HELE Q3 Earnings Meet Estimates, Home & Outdoor Sales Decline Y/Y

Helen of Troy Limited (HELE) reported mixed third-quarter fiscal 2026 results, with the top line beating the Zacks Consensus Estimate and the bottom line matching the same. Both net sales and earnings experienced year-over-year declines.

The company saw growth across select core brands, including OXO, Osprey and Olive & June, alongside an expansion in organic direct-to-consumer sales. Management indicated a renewed focus on consumer-centric priorities, including product innovation, brand engagement and commercial discipline, which it believes should help stabilize operations and support longer-term growth.

Helen of Troy Limited Price, Consensus and EPS Surprise

Helen of Troy Limited price-consensus-eps-surprise-chart | Helen of Troy Limited Quote

HELE’s Quarterly Performance: Key Metrics & Insights

Helen of Troy posted adjusted earnings of $1.71 per share, which was in line with the Zacks Consensus Estimate. The bottom line declined 36% from $2.67 reported in the year-ago period due to lower adjusted operating income and elevated interest expense. These were partly offset by a reduction in adjusted income tax expense.

HELE reported net sales of $512.8 million, which beat the Zacks Consensus Estimate of $505 million. The top line decreased 3.4% from $530.7 million posted in the year-ago period. This decline was caused by a $57.1 million or 10.8% decrease in Organic business. The decline reflected weaker demand for insulated beverageware, hair appliances, prestige hair care products, thermometers, humidifiers and water filtration products. The decrease in Organic sales was partially offset by a $37.7 million or 7.1% contribution from the acquisition of Olive & June and strong demand for travel, technical and lifestyle packs within the Home & Outdoor segment.

International sales fell 8.1% to $119.6 million, due to evolving market dynamics in China.

The consolidated gross profit margin contracted 200 basis points (bps) to 46.9% compared with 48.9% in the prior year. The decrease was primarily caused by the adverse impact of higher tariffs and a less favorable year-over-year inventory obsolescence impact. These factors were partially offset by the positive impact of the Olive & June acquisition and lower commodity and product costs. We estimated a 47.2% gross margin.

The consolidated SG&A ratio increased 160 bps to 35.6% due to higher annual incentive compensation expense, increased outbound freight costs, the impact of the Olive & June acquisition and unfavorable operating leverage resulting from lower net sales.

The adjusted operating income declined 24.6% to $66.3 million, while the adjusted operating margin decreased 370 bps to 12.9%. We expected an adjusted operating margin of 13.2% for the quarter.

HELE’s Segmental Performance

Net sales in the Home & Outdoor segment declined 6.7% to $229.6 million, primarily due to competitive pressures, lower retailer replenishment amid softer demand and reduced club, online and closeout channel sales. These headwinds were partially offset by tariff-related price increases, strong demand for travel and lifestyle packs, solid holiday-driven brick-and-mortar sales and new insulated beverageware launches.

Net sales in the Beauty & Wellness segment fell 0.5% to $283.2 million due to a $39.7 million, or 13.9%, drop in Organic business sales. This was primarily due to softer consumer demand and heightened competition in the Beauty category, tariff-related disruptions in China and a weaker illness season. These declines were partially offset by a $37.7 million, or 13.2%, contribution from the acquisition of Olive & June.

HELE’s Financial Position

Helen of Troy ended the fiscal third quarter with cash and cash equivalents of $27.1 million and total short and long-term debt of $892.4 million. Net cash provided by operating activities for the first nine months of fiscal 2026 was $59.8 million. The free cash flow for the same period was $28.8 million.

HELE’s Outlook

The company now expects fiscal 2026 consolidated net sales revenues to be between $1.76 billion and $1.77 billion compared with its prior outlook of $1.74 billion to $1.78 billion.

By segment, Home & Outdoor net sales are projected to be between $812 million and $819 million, while Beauty & Wellness net sales are expected to range from $946 million to $954 million, including an incremental contribution of $106 million to $109 million from the Olive & June acquisition.

The sales outlook indicates the company’s expectation of continued softness in consumer spending, particularly in discretionary categories, along with heightened macroeconomic uncertainty, a more promotional retail environment and increasing consumer strain.

Management now anticipates fiscal 2026 GAAP loss per share of $35.57 to $36.07 and adjusted EPS to range from $3.25 to $3.75. Previously, the company expected fiscal 2026 GAAP loss per share to be in the range of $29.40 to $29.90 and adjusted EPS between $3.75 and $4.25.

Headwinds include pressures from a more promotional retail environment and continued consumer trade-down behavior, and lower gross margin caused by higher tariffs, weaker-than-expected retail price realization and an unfavorable product mix resulting from selective pricing actions. The outlook also incorporates the company’s decision to preserve key growth investments to support its workforce, future revenue expansion and new product development, along with higher year-over-year incentive compensation expense and the impact of unfavorable operating leverage stemming from lower revenues.

This Zacks Rank #3 (Hold) company has lost 0.7% in the past three months compared with the industry’s decline of 1.9%.

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