Helen of Troy(US:HELE)2019-10-08 20:26Financial Data and Key Metrics Changes - The company reported consolidated sales revenue of $414 million, a 5.2% increase over the prior year, driven by a core business increase of 5.7% [39][50] - Adjusted diluted EPS increased by 13.1% to $2.24 per share, compared to $1.98 per share in the same period last year [50][49] - Consolidated gross profit margin improved to 43% from 39.4%, primarily due to a higher mix of Housewares revenue and tariff exclusion refunds [43][50] Business Line Data and Key Metrics Changes - Housewares segment net sales increased by over 22%, benefiting from strong demand for OXO and Hydro Flask brands [19][40] - Health & Home segment experienced a 9.1% decline in core business net sales, attributed to tough comparisons from the previous year and lower seasonal demand [22][41] - Beauty segment core business net sales grew by 9.3%, driven by growth in the appliance category, particularly online and internationally [24][42] Market Data and Key Metrics Changes - Online sales represented approximately 24% of total sales in the quarter, with a year-over-year increase of about 25% [13][39] - The company noted strong international sales growth, particularly in the EMEA and Asia Pacific regions [16][19] Company Strategy and Development Direction - The company is focused on executing Phase II of its Transformation Plan, which includes eight core strategic priorities aimed at international growth and shared service excellence [16][28] - New senior leadership roles have been created to support international expansion and IT improvements, indicating a commitment to enhancing operational capabilities [16][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate challenges such as tariffs, currency volatility, and rising logistics costs while maintaining a strong balance sheet [27][28] - The outlook for fiscal 2020 has been raised, with consolidated net sales expected to be in the range of $1.61 billion to $1.64 billion, reflecting a growth of 2.9% to 4.8% [55][57] Other Important Information - The company plans to reinvest the majority of tariff exclusion refunds into its brands and retail partners, indicating a strategy focused on long-term growth rather than short-term gains [64][79] - The effective tax rate for the quarter was 10.3%, an increase from 8.3% in the previous year, primarily due to shifts in taxable income [49] Q&A Session Summary Question: Can you provide more information on the tariff exclusion refund? - Management indicated that the refunds are based on successful exclusion applications and are expected to be reinvested for brand benefits, making the impact on the bottom line minimal [63][64] Question: How much of the growth is attributed to price versus volume? - Management acknowledged a price impact, particularly in the Health & Home segment, but emphasized that demand impact is difficult to quantify [66][67] Question: What drove the revenue expectation increase in Housewares? - The increase was attributed to successful distribution wins, particularly with Hydro Flask, and strong direct-to-consumer sales [69][70] Question: Can you elaborate on the Health & Home segment's performance? - Management noted that the segment faced tough comparisons and distribution changes but expects a return to growth in the second half of the fiscal year due to new products and international expansion [92][96] Question: Is there any demand impact observed in discretionary product lines? - Management indicated that while there are alternatives, the strong brand reputation and product differentiation have maintained demand levels [99][100]