Helen of Troy Q2 Earnings Beat Estimates, Sales Decline 9% Y/Y

Core Insights - Helen of Troy Limited (HELE) experienced a significant 25% drop in share price after reporting second-quarter fiscal 2026 results, with revenues and earnings declining year over year but surpassing Zacks Consensus Estimate [1][9] Financial Performance - Adjusted earnings per share (EPS) for HELE were 59 cents, beating the Zacks Consensus Estimate of 54 cents, but reflecting a 51.2% decline from $1.21 in the previous year due to lower adjusted operating income and higher interest expenses [3][9] - Net sales totaled $431.8 million, exceeding the Zacks Consensus Estimate of $419 million, but down 8.9% from $474.2 million in the prior year, primarily due to a 16% decrease in the Organic business [4][9] - The consolidated gross profit margin contracted by 140 basis points to 44.2%, impacted by higher tariffs and increased retail trade spending, partially offset by lower commodity costs and the Olive & June acquisition [5][9] - The adjusted operating income fell 41.9% to $26.9 million, with the adjusted operating margin decreasing by 360 basis points to 6.2% [7][9] Segment Performance - Home & Outdoor segment net sales decreased 13.7% to $208.7 million, driven by lower replenishment orders and heightened competition [8][10] - Beauty & Wellness segment sales fell 4% to $223.1 million, with an 18.2% drop in Organic business sales due to weaker demand and increased competition [11][9] Financial Position - As of the end of the second quarter, HELE had cash and cash equivalents of $22.4 million and total debt of $893.2 million, with net cash provided by operating activities at $47.9 million for the first half of fiscal 2026 [12][9] Outlook - For fiscal 2026, HELE expects consolidated net sales between $1.739 billion and $1.780 billion, indicating a decline of 8.8-6.7% from the previous year [13][14] - The company anticipates third-quarter net sales between $491 million and $512 million, suggesting a decline of 7.5-3.5% year over year, with segment expectations reflecting similar trends [17][18] - Management projects a GAAP loss per share between $29.40 and $29.90, with an adjusted EPS of $3.75-$4.25, indicating a year-over-year decline of 47.7-40.7% [15][16]