Helen of Troy(HELE)2023-04-27 20:48Financial Data and Key Metrics Changes - Consolidated net sales decreased by 16.7%, reflecting lower consumer demand and reduced orders from retail customers due to inventory reduction efforts [117] - Core net sales declined by 16.2% and core adjusted diluted EPS decreased by 19.9% in the fourth quarter [72] - GAAP consolidated operating margin for the quarter was 11.1%, compared to 8.7% in the same period last year, with adjusted operating margin expanding by 130 basis points to 13.8% [86] Business Line Data and Key Metrics Changes - Home & Outdoor total sales were up 0.5% in the quarter, driven by a full three months contribution from Osprey [72] - OXO continued to see point of sale (POS) at brick-and-mortar below peak prior year levels due to normalization of demand from COVID highs [73] - Prestige Beauty showed growth in Curlsmith and Drybar appliances and liquids during the quarter [76] Market Data and Key Metrics Changes - Despite overall category declines, Helen of Troy's US market shares remained strong in thermometers, inhalants, and humidifiers, holding the number one position among branded products in these categories [46] - Internationally, net sales growth was driven primarily by OXO and Osprey as replenishment orders progressed towards normalization [78] Company Strategy and Development Direction - The company is focused on leveraging the successes of its transformation and enhancing its diversified portfolio of brands [104] - Project Pegasus is expected to deliver significant savings and operational efficiency, with a focus on growth investments and better leveraging of scale [64][66] - The company plans to continue advancing its ESG priorities and initiatives, with key objectives under the first stage of its ESG roadmap completed [147] Management's Comments on Operating Environment and Future Outlook - Management anticipates continued softness in consumer spending patterns, particularly in discretionary categories, due to inflation and higher interest rates [125][190] - The company expects adjusted diluted EPS growth to be concentrated in the third and fourth quarters of fiscal 2024, benefiting from lower inbound freight and commodity costs [131] - Management expressed confidence in the company's ability to navigate challenges and emerge stronger, with a focus on operational earnings growth and margin expansion [168] Other Important Information - The company has significantly reduced its exposure to interest rate volatility by swapping $425 million of its outstanding variable rate debt to fixed rates [123] - The fiscal 2024 outlook includes expected revenue impacts from SKU rationalization and the removal of Bed Bath & Beyond revenue from projections [158] Q&A Session Summary Question: Can you provide insights on market share and category performance? - Management noted that while there has been softness in categories like volumizers, OXO has seen strong share results during the COVID period, with some normalization expected [178][179] Question: What are the expectations for sales growth in Home & Outdoor and Beauty & Wellness? - The company expects declines in Beauty & Wellness due to SKU rationalization and other factors, while Home & Outdoor may see slight growth [183][184] Question: How is the company addressing gross margin and product mix? - Management highlighted expectations for significant gross margin expansion driven by acquisitions and a focus on higher-margin businesses [188]