecting a more cautious stance. The company has lowered its consolidated net sales forecast to a range of $1.885 billion to $1.935 billion, down from the previous range. This adjustment implies a decline of 6.0% to 3.5% year-over-year. The revised guidance also lowers the expected GAAP diluted EPS to $4.69-$5.45 and adjusted diluted EPS to $7.00-$7.50, down from the prior expectations of $6.68-$7.45 and $8.70-$9.20, respectively.
The company has also adjusted its expectations for adjusted EBITDA to a range of $287 million to $297 million, compared to the previous range of $324 million to $331 million. This revision accounts for the anticipated benefits from Project Pegasus being reinvested into growth initiatives. Free cash flow expectations have been reduced to $220 million to $240 million, down from $255 million to $275 million. The net leverage ratio is now expected to be between 1.6x and 1.5x by the end of fiscal 2025, reflecting the company’s efforts to manage its debt levels amidst the challenging operating environment.
Disclaimer: The author does not hold or have a position in any securities discussed in the article.
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