After a tough first quarter, Helen of Troy announced second-quarter financial guidance but skipped a full-year outlook due to uncertainty about tariffs and the economy.
Helen of Troy also detailed initiatives to lessen the impact of tariffs on the business.
Net loss was $450.7 million, or $19.65 per diluted share, versus net income of $6.2 million, or 26 cents per diluted share, in the year-earlier quarter, the company reported. Adjusted income was $9.5 million, or 41 cents per diluted share, versus $23.3 million, or 99 cents per diluted share, in the year-prior period.
A Yahoo Finance-published analyst consensus estimate called for earnings per adjusted diluted share of 91 cents and sales of $397.06 million.
Consolidated net sales decreased to $371.7 million from $416.8 million in the year-previous quarter, driven by a decrease from organic business of $71 million, Helen of Troy noted. The organic business decrease reflected a decline in Beauty & Wellness, primarily driven by lower sales of thermometers, fans and hair appliances, and a decline in Home & Outdoor, primarily resulting from a decrease in home and insulated beverage ware sales. Helen of Troy noted that the organic business decline was partially offset by a contribution from the acquisition of Olive & June, valued at $26.8 million, and strong domestic demand for technical packs in the Home & Outdoor segment.
Operating loss was $407 million versus operating income of $30.8 million in the year-before period, while adjusted operating income was $16.1 million versus $43 million.
Home & Outdoor net sales were $178 million compared to $198.5 million in the year-past quarter, while operating loss was $213.8 million versus operating income of $15.9 million and adjusted operating income was $8.9 million versus $21.1 million.
Softer consumer demand in the home and insulated beverage categories, resulting in lower replenishment orders, drove the sales decrease, as did the cancellation of direct import orders in response to higher tariffs, and retailer pull-forward activity in the fourth quarter due to tariff uncertainty and potential supply disruption, resulting in higher retail inventory and lower replenishment. Lower closeout channel sales and a net decrease in distribution year-over-year also pressured sales.
Strong domestic demand for technical packs, along with the favorable comparative impact of shipping disruptions at the company’s Tennessee distribution facility due to automation startup issues during the same period last year, somewhat offset the factors driving down sales.
Beauty & Wellness net sales were $193.7 million compared to $218.4 million in the year-past quarter, while operating loss was $193.2 million versus operating income of $14.9 million and adjusted operating income was $7.3 million versus $21.9 million.
A decrease from organic business of $50.3 million, due to a decline in international thermometry because of evolving dynamics in the China market, including a shift away from cross-border e-commerce toward localized fulfillment models, heightened competition from domestic sellers benefiting from government subsidies, and a weaker illness season in Asia were main drivers of the overall sales decline as well as a decrease in fan sales primarily driven by reduced replenishment orders from retail customers due to a decline in consumer demand and the cancellation of direct import orders from China in response to higher tariffs, and a decline in sales of hair appliances and prestige hair care products primarily due to softer consumer demand, increased competition, and a net decrease in distribution year-over-year.
Favorable comparative impact of the shipping disruption from Curlsmith system integration challenges during the same period in the year past, and higher sales of heaters, as well as contribution from the Olive & June acquistion, partially offset the factors driving down sales.
Due to evolving global tariff policies and the related business and macroeconomic uncertainty, Helen of Troy announced that it would only provide a financial outlook for the second quarter of the current fiscal year. Through the combination of tariff mitigation actions and cost reduction measures, Helen of Troy stated, the company now believes it can reduce the net tariff impact on operating income to less than $15 million based on its assessment of duties currently in place. With that taken into consideration, Helen of Troy expects consolidated net sales revenue in the range of $408 million to $432 million, which implies a decline of 14% to 8.9% in the quarter year over year. The company expects GAAP diluted earnings per share to be in the range of 56 cents to 68 cents and non-GAAP adjusted diluted EPS in the range of 45 cents to 60 cents, which implies an adjusted diluted EPS decline of 62.8% to 50.4% year over year.
Due to its exposure to tariffs, Helen of Troy has initiated significant efforts to diversify its production outside of China, targeting regions where it expects duties or overall costs to be lower. Additionally, the company sources the same product in more than one region, to the extent possible and not cost-prohibitive. The company expects to reduce its cost of goods sold exposed to China tariffs to less than 25% by the end of fiscal 2026. Helen of Troy is also continuing to implement other mitigation actions, which include cost reductions from suppliers and price increases to customers on products subject to tariffs. In addition to the uncertainty from evolving global tariff policies, the company expects unfavorable cascading impacts on inflation, consumer confidence, employment and overall macroeconomic conditions, which are impossible to predict at this time and outside of the company’s control. The tariff mitigation measures come in addition to the actions Helen of Troy outlined as it released its fourth-quarter sales, aiming to reduce costs and preserve cash flow.
Even as it has resumed targeted growth investments, Helen of Troy asserted that the company remains disciplined in its approach, given ongoing tariff volatility and will continue policies including:
- Suspension of projects and capital expenditures that are not critical or in support of supplier diversification or dual sourcing initiatives.
- Keeping in place actions to reduce overall personnel costs.
- Resumption of optimized marketing, promotional and new product development investments focused on opportunities with the highest returns.
- Resumption of targeted inventory purchases from China in the short term, with a measured approach in expectation of softer consumer demand in the short to intermediate term.
- Actions to optimize working capital and balance sheet productivity.
