Helen of Troy, Ltd. reported that its Home & Outdoor segment, which includes Hydro Flask, Osprey and Oxo, posted a small operating loss in the fiscal third quarter ended November 30, after $24.0 million in impairment charges. Sales declined 6.7 percent to $229.6 million, dragged down by a decline at Hydro Flask.

Helen of Troy also said it now expects to show a loss for the year due to the promotional climate, consumers trading and the impact of tariffs.

Helen of Troy said the decline in the Home & Outdoor segment was due to:

  • continued competition, lower replenishment orders from retail customers, partially due to retailer inventory rebalancing in response to softer demand trends, and a decrease in club channel sales in the insulated beverageware category;
  • a decrease in online channel sales in the home category; and
  • lower closeout channel sales.

These factors were partially offset by the benefit of tariff-related price increases, strong demand for travel, technical and lifestyle packs, and higher brick and mortar sales in the home category, primarily due to strong holiday season orders and incremental sales from new product launches in the insulated beverageware category.

Home & Outdoor’s operating loss was $0.1 million, or 0.0 percent of segment net sales revenue, compared to operating income of $40.3 million, or 16.4 percent of segment net sales revenue in the same period a year ago. The loss reflects $24.0 million of pre-tax asset impairment charges tied to a decline in Helen of Troy’s stock price. The remaining 590 basis point decrease in segment operating margin was primarily due to:

  • the net unfavorable impact of higher tariffs on gross profit;
  • higher retail trade and promotional expense;
  • less favorable inventory obsolescence impact year-over-year;
  • higher outbound freight costs;
  • an increase in annual incentive compensation expense year-over-year; and
  • the impact of unfavorable operating leverage.

These factors were partially offset by reduced marketing expense and lower commodity and product costs. Adjusted operating income decreased 39.7 percent to $27.3 million, or 11.9 percent of segment net sales revenue.

Consolidated Results
Third Quarter Fiscal 2026 Compared to Third Quarter Fiscal 2025

Companywide, consolidated net sales revenue decreased $17.9 million, or 3.4 percent, to $512.8 million, driven by a decrease from the Organic business of $57.1 million, or 10.8 percent. The Organic business decrease was primarily driven by a decline in insulated beverageware, hair appliances, prestige hair care products, thermometers, humidifiers, and water filtration. The Organic business decline was partially offset by the contribution from the acquisition of Olive & June, LLC of $37.7 million, or 7.1 percent, to consolidated net sales revenue and strong demand for travel, technical and lifestyle packs in Home & Outdoor. International sales declined $10.6 million, or 8.1 percent, to $119.6 million, driven by evolving dynamics in the China market.

Consolidated gross profit margin decreased 200 basis points to 46.9 percent, primarily due to the net unfavorable impact of higher tariffs and a less favorable inventory obsolescence impact year-over-year. These factors were partially offset by the favorable impact of the Olive & June acquisition and lower commodity and product costs.

Consolidated selling, general and administrative expense (SG&A) ratio increased 160 basis points to 35.6 percent, primarily due to the impact of the Olive & June acquisition, higher outbound freight costs, an increase in annual incentive compensation expense year-over-year and the impact of unfavorable operating leverage due to the decrease in net sales.

The company recognized non-cash asset impairment charges of $65.9 million ($72.1 million after tax) primarily due to the sustained decline in the company’s stock price, to reduce goodwill by $39.0 million and other intangible assets by $26.9 million, which impacted both the Beauty & Wellness and Home & Outdoor segments.

Consolidated operating loss was $8.4 million, or (1.6) percent of net sales revenue, compared to consolidated operating income of $75.1 million, or 14.2 percent of net sales revenue. The decrease in consolidated operating margin was primarily due to pre-tax non-cash asset impairment charges of $65.9 million, an increase in the SG&A ratio and a decrease in consolidated gross profit margin, primarily due to the net unfavorable impact of higher tariffs.

Interest expense was $15.9 million, compared to $12.2 million. The increase in interest expense was primarily due to higher average borrowings outstanding to fund the acquisition of Olive & June, as well as increased inventory and capital expenditures, both of which were impacted by higher tariffs.

Income tax expense was $60.0 million on a pre-tax loss of $24.0 million, compared to income tax expense of $13.5 million on pre-tax income of $63.2 million for the same period last year. The increase in tax expense relative to pre-tax income (loss) is primarily due to the tax effects of non-deductible impairment charges and valuation allowances on deferred tax assets recorded in the third quarter of fiscal 2026.

Net loss was $84.1 million, compared to net income of $49.6 million. Diluted loss per share was $3.65, compared to diluted earnings per share of $2.17. The decrease is primarily due to the recognition of an after-tax asset impairment charge of $72.1 million during the third quarter of fiscal 2026, higher income tax expense primarily from the recognition of a valuation allowance on a deferred tax asset related to the company’s intangible asset reorganization in fiscal 2025, lower operating income exclusive of the asset impairment charges, and an increase in interest expense.

Non-GAAP adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $75.6 million, compared to $96.8 million. Non-GAAP adjusted EBITDA margin was 14.7 percent compared to 18.2 percent.

On an adjusted basis (non-GAAP) for the third quarters of fiscal 2026 and 2025, excluding asset impairment charges, intangible asset reorganization, restructuring charges, amortization of intangible assets and non-cash share-based compensation, as applicable:

  • Adjusted operating income decreased $21.6 million, or 24.6 percent, to $66.3 million, or 12.9 percent of net sales revenue, a decline of 370 basis points. The decrease was primarily driven by the net unfavorable impact of higher tariffs on gross profit, higher outbound freight costs, a less favorable inventory obsolescence impact year-over-year, an increase in annual incentive compensation expense and the impact of unfavorable operating leverage. These factors were partially offset by the favorable impact of the Olive & June acquisition and lower commodity and product costs.
  • Adjusted income decreased $21.4 million, or 35.0 percent, to $39.7 million and adjusted diluted EPS decreased 36.0 percent to $1.71. The decrease in adjusted diluted EPS was primarily due to lower adjusted operating income and higher interest expense, partially offset by a decrease in adjusted income tax expense.

Beauty & Wellness Segment Results
In its other segment, Beauty & Wellness net sales revenue decreased $1.4 million, or 0.5 percent, to $283.2 million. The decrease was primarily driven by a 13.9 percent decline in the Organic business. Beauty & Wellness’ operating loss was $8.3 million, or (2.9) percent of segment net sales revenue, compared to operating income of $34.8 million, or 12.2 percent of segment net sales revenue. Operating loss in the third quarter of fiscal 2026 included $41.9 million of pre-tax asset impairment charges. Adjusted operating income decreased 8.5 percent to $39.0 million, or 13.8 percent of segment net sales revenue. Brands in the segment include Vicks, Braun, Honeywell, PUR, Hot Tools, Drybar, Curlsmith, Revlon, and Olive & June.

Management Commentary
Scott Uzzell, chief executive officer, stated: “We delivered third quarter results in line with our outlook and are making progress toward stabilizing the business despite the challenging external environment. We grew revenue in key brands – OXO, Osprey, and Olive & June – expanded Organic DTC sales and generated positive free cash flow despite tariff-related headwinds.

“We are sharpening our priorities and placing the consumer at the center of everything we do – investing in innovation, strengthening brand loyalty, and advancing commercial excellence. I am confident that we are taking the right steps to position us to deliver sustained revenue and profit growth and create long-term value for all stakeholders.”

Balance Sheet and Cash Flow
Third Quarter Fiscal 2026 Compared to Third Quarter Fiscal 2025

  • Cash and cash equivalents totaled $27.1 million, compared to $40.8 million.
  • Accounts receivable turnover was 75.4 days, compared to 72.3 days.
  • Inventory was $505.3 million, including $35 million in higher tariff costs, compared to $450.7 million.
  • Total short- and long-term debt was $892.4 million, compared to $733.9 million.
  • Net cash provided by operating activities for the first nine months of the fiscal year was $59.8 million, compared to $78.2 million for the same period last year, with free cash flow of $28.8 million, compared to $56.1 million. Fiscal 2026 year-to-date cash flow includes $58 million of cash outflows related to higher tariff payments.

Fiscal 2026 Annual Outlook
The company expects fiscal year 2026 consolidated net sales revenue in the range of $1.758 billion to $1.773 billion. Previous guidance called sales in the range of $1.739 billion to $1.780 billion.

The consolidated net sales outlook reflects the following expectations by segment:

  • Home & Outdoor net sales in the range of $812 million to $819 million, representing a decline of 9.6 percent to 10.4 percent. Previous guidance called for a decline in the range of f 11.8 percent to 9.7 percent;
  • Beauty & Wellness net sales in the range of $946 million to $954 million, or a decline in the range of 5.5 percent to 4.7 percent. Previous guidance called for a decline of 6.2 percent to 4.0 percent.

The sales outlook reflects the company’s view of continued consumer spending softness, especially in certain discretionary categories, as well as its view of increased macro uncertainty, a more promotional environment, and an increasingly stretched consumer, including the impact from:

  • lower direct import orders following tariff-related pullbacks, with continuing improvement and select programs shifting to warehouse replenishment;
  • ongoing impact from the shift from cross-border ecommerce to localized distribution and sustained competitive pressure from government-subsidized domestic sellers in China;
  • lapping prior-year tariff-related order pull-forward, resulting in a sales headwind in the fourth quarter;
  • strategic price increases that were largely implemented by the end of September, with price realization impacted by market dynamics and stop-shipments to support consistent price adoption by our retail partners;
  • a below-average cough, cold and flu season compared to our previous expectation of an average season;
  • continued soft consumer demand and increased competition;
  • consumer trade-down behavior, expected to persist, reflected in heightened deal-seeking and a greater emphasis on essential categories; and
  • conservative retailer inventory management in response to demand trends.

The company said it is continuing to assess the incremental tariff cost exposure considering ongoing changes to global tariff policies, the full extent of its potential mitigation plans, and the associated timing for implementing such plans and realizing the anticipated benefits. The company is also continuing to assess the disruptive impact of tariffs on its markets and retailers’ adaptation to tariff costs and uncertainty. To mitigate the company’s ongoing exposure to tariffs, it has initiated significant efforts to diversify its production outside China into regions where it expects tariffs or overall costs to be lower, and to source the same product from more than one region to the extent possible and not cost-prohibitive. The company continues to expect to reduce its cost of goods sold exposed to China tariffs to between 25 percent and 30 percent by the end of fiscal 2026. The company continues to implement additional mitigation actions, including cost reductions from suppliers and strategic customer pricing adjustments, to mitigate tariff headwinds. In addition to the uncertainty from evolving global tariff policies, the company expects unfavorable, cascading impacts on inflation, consumer confidence, employment, and overall macroeconomic conditions, all of which are impossible to predict currently and are outside the company’s control.

In the first quarter of fiscal 2026, the company adjusted its measures to reduce costs and preserve cash flow, as outlined in its fourth-quarter fiscal 2025 earnings release, as the environment continued to evolve. While the company resumed targeted growth investments during the second and third quarters of fiscal 2026, it remains disciplined in its approach amid continued tariff volatility. The measures in place continue to include the following:

Suspension of projects and capital expenditures that are not critical or in support of supplier diversification or dual sourcing initiatives;

  • Actions to reduce overall personnel costs and pause most project and travel expenses remain in place;
  • A resumption of optimized marketing, promotional, and new product development investments focused on opportunities with the highest returns;
  • A measured approach to inventory purchases in expectation of softer consumer demand in the short to intermediate term; and
  • Actions to optimize working capital and balance sheet productivity.
  • Through the combination of tariff mitigation actions and these additional cost-reduction measures, the company now believes it can reduce the net tariff impact on operating income to less than $30 million, compared to its prior expectation of less than $20 million, based on tariffs currently in place.

The company expects fiscal 2026 GAAP diluted loss per share in the range of $36.07 to $35.57, and non-GAAP adjusted diluted earnings per share in the range of $3.25 to $3.75. Previously, the company expected EPS in the range of $1.85 to $2.05, and non-GAAP adjusted diluted EPS in the range of $1.55 to $1.80.

The company’s adjusted diluted EPS outlook reflects:

  • pressures from a more promotional environment and consumer trade-down behavior;
  • lower gross profit margin driven by higher tariffs, lower than expected retail pricing realization and unfavorable product mix in response to selective pricing actions;
  • preservation of key growth investments to support our people, future revenue expansion and new product development;
  • higher incentive compensation expense year-over-year; and
  • the impact of unfavorable operating leverage due to the decline in revenue.

The company continues to expect these factors to be partially offset by cost reduction measures implemented in the first nine months and continuing throughout the year.