Why Is Helen of Troy (HELE) Up 5.1% Since Last Earnings Report?

A month has gone by since the last earnings report for Helen of Troy (HELE). Shares have added about 5.1% in that time frame, outperforming the S&P 500.

But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Helen of Troy due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important drivers.

Helen of Troy Q1 Earnings Beat Estimates, Sales Outlook Raised

Helen of Troy Limited reported first-quarter fiscal 2027 results, wherein both top and bottom lines beat the Zacks Consensus Estimate. While net sales increased, earnings decreased from the year-ago period’s actuals. Management raised net sales guidance for fiscal 2027.

Helen of Troy posted adjusted earnings of 17 cents per share, beating the Zacks Consensus Estimate of 2 cents. However, the bottom line declined 58.5% from 41 cents reported in the year-ago period.

The company reported net sales of $402.1 million, which beat the Zacks Consensus Estimate of $375 million. The top line increased 8.2% from $371.7 million posted in the year-ago period, driven by growth across both business segments. Home & Outdoor benefited from strong international demand for packs, successful new product launches and a favorable comparison to the prior year due to tariff-related order timing. Beauty & Wellness growth was led by strong sales of nail care products, fans and thermometers.

The consolidated gross margin decreased 110 basis points to 46% in the quarter, primarily due to the net unfavorable impact of tariffs, higher inventory obsolescence costs compared with the prior year and a less favorable customer mix within Home & Outdoor. 

The consolidated SG&A ratio decreased to 31% from 45.1% posted in the year-ago period, reflecting a $54.9 million pre-tax gain from the sale of a distribution facility, lower outbound freight costs, reduced depreciation and amortization, favorable operating leverage and the absence of $3.5 million in CEO succession costs incurred in the prior-year period.

The adjusted operating income remained flat at $16.1 million, while the adjusted operating margin decreased 30 bps to 4%. The margin compression was primarily caused by tariff-related cost pressures, a less favorable inventory obsolescence impact year over year and an unfavorable customer mix within Home & Outdoor, partially offset by reduced outbound freight costs and favorable operating leverage.

HELE’s Segmental Performance

Net sales in the Home & Outdoor segment increased 9.5% to $194.9 million, driven by strong international demand for technical, lifestyle and travel packs, new product launches, expanded distribution in the home and insulated beverageware categories, and a favorable comparison to the prior year due to tariff-related order timing. These gains were partially offset by lower international sales in the home and insulated beverageware categories.

Home & Outdoor adjusted operating income increased 39.2% to $12.3 million, while the segment adjusted operating margin increased 130 bps to 6.3%.

Net sales in the Beauty & Wellness segment gained 7% to $207.2 million, driven by growth in nail care from new and expanded distribution, higher fan and thermometer sales benefiting from an easier comparison against prior-year tariff-related direct import cancellations and disruptions in the China thermometry market, and incremental sales from new Wellness product launches.

Beauty & Wellness adjusted operating income declined 48.2% to $3.8 million, while the segment adjusted operating margin decreased 190 bps to 1.8%.

HELE’s Financial Position

Helen of Troy ended the quarter with cash and cash equivalents of $21.7 million and total short and long-term debt of $716.1 million. Net cash used by operating activities for the fiscal first quarter was $0.6 million. The free cash flow for the same period was negative $6.4 million.

HELE’s Outlook

For fiscal 2027, the company raised its net sales guidance to $1.759-$1.831 billion, from the previous range of $1.751-$1.822 billion. The updated outlook includes Home & Outdoor sales of $859-$884 million (previously $854-$882 million) and Beauty & Wellness sales of $900-$947 million (previously $897-$940 million).

Adjusted earnings are still expected in the range of $3.25 to $3.75 per share, with adjusted EBITDA of $190 million to $197 million and free cash flow of $85 million to $100 million.

Management expects continued inflationary pressures, weak discretionary demand, cautious retailer inventory management and a highly promotional environment. The outlook assumes current tariff rates remain in place, includes $9.2 million in Phase 1 tariff refunds and excludes potential future refunds due to uncertainty. It also factors in higher product and freight costs, unfavorable Chinese yuan movements, and ongoing geopolitical and supply-chain risks that may increase input costs and disrupt supply.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

The consensus estimate has shifted 9.09% due to these changes.

VGM Scores

At this time, Helen of Troy has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock has a score of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, Helen of Troy has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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This article originally published on Zacks Investment Research (zacks.com).

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