The stock market has seen steep declines to begin the month of October, but investors saw a glimmer of hope on Wednesday morning. Stock index futures bounced slightly, with key market benchmarks looking to climb as much as half a percent to reclaim some of their lost ground recently.
More broadly, though, market participants are looking closely at consumer stocks for signs of whether the easing of inflationary pressures is also helping to put more money into people's wallets. Unfortunately, the latest results from Cal-Maine Foods (CALM -2.13%) and Helen of Troy (HELE 0.40%) didn't make their shareholders happy, and some of it comes from the various crosswinds that inflation can cause.
These turbulent times could last through the end of the year and beyond. Here's the latest from both companies.
Cal-Maine leaves shareholders with egg on their faces
Shares of Cal-Maine Foods dropped sharply early Wednesday, falling 12% in the pre-market session. The egg producer reported fiscal first-quarter financial results for the period ended Sept. 2 that showed many of the difficulties of operating in a tough economy.
Cal-Maine's financial numbers reflected the huge drop in prices of eggs after an equally large spike in the year-earlier period. Revenue in the fiscal first quarter plunged 30% to $459 million. However, costs of sales didn't fall by nearly as much, and that almost eliminated the company's profits. The food stock ended up posting earnings of just $0.02 per share, down from $2.57 per share a year ago.
CEO Sherman Miller said that the weakness came as egg prices "returned to more normalized levels." Cal-Maine continued to see solid consumer demand, with sales volumes of conventional eggs exceeding year-earlier numbers. However, specialty eggs saw falling volumes.
Even with the financial pressure it's facing, Cal-Maine is looking to expand its operations aggressively. Between a major acquisition of Fassio Egg Farms in Utah and its own efforts to boost production organically, the company wants to take an even greater share of the egg market -- even if that market's prospects seem uncertain in the short run.
Helen of Troy still expects a solid year
Shares of Helen of Troy were also lower, falling 6% in pre-market trading. The consumer beauty and wellness company that also has a line of home and outdoor products posted somewhat weaker results in the fiscal 2024 second quarter that ended Aug. 31, and despite assurances that it remains on track with longer-term efforts to reinvigorate its business, shareholders seem skeptical.
Second-quarter results didn't hold up as well as some had hoped. Revenue of $492 million was down almost 6% year over year. Net income was down 11% from year-ago levels to $27.4 million, and adjusted earnings fell 23% to $1.74 per share.
The company pointed to several product lines in explaining the declines. In the beauty & wellness category, lower sales of heaters, fans, and humidifiers weighed on broader consumer demand. Retail customers cut their orders as they sought to manage inventory more effectively.
Meanwhile, on the home & outdoor side of the business, reduced sales of insulated-beverage products held back the segment, with stronger demand for travel-related products failing to offset those declines fully.
Helen of Troy still believes sales will fall about 3% to 5% for the full 2024 fiscal year, within a range of $1.965 billion to $2.015 billion. Adjusted earnings of $8.50 to $9 per share would represent a decline of 5% to 10% from fiscal 2023, but the stock's current valuation appears to price in that drop as long as Helen of Troy is able to move forward more successfully.
