At its Investor Day on Tuesday, Helen of Troy, the parent of Hydro Flask and Osprey, outlined an “Elevate for Growth” platform designed to annually expand sales between 3 percent and 4 percent and EPS by 10 percent or greater over the next six years. Noel Gregory, incoming CEO, cited four “Wear to Play” and seven “How to Win” priorities guiding the platform.
The six-year plan also calls for annually expanding adjusted EBITDA by 30-to-40 basis points. Helen of Troy’s brand also includes OXO in the Home & Outdoor segment and Drybar, Vicks, Braun, Honeywell, PUR, and Hot Tools in its Beauty & Wellness segment.
“We’re now entering a new era designed to create significant value that builds on the foundation established during the transformation era and also leverages new ideas and capabilities,” said Gregory, Helen of Troy’s current COO who replaces the retiring Julien Mininberg as CEO in April 2024. “These strategies are designed to help focus more on the most attractive opportunities, take our brand building and our retail partnerships to the next level, and fully leverage the scale and capability of an empowered but leveraged operating company.”
The four “Wear to Play” drivers are:
- Shape and invest in a growth portfolio
- Win with winning customers
- Strategically grow international
- Continue better together M&A
The seven “How to Win” priorities are:
- Foster a winning culture
- Strategically extend our brands
- Embrace next-level data and analytics
- Fully leverage operational scale and assets
- Be and win where the shopper shops
- Strengthen end-to-end M&A capabilities
- Be consumer-obsessed
Addressing each focus, Gregory said, “Shape and invest in a growth portfolio” is about identifying brands within its existing portfolio that are “most financially attractive and have the greatest growth potential” and better-prioritizing resources to accelerate their growth. “Our approach is to disproportionately find those opportunities that we think are most attractive, leveraging the following four criteria for each brand:
- Are they a differentiated marketing leader;
- Is there growth potential in core and in adjacent categories;
- Do they have higher margins than the fleet average; and
- Are they asset efficient?”
As a result of recent analysis, Helen of Troy formed a brand portfolio classification made up of of three categories: “Invest to grow,” its likely fastest growers; “Stronghold,” or stable and growing brands and “Optimize,” brands that may be divested or repositioned.
Gregory said Helen of Troy is leveraging the cost savings and efficiencies gained from its Project Pegasus improvement plan with a brand portfolio classification to better focus on attractive opportunities. “This is a big moment for our brands, especially our ‘Invest to grow’ brands. We are looking to supercharge organic revenue growth in a way we haven’t been able to before leveraging the fuel from Project Pegasus. We will refresh the classification regularly as we make resource allocation decisions, taking into account the landscape market position and then the other changes that might impact a brand’s margins or potential. Importantly, we want to remain agile as needed. This classification and the incremental funding are an important difference in ‘Elevate for Growth’ that we believe will enable more accelerated growth,” said Gregory.
The second driver, “Win with winning customers,” takes full advantage of Helen of Troy’s organizational workstream that was reimagined through the Pegasus project. The realignment focused on joint business planning with its retail customers on shared priorities to benefit both Helen of Troy and its customers. Gregory said, “North America sales teams now see across the full company portfolio versus only a portion. This means they can identify opportunities to leverage our scale and elevate our partnership with key customers.”
Regarding the “Strategically grow international” “Where to Win” driver, Gregory noted that in the first half of Helen of Troy’s current fiscal year, 22.5 percent of total company revenue was from outside North America, up from 20 percent a year ago. International growth will continue to receive an over-sized focus. Said Gregory, “We have prioritized brand market combinations where we see high market attractiveness using criteria like size, growth, potential profitability and ease of use. We’ve also looked at a strong ability for us to win using criteria like currently competitive intensity, and strong internal or distributor relationships.”
Gregory also said Helen of Troy will look to acquisitions to drive international expansion. She pointed to the recent acquisition of Osprey, which generates about half of its sales in international markets. “It offered great additional scale in many markets and is opening up opportunities for us for Hydro Flask. Osprey’s performance internationally continues to be strong,” said Gregory of Osprey.
Finally, “Continue Better Together M&A” involves continuing to build on its success acquiring “attractive assets” and expanding their growth trajectory, including its acquisitions of Hydro Flask and Osprey. Gregory said Helen of Troy has found success with a “string of pearls” acquisition focus, which essentially means, buying out smaller companies and adding to the overall strength of the company. Gregory adds, “We will also look continue to look for opportunities that are ‘better together.’ What does this mean? It means better for both Helen of Troy and better for the acquired brand. Better for Helen of Troy means that the asset is accretive to our fleet average, has growth potential and complements our portfolio and capabilities. Better for the acquired brand means Helen of Troy can bring value and scale to enable more faster growth and efficiency.”
Addressing the seven “How to Win” underlying priorities, Gregory said, “Foster a winning culture” involves taking consumer centricity “to the next level to a true consumer obsession” and ensuring brand equities are “clear, distinctive and uninspiring.” She added it extends consumer obsession to traditionally non-consumer-facing functions as well. Gregory said, “We will do this by bringing the consumer into our company meetings, expecting everyone to do regular store visits among other activities so that they’re closer to our consumer on a day-to-day basis.”
“Strategically extend our brands” involves identifying attractive adjacencies for brands to tap new growth opportunities. Gregory said, “Many Helen of Troy brands have this kind of stretch potential.” She offered Osprey’s expansion into travel as an example. Gregory said, “We’re pushing deeper into the adjacent and attractive travel category, leveraging Osprey’s technical prowess in carry, fit, durability and use of sustainable materials – all points of difference that resonate with travel consumers. In doing so, we believe we can continue to drive strong incremental growth.”
The third “How to Win” priority, “Embrace next-level data and analytics,” focuses on tapping data to guide distribution choices and then execution. Gregory said, “Winning execution means great shelf presence, strong merchandising and display, and great in-store education to drive interest and trial.”
The fourth “How to Win” priority, “Fully leverage operational scale and assets,” aims at fully capitalizing on company assets, such as its new Tennessee distribution center or its improved organizational workstream realized through the Pegasus project. Gregory said, “We want to fully embrace and leverage our new operating model that enables our business units to 100-percent focus on delighting consumers with our brands and innovation; our regional market organizations to focus on unlocking new and bigger opportunities in our markets and with our retail partners; and finally, our centralized global shared services to bring scaled excellence to enable success in all that we do.”
“Be and win where the shopper shops” focuses on embracing data and analytics to enable enhanced productivity and visibility across the enterprise, including supporting the gathering and synthesis of consumer insights to drive marketing spend. Gregory said, “As a few examples, we’re investing in enhanced marketing-mix modeling capabilities to optimize the ROI of our marketing investment across the portfolio and within each brand’s strategic choices. We’re developing dashboards across sales and operations to put data at our associates’ fingertips. This will enable faster decision-making. We will also further leverage the first-party data we have from our opt-in consumers to ensure we are leveraging it for rich insights and lookalike targeting within our digital activation.”
The sixth “How to Win” priority, “Strengthen end-to-end M&A capabilities,” emphasizes becoming better at acquisitions and integrations. Gregory said, “We believe we have an opportunity to continuously improve across the process. For example, in the strategy phase, we plan to conduct data-driven analysis to scan and prioritize potential new attractive categories that meet our criteria. In doing so, we will continue to take a proactive approach to target identification, cultivating relationships with businesses will be a good fit.”
Finally, “Be consumer obsessed” focuses on the need to have “highly engaged people to be successful.” Mantras for employees include being outcome-focused, agile, focused on growth and eager to take action. Gregory said, “We want our associates to be empowered to move forward and drive outcomes. To further enable these behaviors, we’ll build additional training programs and invest in coaching resources to drive the change.”
Photo courtesy Helen of Troy/Osprey
