Dive Brief:
- Helen of Troy's Q1 earnings report revealed a 6.6% plunge in net revenue to $474.7 million, as stated in a recent press release.
- The corporation, which owns brands like Hydro Flask, Drybar, and Osprey, reported an improvement in gross margin from 41.6% to 45.4%. Meanwhile, net income dipped by 8.2% to $22.6 million, while operating income climbed from $33.9 million to $40.6 million.
- In response to their global restructuring plan, Helen of Troy reorganized its structure into two business segments: beauty and wellness, and home and outdoor. The beauty and wellness segment posted a 5.9% drop in sales to $257.5 million, while the home and outdoor segment suffered a 7.3% sales decline to $217.1 million. Both segments faced some consequences from Bed Bath & Beyond's bankruptcy.
Dive Insight:
Hydro Flask surpasses Q1 projections, despite a drop in sales revenue.
Despite the sales and net income slump, Helen of Troy's Q1 results exceeded predictions that anticipated net sales to decrease between 7% and 9%.
CEO Julien Mininberg expressed satisfaction in a statement, stating, "I'm stoked we beat the expectations, even with the continued pressure from decreased consumer demand and changing shopping habits." He noted that retail partners have improved inventory levels, now better aligning orders with consumer demands following a year of disruptions.
Within its home and outdoor segment, Helen of Troy observed a drop in insulated beverage sales and an increase in online channel sales for outdoor travel items. COO Noel Geoffroy revealed on a call with analysts that the Hydro Flask brand has seen a shift in consumer interest from bottles to tumblers, with promising early sales results for their new travel tumbler launched in June.
The beauty and wellness sector experienced lower sales for hair appliances, air purification, and humidification devices, partially due to changes in consumer spending habits and reduced orders from retail partners. Sales in prestige hair products and thermometry partially offset this decline.
Helen of Troy's latest earnings follow the news in April that Mininberg will step down as CEO in February 2024, with Geoffroy taking on the role on March 1.
As a part of Project Pegasus, the company announced in January that it would slash its global workforce, with around 10% cuts expected, primarily completed by March, and the remaining reductions planned for end-Q1 24.
Mininberg claimed that "Pegasus remains on course, and its structural changes are functioning across our Regional Market Organizations, Business Segments, and Shared Services." He expressed satisfaction with the organization's execution of Pegasus as well as other initiatives designed to boost performance both short-term and long-term.
The AI-driven restructuring plan, Project Pegasus, is expected to lead to a 10% reduction in Helen of Troy's global workforce. With the new CEO, Noel Geoffroy, set to take over in March 2024, he has highlighted a positive shift in consumer interest towards travel tumblers in the Hydro Flask brand, a part of the home and outdoor business segment. This change aligns with the rising trend of online channel sales for outdoor travel items. Despite the sales and net income slump, the Q1 results of Helen of Troy exceeded predictions in finance, which anticipated a net sales decrease between 7% and 9%.
