Helen of Troy Q3 Earnings Call Highlights

Core Insights - The company is focusing on four key priorities: re-energizing brands and people, consumer-centric structural adaptation, strengthening the portfolio for predictable growth, and improving asset efficiency while maintaining shareholder-friendly policies. Fiscal 2027 is seen as a significant step towards the long-term strategy, with an outlook expected in April and a growth strategy planned for the second half of 2026 [1][3]. Financial Performance - In the third quarter of fiscal 2026, the company reported a 3.4% decline in consolidated net sales, with organic sales down 10.8%. Approximately $17.3 million of this decline was attributed to tariff-related disruptions and stop-shipments [5][6]. - Adjusted EPS for the quarter was $1.71, with management lowering the full-year adjusted EPS guidance to a range of $3.25 to $3.75 due to less than full pricing realization and increased costs [10][17]. - Gross margin decreased by 200 basis points to 46.9%, primarily due to higher tariffs and inventory obsolescence impacts, while adjusted operating margin fell to 12.9% [10][11]. Segment Performance - The Home and Outdoor segment saw a 6.7% decline in net sales, while the Beauty and Wellness segment experienced a 0.5% decrease, with organic sales down 13.9% [7][8]. - Specific brands like Osprey, OXO, and Olive & June showed growth, with Olive & June contributing nearly $38 million in sales, exceeding internal expectations [9]. Strategic Initiatives - The company is shifting to a growth-first strategy, focusing on brand re-energization, consumer-centric innovation, and supplier diversification to mitigate tariff impacts. It aims to reduce China-tariff exposure on COGS to 25-30% by the end of fiscal 2026 [4][15]. - Management is evaluating its brand portfolio as part of a strategic review, with a focus on tightening inventory and improving balance sheet productivity [19]. Tariff Impact - Year-to-date unmitigated tariffs have reduced gross profit by $31.3 million, with a full-year impact expected to be between $50 million and $55 million. The company anticipates a less than $30 million impact on operating income for the full year [15][17]. - Management has made progress in tariff mitigation through supplier diversification and cost reductions, but pricing realization remains below expectations due to market dynamics [14].