What happened
Shares of Helen of Troy (HELE 1.47%) were soaring Thursday after the diversified consumer products company posted better results than expected for its fiscal 2023 fourth quarter.
As of 1:33 p.m. ET, the stock was up by 21%.
NASDAQ: HELE
Key Data Points
So what
Helen of Troy, which owns brands such as OXO, Hydro Flask, Vicks, Braun, and PUR, actually posted a decline in sales as many of its products are health-oriented, and it was lapping the peak of the COVID-19 omicron-variant surge. Core net sales fell by 16.2% year over year, and overall revenue was down 16.7% to $484.6 million, but that beat the consensus estimate of $457.7 million.
Even as sales fell sharply, the company increased its adjusted operating margin from 12.5% to 13.8%, a credit to the success of its global restructuring plan, Project Pegasus.
However, that wasn't enough to fully compensate for the decline in revenue. Adjusted earnings per share fell by 20% to $2.01 as the company's interest expenses rose. Still, the EPS result beat analysts' consensus estimate of $1.88.
"I am pleased to report that our fourth quarter financial performance, including our sales and adjusted EPS, was better than expected in what has been one of the most unpredictable and challenging years in memory," CEO Julien Mininberg said.
The company also announced that Mininberg will retire next February and be replaced by Chief Operating Officer Noel Geoffroy.
Now what
Looking ahead to its fiscal 2024, the company expects revenue in the $1.97 billion to $2.01 billion range, which would amount to a decline of between 2.8% and 5.2%. This outlook factors in an expected 1.7% decline in revenue from the loss of Bed, Bath & Beyond as a customer, and a SKU rationalization that is part of its restructuring plan. That range was slightly worse than the consensus estimate of $2.03 billion.
On the bottom line, the company guided for adjusted EPS of $8.50 to $9, down by 5% to 10% from the prior year, but better than the consensus estimate of $8.46.
The company expects to face continued macroeconomic challenges, but given that the stock is trading at a price-to-earnings ratio of 11, there could be more upside if Project Pegasus pays off.
