What happened

Shares of Helen of Troy (HELE 0.40%) were moving higher today after the diversified consumer products company posted better-than-expected results in its first-quarter earnings report even as sales continue to fall.

As of 10:51 a.m. ET, the stock was up 17.6%.

So what

Helen of Troy -- which owns brands like OXO, Hydro Flask, Vicks, Braun, and PUR -- said that revenue in the quarter fell 6.6% to $474.7 million, which topped analysts' estimate of $465.4 million. Organic sales -- which eliminate the impact of acquisitions, divestitures, and foreign currency -- were down 7.7%.

Sales fell in both its home and outdoor and beauty and wellness categories as consumer spending shifted back to services like travel and restaurants and away from at-home purchases. 

In addition to beating top-line estimates, the company also saw promising results from its restructuring plan, Project Pegasus, on the bottom line. Gross margin improved from 41.6% to 45.4% and its adjusted operating margin ticked up from 13.6% to 13.9%.

However, due to higher interest expense, adjusted earnings per share fell from $2.41 to $1.94, but that still beat the analyst consensus of $1.60.

CEO Julien Mininberg said, "I am pleased to report that first quarter financial performance exceeded our expectations despite continued pressure on certain categories from lower consumer demand and shifting buying patterns." He also noted that many of the company's top brands grew market share in the U.S. and that international sales outperformed.

Now what

Looking ahead, Helen of Troy reiterated its full-year outlook, calling for revenue of $1.965 billion-$2.015 billion, implying a decline of 2.8%-5.2%. The company is also being impacted by the Bed Bath & Beyond bankruptcy because it expects to lose $35 million in business from that retailer and it anticipates a similar decline from the rationalization of stock-keeping units (SKUs) stemming from the Pegasus initiative.

On the bottom line, it expects adjusted EPS of $8.50-$9.00, or a decline of 5%-10%, which compares to the consensus of $8.49. It also reaffirmed its EBITDA leverage reduction of 1.85x-2x, or debt/EBITDA, by the end of the year.

At a forward P/E of 15, Helen of Troy shares aren't dirt cheap, but investors seem to like the early results of the Pegasus initiative. If it can deliver solid growth on the bottom line, the stock could be a winner from here.