[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section provides the unaudited condensed consolidated financial statements and management's discussion and analysis for the quarter ended May 31, 2025 [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements for Q1 FY2026 show a significant net loss of $450.7 million, primarily due to a $414.4 million asset impairment charge, with total assets decreasing to $2.65 billion Consolidated Balance Sheets (in millions) | (in millions) | May 31, 2025 | February 28, 2025 | | :--- | :--- | :--- | | **Total Assets** | $2,651.9 | $3,132.1 | | Goodwill | $861.8 | $1,182.9 | | **Total Liabilities** | $1,424.3 | $1,448.6 | | **Total Stockholders' Equity** | $1,227.7 | $1,683.4 | Consolidated Statements of Operations (in millions, except per share data) | (in millions, except per share data) | Three Months Ended May 31, 2025 | Three Months Ended May 31, 2024 | | :--- | :--- | :--- | | Sales revenue, net | $371.7 | $416.8 | | Asset impairment charges | $414.4 | $— | | Operating (loss) income | $(407.0) | $30.8 | | **Net (loss) income** | **$(450.7)** | **$6.2** | | **Diluted (loss) earnings per share** | **$(19.65)** | **$0.26** | Consolidated Statements of Cash Flows (in millions) | (in millions) | Three Months Ended May 31, 2025 | Three Months Ended May 31, 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | **$58.3** | **$25.3** | | Net cash used by investing activities | $(9.5) | $(9.2) | | Net cash used by financing activities | $(45.1) | $(18.5) | [Note 4 - Acquisition of Olive & June](index=10&type=section&id=Note%204%20-%20Acquisition%20of%20Olive%20%26%20June) The company acquired Olive & June for an initial cash consideration of $224.7 million, recognizing $150.7 million in goodwill for expected synergies - Acquired Olive & June for initial cash of **$224.7 million** (net of cash acquired and adjustments) plus up to **$15.0 million** in contingent payments based on future performance[19](index=19&type=chunk)[24](index=24&type=chunk) - The acquisition resulted in the provisional recognition of **$150.7 million** in goodwill, primarily attributed to expected synergies[27](index=27&type=chunk)[29](index=29&type=chunk) [Note 5 - Goodwill and Intangibles](index=11&type=section&id=Note%205%20-%20Goodwill%20and%20Intangibles) A Q1 FY2026 impairment test, triggered by stock price decline and revised forecasts, resulted in total asset impairment charges of $414.4 million, significantly reducing goodwill and other intangible assets - A goodwill impairment triggering event occurred in Q1 FY2026 due to a sustained decline in stock price and downward revisions to internal forecasts, reflecting tariff policies and macroeconomic impacts[31](index=31&type=chunk) Impairment Charge by Segment (in millions) | Segment | Impairment Charge (in millions) | Key Businesses Affected | | :--- | :--- | :--- | | **Home & Outdoor** | $219.1 | Hydro Flask ($120.8M), Osprey ($98.3M) | | **Beauty & Wellness** | $195.3 | Drybar ($103.7M), Curlsmith ($36.2M), Health & Wellness ($35.8M), Revlon ($19.6M) | | **Total** | **$414.4** | | - Goodwill decreased by **$317.0 million** due to impairment charges, with the net carrying amount falling from **$1.18 billion** to **$861.8 million**[35](index=35&type=chunk)[36](index=36&type=chunk) [Note 10 - Long-Term Debt](index=17&type=section&id=Note%2010%20-%20Long-Term%20Debt) Total long-term debt was $871.0 million as of May 31, 2025, with $250.0 million borrowed under a delayed draw term loan to repay revolving credit facility debt Long-Term Debt (in millions) | (in millions) | May 31, 2025 | February 28, 2025 | | :--- | :--- | :--- | | Revolving loans | $385.4 | $678.1 | | Term loans | $491.4 | $243.8 | | **Total long-term debt** | **$871.0** | **$916.9** | - In Q1 FY2026, the company borrowed **$250.0 million** under its delayed draw term loan facility and used the proceeds to repay debt on the revolving credit facility[53](index=53&type=chunk) [Note 14 - Segment and Geographic Information](index=24&type=section&id=Note%2014%20-%20Segment%20and%20Geographic%20Information) The company's Q1 FY2026 sales declined across both Home & Outdoor and Beauty & Wellness segments, with domestic sales comprising 74.8% of total revenue Segment Sales (in millions) | Segment (in millions) | Q1 FY2026 Sales | Q1 FY2025 Sales | % Change | | :--- | :--- | :--- | :--- | | Home & Outdoor | $178.0 | $198.5 | (10.3)% | | Beauty & Wellness | $193.7 | $218.4 | (11.3)% | | **Total** | **$371.7** | **$416.8** | **(10.8)%** | - Domestic sales (U.S. and Canada) represented **74.8%** of total net sales revenue for the quarter, while international sales were **25.2%**[84](index=84&type=chunk) [Management's Discussion and Analysis (MD&A)](index=29&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the significant factors impacting Q1 FY2026 results, including a 10.8% decline in consolidated net sales, a $414.4 million asset impairment charge, and a 62.5% decrease in adjusted operating income - Consolidated net sales revenue decreased **10.8%** to **$371.7 million**, driven by a **17.0%** decline in the Organic business[130](index=130&type=chunk)[131](index=131&type=chunk)[133](index=133&type=chunk) - The company recorded a consolidated operating loss of **$407.0 million**, which includes a **$414.4 million** pre-tax asset impairment charge; adjusted operating income fell **62.5%** to **$16.1 million**[131](index=131&type=chunk)[146](index=146&type=chunk)[150](index=150&type=chunk) - Adjusted diluted EPS decreased **58.6%** to **$0.41** from **$0.99** in the prior-year period[131](index=131&type=chunk)[171](index=171&type=chunk) [Significant Trends Impacting the Business](index=30&type=section&id=Significant%20Trends%20Impacting%20the%20Business) The business is significantly impacted by evolving U.S. tariff policies, macroeconomic pressures, and increased competition, leading to reduced retailer orders and softer consumer demand - U.S. tariff policies on imports from China and other regions are creating uncertainty and negatively impacting sales due to paused or canceled retailer orders[103](index=103&type=chunk)[106](index=106&type=chunk)[107](index=107&type=chunk) - High inflation and interest rates are negatively impacting consumer disposable income and spending on discretionary items, leading to reduced replenishment orders from retailers[110](index=110&type=chunk)[112](index=112&type=chunk) - Online channel sales, representing approximately **23%** of total consolidated net sales, declined by about **18%** compared to the prior year[113](index=113&type=chunk) [Results of Operations](index=36&type=section&id=Results%20of%20Operations) Consolidated net sales declined 10.8% to $371.7 million, with both segments experiencing decreases due to lower orders and softer demand, while gross profit margin fell and SG&A ratio increased Key Financial Metrics | Metric | Q1 FY2026 | Q1 FY2025 | Change | | :--- | :--- | :--- | :--- | | **Net Sales Revenue** | $371.7M | $416.8M | (10.8)% | | **Gross Profit Margin** | 47.1% | 48.7% | (1.6) p.p. | | **SG&A as % of Sales** | 45.1% | 40.9% | +4.2 p.p. | | **Operating Margin** | (109.5)% | 7.4% | (116.9) p.p. | - The decline in the Home & Outdoor segment was driven by lower orders in home and insulated beverageware categories, partially offset by strong demand for technical packs[134](index=134&type=chunk)[136](index=136&type=chunk) - The decline in the Beauty & Wellness segment was driven by lower sales of thermometers, fans, and hair appliances due to market dynamics in China, reduced consumer demand, and competition; the Olive & June acquisition contributed **$26.8 million** in sales[137](index=137&type=chunk)[138](index=138&type=chunk)[142](index=142&type=chunk) [Liquidity and Capital Resources](index=46&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains adequate liquidity through cash from operations and its $1.5 billion credit facility, generating $58.3 million in operating cash flow in Q1 FY2026 - Cash provided by operating activities increased to **$58.3 million** from **$25.3 million** in the prior-year period, primarily due to favorable changes in working capital, especially accounts receivable[172](index=172&type=chunk)[176](index=176&type=chunk) - As of May 31, 2025, the outstanding principal balance on the Credit Agreement was **$876.8 million**, with **$346.7 million** available for borrowing per the maximum leverage ratio[183](index=183&type=chunk) [Critical Accounting Policies and Estimates](index=48&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section details the Q1 FY2026 impairment testing for goodwill and intangible assets, which resulted in $414.4 million in charges due to a stock price decline and revised forecasts - The impairment was triggered by a sustained decline in stock price and downward revisions to forecasts reflecting the impact of tariffs and the macroeconomic environment[185](index=185&type=chunk) Impairment Charge by Asset Type (in millions) | Asset Type | Impairment Charge (in millions) | | :--- | :--- | | Goodwill | $317.0 | | Indefinite-lived intangible assets | $48.0 | | Definite-lived intangible assets | $49.4 | | **Total** | **$414.4** | - Management judgment is crucial in estimating future cash flows for impairment testing, and further deterioration in economic conditions or consumer demand could lead to additional charges[191](index=191&type=chunk)[192](index=192&type=chunk)[201](index=201&type=chunk) [PART II. OTHER INFORMATION](index=54&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers updates on legal proceedings and the company's share repurchase program [Legal Proceedings & Risk Factors](index=54&type=section&id=Item%201.%20Legal%20Proceedings%20%26%20Item%201A.%20Risk%20Factors) No material changes to legal proceedings or risk factors are reported since the last Form 10-K, except for an update on the Brita LP patent litigation appeal scheduled for August 5, 2025 - There are no material changes in legal proceedings or risk factors since the last Form 10-K[209](index=209&type=chunk)[210](index=210&type=chunk) - An update on the Brita LP patent litigation indicates that Brita is appealing the ITC's decision in favor of the Company, with oral arguments scheduled for August 5, 2025[50](index=50&type=chunk)[120](index=120&type=chunk) [Share Repurchases and Use of Proceeds](index=55&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No open market share repurchases occurred in Q1 FY2026, though 24,660 shares were acquired for tax withholdings on equity awards, with $498.6 million remaining under the $500 million authorization - No shares were repurchased on the open market during the three months ended May 31, 2025[46](index=46&type=chunk)[213](index=213&type=chunk) - A total of **24,660 shares** were acquired through "net exercise" transactions related to employee share-based compensation[46](index=46&type=chunk)[213](index=213&type=chunk) - As of May 31, 2025, approximately **$498.6 million** remained available for future repurchases under the current authorization[44](index=44&type=chunk)[213](index=213&type=chunk)

[Q1 FY2026 Financial & Operational Highlights](index=1&type=section&id=Helen%20of%20Troy%20Limited%20Reports%20First%20Quarter%20Fiscal%202026%20Results) [Executive Summary](index=1&type=section&id=Executive%20Summary%20-%20First%20Quarter%20of%20Fiscal%202026%20Compared%20to%20Fiscal%202025) Helen of Troy reported a 10.8% sales decline and a significant GAAP loss per share due to impairment charges, alongside strategic operational focus Key Financial Metrics | Metric | Q1 FY2026 | Q1 FY2025 | | :--- | :--- | :--- | | **Consolidated Net Sales** | $371.7M | $416.8M | | **GAAP Diluted (Loss) EPS** | $(19.65) | $0.26 | | **Adjusted Diluted EPS** | $0.41 | $0.99 | | **Operating Margin (GAAP)** | (109.5)% | 7.4% | | **Adjusted Operating Margin** | 4.3% | 10.3% | | **Cash Flow from Operations** | $58.3M | $25.3M | - The Board's search for a new CEO is well underway, focusing on finding a leader with experience in diversified global organizations to bolster the company's brands[4](index=4&type=chunk) - The interim CEO has prioritized a 'back to fundamentals' approach, focusing on improving go-to-market effectiveness, simplifying operations, driving product innovation, and sharpening spending[4](index=4&type=chunk) - Tariff-related impacts were a major headwind, contributing approximately **8 percentage points** to the **10.8% consolidated revenue decline**[4](index=4&type=chunk) [Consolidated Financial Performance](index=2&type=section&id=Consolidated%20Results%20-%20First%20Quarter%20Fiscal%202026%20Compared%20to%20First%20Quarter%20Fiscal%202025) Consolidated net sales decreased 10.8% to $371.7 million, primarily impacted by a $414.4 million asset impairment charge leading to a GAAP operating loss - The company recognized a significant non-cash asset impairment charge of **$414.4 million**, impacting goodwill (**$317.0 million**) and other intangible assets (**$97.4 million**) across both segments[7](index=7&type=chunk)[8](index=8&type=chunk) - The **10.8% sales decrease** was driven by a **17.0% decline in Organic business**, partially offset by a **6.4% positive impact** from the Olive & June acquisition[7](index=7&type=chunk) - Gross profit margin fell to **47.1% from 48.7%**, primarily due to the comparative impact of favorable inventory obsolescence in the prior year, consumer trade-down, and higher retail trade expense[7](index=7&type=chunk) Consolidated Financial Summary | Metric | Q1 FY2026 | Q1 FY2025 | | :--- | :--- | :--- | | **Net Sales Revenue** | $371.7M | $416.8M | | **Gross Profit** | $175.0M | $203.1M | | **Operating (Loss) Income (GAAP)** | $(407.0)M | $30.8M | | **Net (Loss) Income (GAAP)** | $(450.7)M | $6.2M | | **Adjusted Operating Income** | $16.1M | $43.0M | [Segment Performance](index=4&type=section&id=Segment%20Results%20-%20First%20Quarter%20Fiscal%202026%20Compared%20to%20First%20Quarter%20Fiscal%202025) Both segments experienced sales declines and significant operating losses due to large impairment charges, with adjusted operating income substantially decreasing Segment Performance Overview | Segment | Net Sales (Q1 FY26) | YoY Change | Adjusted Operating Margin (Q1 FY26) | Adjusted Operating Margin (Q1 FY25) | | :--- | :--- | :--- | :--- | :--- | | **Home & Outdoor** | $178.0M | (10.3)% | 5.0% | 10.6% | | **Beauty & Wellness** | $193.7M | (11.3)% | 3.7% | 10.0% | [Home & Outdoor](index=4&type=section&id=Home%20%26%20Outdoor) Home & Outdoor net sales decreased 10.3% to $178.0 million, primarily due to softer demand and tariffs, leading to a $213.8 million operating loss from impairment - Key drivers for the sales decline included softer demand for home/beverageware, tariff-related order cancellations, retailer pull-forward activity in the prior quarter, and lower closeout sales[15](index=15&type=chunk) - The segment's operating loss of **$213.8 million** included a **$219.1 million pre-tax asset impairment charge**[11](index=11&type=chunk) Home & Outdoor Segment Financials | Metric | Q1 FY2026 | Q1 FY2025 | | :--- | :--- | :--- | | **Net Sales Revenue** | $178.0M | $198.5M | | **Operating (Loss) Income (GAAP)** | $(213.8)M | $15.9M | | **Adjusted Operating Income** | $8.9M | $21.1M | [Beauty & Wellness](index=4&type=section&id=Beauty%20%26%20Wellness) Beauty & Wellness net sales decreased 11.3% to $193.7 million, with organic decline offset by acquisition, leading to a $193.2 million operating loss from impairment - The organic business decline of **23.0%** was partially offset by a **12.3% contribution** from the Olive & June acquisition[13](index=13&type=chunk) - Organic sales fell due to a decline in international thermometry (China market dynamics), lower fan sales (reduced demand and tariff impact), and softer sales of hair appliances (competition and demand)[16](index=16&type=chunk) - The segment's operating loss of **$193.2 million** included a **$195.3 million pre-tax impairment charge**[14](index=14&type=chunk) Beauty & Wellness Segment Financials | Metric | Q1 FY2026 | Q1 FY2025 | | :--- | :--- | :--- | | **Net Sales Revenue** | $193.7M | $218.4M | | **Operating (Loss) Income (GAAP)** | $(193.2)M | $14.9M | | **Adjusted Operating Income** | $7.3M | $21.9M | [Financial Position and Cash Flow](index=5&type=section&id=Balance%20Sheet%20and%20Cash%20Flow%20-%20First%20Quarter%20Fiscal%202026%20Compared%20to%20First%20Quarter%20Fiscal%202025) Inventory and total debt increased, while net cash from operating activities more than doubled to $58.3 million, and free cash flow significantly improved Balance Sheet Summary | Balance Sheet Item | May 31, 2025 | May 31, 2024 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $22.7M | $16.1M | | **Inventory** | $484.1M | $444.7M | | **Total debt** | $871.0M | $748.4M | Cash Flow Summary | Cash Flow Item (3 months ended) | May 31, 2025 | May 31, 2024 | | :--- | :--- | :--- | | **Net cash from operating activities** | $58.3M | $25.3M | | **Free cash flow** | $45.0M | $16.2M | [Second Quarter Fiscal 2026 Outlook](index=5&type=section&id=Second%20Quarter%20Fiscal%202026%20Outlook) Q2 FY2026 outlook projects consolidated net sales of $408-432 million, reflecting continued consumer softness and tariff impacts, with mitigation efforts Q2 FY2026 Financial Outlook | Q2 FY2026 Outlook | Low End | High End | | :--- | :--- | :--- | | **Consolidated Net Sales** | $408M | $432M | | **YoY Sales Decline** | (14.0)% | (8.9)% | | **GAAP Diluted EPS** | $0.56 | $0.68 | | **Adjusted Diluted EPS** | $0.45 | $0.60 | - The company is actively mitigating tariff risks by diversifying production outside of China, aiming to reduce its cost of goods sold exposed to China tariffs to less than **25% by the end of fiscal 2026**[19](index=19&type=chunk) - The outlook reflects continued challenges, including consumer spending softness, a more promotional environment, retailer inventory rebalancing, and competitive pressure in China[22](index=22&type=chunk)[24](index=24&type=chunk) - Cost reduction measures remain in place, including suspension of non-critical projects, reduced personnel costs, and optimized marketing and inventory purchases[21](index=21&type=chunk) [Financial Statements and Reconciliations](index=10&type=section&id=Financial%20Statements%20and%20Reconciliations) This section provides detailed unaudited financial statements for Q1 FY2026, including income, balance sheet, cash flow, and GAAP to non-GAAP reconciliations [Condensed Consolidated Statements of Income](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20(5)) The company reported a net loss of $450.7 million for the quarter, primarily due to a $414.4 million asset impairment charge Condensed Consolidated Statements of Income (in thousands) | (in thousands) | Three Months Ended May 31, 2025 | Three Months Ended May 31, 2024 | | :--- | :--- | :--- | | **Sales revenue, net** | $371,655 | $416,847 | | **Gross profit** | $175,011 | $203,079 | | **Asset impairment charges** | $414,385 | $— | | **Operating (loss) income** | $(407,038) | $30,763 | | **Net (loss) income** | $(450,718) | $6,204 | | **Diluted (loss) earnings per share** | $(19.65) | $0.26 | [Reconciliation of GAAP to Non-GAAP Operating Income](index=11&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures%20%E2%80%93%20GAAP%20Operating%20(Loss)%20Income%20and%20Operating%20Margin%20to%20Adjusted%20Operating%20Income%20and%20Adjusted%20Operating%20Margin%20(Non-GAAP)%20(1)) This section reconciles GAAP operating loss to adjusted operating income, showing a Q1 FY2026 adjusted operating income of $16.1 million after key adjustments Reconciliation of Operating Income (in thousands) | (in thousands) | Q1 FY2026 | | :--- | :--- | | **Operating loss, as reported (GAAP)** | $(407,038) | | Asset impairment charges | $414,385 | | CEO succession costs | $3,484 | | Amortization of intangible assets | $4,989 | | Non-cash share-based compensation | $296 | | **Adjusted operating income (non-GAAP)** | **$16,116** | [Reconciliation of GAAP Net Income to Adjusted EBITDA](index=12&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures%20%E2%80%93%20GAAP%20Net%20(Loss)%20Income%20to%20EBITDA%20(Earnings%20(Loss)%20Before%20Interest,%20Taxes,%20Depreciation%20and%20Amortization),%20Adjusted%20EBITDA%20and%20Adjusted%20EBITDA%20Margin%20(Non-GAAP)%20(1)) Adjusted EBITDA for the quarter was $25.5 million, reconciled from a GAAP net loss of $450.7 million by adjusting for interest, taxes, D&A, and impairment charges Reconciliation of Net Income to Adjusted EBITDA (in thousands) | (in thousands) | Q1 FY2026 | | :--- | :--- | | **Net (loss) income, as reported (GAAP)** | $(450,718) | | Interest expense | $13,808 | | Income tax expense | $30,180 | | Depreciation and amortization | $14,084 | | **EBITDA (non-GAAP)** | **$(392,646)** | | Asset impairment charges | $414,385 | | CEO succession costs | $3,484 | | **Adjusted EBITDA (non-GAAP)** | **$25,519** | [Reconciliation of GAAP to Non-GAAP Net Income and EPS](index=13&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures%20%E2%80%93%20GAAP%20(Loss)%20Income%20and%20Diluted%20(Loss)%20Earnings%20Per%20Share%20to%20Adjusted%20Income%20and%20Adjusted%20Diluted%20Earnings%20Per%20Share%20(Non-GAAP)%20(1)) GAAP net loss of $450.7 million, or $(19.65) per share, was reconciled to an adjusted net income of $9.5 million, or $0.41 per share Reconciliation of Net Income and EPS (in thousands, except per share) | (in thousands, except per share) | Net of Tax | Per Share | | :--- | :--- | :--- | | **As reported (GAAP)** | $(450,718) | $(19.65) | | Asset impairment charges | $436,154 | $18.99 | | CEO succession costs | $3,331 | $0.15 | | Intangible asset reorganization | $16,474 | $0.72 | | Amortization of intangible assets | $4,107 | $0.18 | | **Adjusted (non-GAAP)** | **$9,487** | **$0.41** |

Core Viewpoint - Analysts expect Helen of Troy (HELE) to report quarterly earnings of $0.91 per share, reflecting an 8.1% year-over-year decline, with revenues projected at $399.33 million, down 4.2% from the previous year [1]. Earnings Estimates - Revisions to earnings estimates are crucial indicators for predicting investor actions regarding the stock, with empirical research showing a strong correlation between earnings estimate trends and short-term stock performance [2]. - The consensus EPS estimate for the quarter has remained unchanged over the last 30 days, indicating analysts' reassessment of their initial estimates [1]. Key Metrics - Analysts predict 'Net sales- Beauty & Wellness' will reach $220.42 million, indicating a year-over-year increase of 0.9% [4]. - 'Net sales- Home & Outdoor' is expected to be $178.91 million, suggesting a decline of 9.9% year over year [4]. - The consensus estimate for 'Adjusted operating income (non-GAAP)- Beauty & Wellness' is $20.55 million, down from $21.88 million in the same quarter last year [4]. - 'Adjusted operating income (non-GAAP)- Home & Outdoor' is projected at $22.84 million, compared to $21.07 million reported in the same quarter last year [5]. Stock Performance - Shares of Helen of Troy have returned +16.9% over the past month, outperforming the Zacks S&P 500 composite's +5.2% change [5]. - Despite recent performance, HELE holds a Zacks Rank 5 (Strong Sell), indicating expectations of underperformance relative to the overall market in the near future [5].

Core Insights - Helen of Troy Limited (HELE) is expected to report a decline in both revenue and earnings for the first quarter of fiscal 2026, with revenues estimated at $399.3 million, reflecting a 4.2% decrease from the previous year [1][2] - The earnings per share (EPS) estimate remains unchanged at 91 cents, indicating an 8.1% decline compared to the same quarter last year [2] Economic Environment - The company is facing a challenging macroeconomic environment characterized by softening consumer demand, tighter retailer inventory levels, and persistent inflationary pressures [2][3] - Financially strained consumers are prioritizing essential items, leading to a decline in discretionary spending [2] Company Performance Challenges - Helen of Troy is experiencing rising selling, general and administrative (SG&A) expenses due to increased marketing investments [3] - The company anticipates a weaker-than-usual first quarter due to multiple headwinds, including conservative retailer ordering patterns and paused direct import shipments from China due to elevated tariff levels [4] - International revenues are expected to decline, particularly due to weaker sales in China amid ongoing trade tensions [4] Earnings Outlook - The current model does not predict an earnings beat for Helen of Troy, as it holds a Zacks Rank of 5 (Strong Sell) and an Earnings ESP of 0.00% [5]

Core Insights - Helen of Troy Limited (HELE) is experiencing a management shake-up and is facing challenges due to tariffs, with expected earnings decline of 15.6% in fiscal 2026 [1][7] Financial Performance - In the fourth quarter of fiscal 2025, Helen of Troy reported earnings of $2.33, missing the Zacks Consensus by a penny, which was $2.34 [2] - Sales for the same quarter fell by 0.7% year-over-year [2] Management Changes - The CEO, Noel Geoffroy, resigned on May 2, 2025, following the earnings report, and Brian Grass, the CFO, was appointed as interim CEO [8] Tariff Impact and Mitigation Strategies - Helen of Troy has significant exposure to tariffs and did not provide guidance for fiscal 2026, indicating a grim outlook [3][4] - The company aims to reduce its cost of goods sold exposed to China tariffs to less than 20% by the end of fiscal 2026 [5] - To mitigate tariff risks, the company is diversifying production outside of China and considering price increases to customers [4][5] Analyst Reactions - Analysts have cut fiscal 2026 earnings estimates, with the Zacks Consensus dropping from $7.76 to $6.05, reflecting a 15.6% decline from the previous fiscal year earnings of $7.17 [7] Stock Performance - Shares of Helen of Troy have decreased by 58.9% year-to-date and are trading at new 5-year lows [9] - The company has a forward price-to-earnings (P/E) ratio of 4.2, which raises concerns given the recent earnings estimate cuts [11]

Core Viewpoint - Helen of Troy's shares dropped 10.4% following the abrupt resignation of CEO Noel Geoffroy, raising concerns about underlying issues within the company [1][2][3] Company Leadership Changes - CEO Noel Geoffroy stepped down "effective immediately" after only one year in the role, which suggests a sudden decision that may indicate deeper problems [3] - CFO Brian Grass has been appointed as interim CEO while the board searches for a permanent successor, but this has not alleviated investor concerns [4] Financial Performance - Helen of Troy's stock has declined 58% year-to-date, despite slightly beating revenue expectations last quarter [5] - The company's adjusted (non-GAAP) EPS fell short of estimates, and overall revenue decreased by 0.7%, with organic revenue declining by 4.9% [5] - The acquisition of Olive & June increased the company's debt by $235 million, adding financial pressure in a potential recession [5] Market Conditions and Risks - The decline in stock price is largely attributed to the uncertainty surrounding tariffs, as the company manufactures products in China, Vietnam, and Mexico [8] - Investors are apprehensive due to the sudden CEO resignation and lack of a prepared successor, which contributes to the perception of risk despite a low valuation based on expected earnings [9]

Core Insights - Helen of Troy Limited (HELE) experienced a 12% decline in share price after reporting disappointing fourth-quarter fiscal 2025 results, with both top and bottom lines decreasing year over year and earnings missing the Zacks Consensus Estimate [1] Financial Performance - Adjusted earnings per share were $2.33, missing the Zacks Consensus Estimate of $2.34, and down 4.9% from $2.45 in the previous year, attributed to lower adjusted operating income and higher interest expenses [4] - Net sales reached $485.9 million, exceeding the Zacks Consensus Estimate of $480 million, but down 0.7% from $489.2 million year-over-year, primarily due to a 4.9% decline in Organic business sales [4] - The consolidated gross profit margin contracted by 40 basis points to 48.6%, influenced by a less favorable product mix and customer mix, partially offset by lower inventory obsolescence and reduced commodity costs [5] - The adjusted operating income fell 9.9% to $75 million, with the adjusted operating margin decreasing by 160 basis points to 15.4% [7] Segment Performance - In the Home & Outdoor segment, net sales declined 1.6% to $219.8 million, mainly due to decreased sales in insulated beverageware amid competitive pressure and weaker consumer demand [8] - The Beauty & Wellness segment saw a slight increase in net sales by 0.1% to $266.1 million, driven by the acquisition of Olive & June, although Organic business sales dropped by 8% [10] Strategic Outlook - The company is not providing a fiscal 2026 outlook due to global tariff policy changes and associated uncertainties, but is focusing on diversifying production outside of China to reduce tariff-related costs to under 20% by the end of fiscal 2026 [2] - Efforts are being made to preserve margins, reduce debt, and strengthen cash flow to navigate the dynamic environment [3] Financial Position - As of the end of fiscal 2025, the company had cash and cash equivalents of $18.9 million and total debt of $916.9 million, with net cash provided by operating activities at $113.2 million and free cash flow at $83.1 million [12]

Financial Data and Key Metrics Changes - Consolidated net sales decreased by 0.7%, which was at the higher end of the range implied in the full-year outlook despite an unfavorable foreign currency impact of 0.5% [61] - Consolidated gross profit margin decreased by 40 basis points to 48.6% primarily due to a less favorable product mix and customer mix [62] - GAAP operating margin for the quarter was 0.4% compared to 13.5% in the same period last year, primarily due to non-cash asset impairment charges of $51.5 million [63] - Non-GAAP adjusted EPS was $2.33, down from $2.45 in the same period last year, primarily due to lower adjusted operating income and higher interest expense [69] Business Line Data and Key Metrics Changes - Total sales in the Beauty & Wellness segment increased by 0.1%, driven by contributions from Olive & June, Honeywell, Vicks, and Braun [61] - Home & Outdoor saw an organic business decline of 1.2%, driven by Hydro Flask, partially offset by growth in Osprey and OXO [62] - Adjusted operating margin for Beauty & Wellness declined by 220 basis points to 13.4%, primarily due to incremental growth investments and a less favorable product mix [67] Market Data and Key Metrics Changes - International net sales grew by 5.3%, reflecting expanded distribution and greater collaboration between brand and sales teams [25] - The US weighted distribution increased by approximately 12% year-over-year, making brands more available to shoppers [25] - The competitive environment intensified, with retailers closely managing their inventory [21] Company Strategy and Development Direction - The company is focusing on diversifying its supply chain outside of China and has paused certain purchases from China to manage short-term demand [14][15] - The company aims to leverage its brands that resonate well during economic downturns, offering value to consumers [18] - Strategic choices include growing brands through consumer obsession, leveraging scale, and opportunistic M&A [50] Management's Comments on Operating Environment and Future Outlook - The management acknowledged significant uncertainty and disruption due to global trade policy changes, impacting consumer behavior [11] - The company is not providing fiscal '26 guidance due to the volatile environment and is assessing the incremental tariff impact [53] - Management expressed confidence in navigating the current environment, drawing on past experiences during the pandemic [54] Other Important Information - The company reported the largest year of Project Pegasus savings, contributing to a 60 basis point increase in gross margin [24] - The acquisition of Olive & June is expected to perform well in a cost-conscious environment [84] - The company ended the fourth quarter with total debt of $917 million, reflecting the acquisition of Olive & June [69] Q&A Session Summary Question: Can you talk about the diversification of your manufacturing base? - Management indicated a blend of existing and new suppliers for diversification efforts, with a larger percentage being existing suppliers [88][90] Question: What is the potential cost increase of new manufacturing locations? - Management stated that they are seeing the ability to be cost-neutral irrespective of tariffs, with additional costs mainly from the transition process [93] Question: What are the expected tariff impacts for the year? - Management estimated over $200 million of impact to fiscal year '26 based on current tariff rates [105] Question: Do you expect positive free cash flow for the full year? - Management confirmed that they expect positive free cash flow for the full year [107] Question: What are the expectations for Q1 sales dynamics? - Management anticipates softness in Q1 due to various factors, including retailer adjustments and direct import impacts [110]

Core Insights - Helen of Troy (HELE) reported revenue of $485.89 million for the quarter ended February 2025, reflecting a year-over-year decline of 0.7% and an EPS of $2.33 compared to $2.45 a year ago [1] - The reported revenue exceeded the Zacks Consensus Estimate of $480.25 million by 1.17%, while the EPS fell short of the consensus estimate of $2.34 by 0.43% [1] Financial Performance - Net sales in the Beauty & Wellness segment reached $266.07 million, surpassing the average estimate of $251.19 million by three analysts, marking a year-over-year increase of 0.1% [4] - Net sales in the Home & Outdoor segment totaled $219.82 million, below the average estimate of $229.09 million, representing a year-over-year decline of 1.6% [4] - Adjusted operating income (non-GAAP) for Beauty & Wellness was $35.77 million, slightly below the two-analyst average estimate of $37.58 million [4] - Adjusted operating income (non-GAAP) for Home & Outdoor was $39.27 million, exceeding the two-analyst average estimate of $38.42 million [4] Stock Performance - Shares of Helen of Troy have declined by 33.7% over the past month, in contrast to the Zacks S&P 500 composite's decline of 5.1% [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Helen of Troy (HELE) Q4 2025 Earnings Call April 24, 2025 09:00 AM ET Company Participants Sabrina McKee - Senior Vice President of Business Development and Investor RelationsNoel Geoffroy - CEOBrian Grass - Chief Financial OfficerBob Labick - President Conference Call Participants Rupesh Parikh - Senior Equity Research AnalystSusan Anderson - Managing Director & Senior AnalystPeter Grom - Equity Research Analyst Operator and welcome to the Helen of Troy Fourth Quarter Fiscal twenty twenty five Earnings Con ...