Helen of Troy(US:HELE)2023-10-04 16:12Financial Data and Key Metrics Changes - Consolidated net sales decreased by 5.7% compared to a growth of 9.7% in the same period last year, with a decline of 3.4% on a two-year stack [87] - Net income was $27.4 million, or $1.14 per diluted share, while non-GAAP adjusted diluted EPS decreased by 23.3% to $1.74 per share [40] - Gross profit margin improved by 420 basis points to 46.7% compared to 42.5% in the same period last year [66] - Adjusted operating margin declined by 120 basis points to 12.7% [39] Business Line Data and Key Metrics Changes - Home & Outdoor adjusted operating margin decreased by 180 basis points to 17.7% [88] - Beauty and Wellness segment net sales declined by 10.4%, primarily due to SKU rationalization and softness in humidification, heaters, and fans [33] - Osprey brand achieved strong growth fueled by accelerated travel demand and improved inventory position [32] Market Data and Key Metrics Changes - International sales growth was driven by Braun and Osprey, with strong performance in the UK and Germany [63] - The company expects a decline in net sales of approximately 4% to 2% in the third quarter, with growth concentrated in the fourth quarter [91] Company Strategy and Development Direction - The company is focused on executing the Pegasus restructuring initiatives to improve efficiency and effectiveness [57] - Plans to geographically consolidate the U.S. Beauty business to enhance collaboration and innovation [57] - The upcoming Investor Day on October 17th will outline the next strategic plan and long-term targets [36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to net sales and adjusted EPS growth in the fourth quarter despite a challenging macro environment [53] - The company anticipates cautious retail ordering patterns in the third quarter, with a more normalized ordering in the fourth quarter [41] - Management noted that consumer spending is shifting towards experiences rather than discretionary products due to inflation [52] Other Important Information - The company closed on the sale of its El Paso distribution facility for total proceeds of $51 million, with a gain of approximately $34 million expected to be recognized in the third quarter [89] - The company continues to expect capital asset expenditures of between $45 million and $50 million for fiscal 2024 [43] Q&A Session Summary Question: Can you elaborate on the change in Pegasus costs? - Management clarified that the reduction in restructuring charges is due to a revised assessment of a potential exit from one of the businesses, which is no longer expected to incur costs [96] Question: What progress has been made with the new North American RMO? - Management indicated that the new regional marketing organization has started to yield positive results, including increased shelf space and distribution gains [100] Question: How is the company addressing inventory destocking? - Management noted that inventory levels are generally low, and they expect Q4 ordering patterns to align more closely with the first half of the year [108]