Helen of Troy Ltd. reported sales at its Housewares segment, which includes Hydro Flask and OXO, increased 15.0 percent in the fourth quarter ended February 29.

The gains were primarily due to point-of-sale growth with existing domestic brick & mortar customers, an increase in online sales and revenue from new product introductions. These factors were partially offset by lower club channel sales, a decline in international sales and lower closeout channel sales.

Operating income in the segment decreased 31.5 percent to $14.0 million, or 9.6 percent of segment net sales, compared to $20.4 million, or 16.2 percent of segment net sales in the same period last year. The 6.6 percentage point decrease was primarily due to higher advertising and new product development expense to support strategic initiatives, higher freight and distribution expense to support increased retail customer shipments, and higher restructuring charges. These factors were partially offset by the impact of a more favorable product mix and increased operating leverage from sales growth. Adjusted operating income decreased 24.8 percent to $17.1 million, or 11.8 percent of segment net sales, compared to $22.8 million, or 18.1 percent of segment net sales.

Consolidated net sales revenue increased 14.9 percent to $442.4 million compared to $384.8 million, driven by an Organic business increase of $51.7 million, or 13.4 percent, and growth from the acquisition of Drybar Products of $6.0 million, or 1.6 percent. The Organic business increase primarily reflects growth in both online and brick and mortar appliance sales in the Beauty segment, higher sales across core channels in the Housewares segment, and increased demand driven growth in the Health & Home segment, particularly in thermometry, related to higher pediatric fever and the impact of COVID-19 late in the quarter. These factors were partially offset by a decline in Non-Core business (Personal Care) sales within the Beauty segment.

Health & Home net sales increased 10.5 percent, primarily due to new product introductions and increased demand, particularly in thermometry, related to higher pediatric fever and the impact of COVID-19 toward the end of the fourth quarter. The segment includes Vicks, Braun, Honeywell and PUR.

Beauty net sales increased 23.1 percent, or $20.9 million, primarily due to an Organic business increase of 16.1 percent and 6.7 percent of growth from the acquisition of Drybar Products. The segment also includes Hot Tools.

Consolidated operating loss was $2.7 million, or 0.6 percent of net sales, compared to operating income of $44.1 million, or 11.5 percent of net sales. The decline in consolidated operating margin is primarily due to $41.0 million of non-cash asset impairment charges, higher advertising and new product development expense, acquisition-related expenses, higher restructuring charges, higher royalty expense, an increase in amortization expense, and higher performance-based annual incentive compensation expense. These factors were partially offset by a more favorable product mix, lower share-based compensation expense, and increased operating leverage from sales growth.

Loss from continuing operations was $3.2 million, or $0.13 per diluted share, compared to income from continuing operations of $37.7 million, or $1.47 per diluted share. Fiscal 2020 includes after-tax non-cash asset impairment charges, restructuring charges, and acquisition-related expenses totaling $1.55 per share, compared to a total of $0.04 per share in after-tax restructuring charges in the same period last year.

On an adjusted basis for the fourth quarter of fiscal 2020 and 2019, excluding asset impairment charges, acquisition-related expenses, restructuring charges, amortization of intangible assets, and non-cash share-based compensation, as applicable:

  • Adjusted operating income increased $0.4 million, or 0.8 percent, to $53.9 million, or 12.2 percent of net sales, compared to $53.5 million, or 13.9 percent of net sales. The 1.7 percentage point decrease in adjusted operating margin primarily reflects higher advertising and new product development expense, higher performance-based annual incentive compensation expense, and an increase in royalty expense. These factors were partially offset by a more favorable product mix and increased operating leverage from sales growth.
  • Adjusted income from continuing operations increased $1.3 million, or 2.7 percent, to $47.8 million, or $1.88 per diluted share, compared to $46.6 million, or $1.82 per diluted share. The 3.3 percent increase in adjusted diluted EPS from continuing operations was primarily due to higher adjusted operating income and the impact of lower weighted average diluted shares outstanding, partially offset by higher interest expense.

For the full year, highlights include:

  • Consolidated net sales revenue increased 9.2 percent to $1.71 billion
  • GAAP operating income of $178.3 million, or 10.4 percent of net sales, which includes non-cash asset impairment charges of $41.0 million, acquisition-related expenses of $2.5 million, and restructuring charges of $3.3 million compared to GAAP operating income of $199.4 million, or 12.7 percent of net sales, for the same period last year, which included restructuring charges of $3.6 million
  • Non-GAAP adjusted operating income increase of 12.6 percent to $269.3 million, or 15.8 percent of net sales, compared to $239.2 million, or 15.3 percent of net sales, for the same period last year
  • GAAP diluted EPS from continuing operations of $6.02, which includes acquisition-related expenses of $0.10 per share, non-cash asset impairment charges of $1.44 per share, and restructuring charges of $0.12 per share compared to GAAP diluted EPS of $6.62 for the same period last year, which included restructuring charges of $0.13 per share
  • Non-GAAP adjusted diluted EPS from continuing operations growth of 15.4 percent to $9.30 compared to $8.06

Julien R. Mininberg, chief executive officer, stated: “The fourth quarter was extremely strong, capping the best year in Helen of Troy’s history by almost any measure. For the quarter, we delivered net sales growth of 14.9 percent. Our Leadership Brands led the way, growing 15.7 percent, and we continued to make major gains online, growing that channel 39 percent to now represent 24 percent of total sales. All three of our business segments grew double digit in the quarter and we leaned into our flywheel with key new product, marketing and sustainability programs. On an adjusted basis, EPS for the quarter grew 3.3 percent against a strong year-ago comparison. For the full fiscal year 2020 net sales grew 9.2 percent, adjusted EPS grew 15.4 percent, adjusted operating margin expanded by 50 basis points, and we increased our free cash flow significantly. We are delighted by the acceleration of our flywheel in fiscal year 2020 on top of the strength posted in fiscal 2019 and 2018 and the outstanding first year of Phase II of Helen of Troy’s Transformation.”

“Our heartfelt thoughts are with people around the globe as the COVID-19 pandemic has quickly reshaped nearly every aspect of life. As COVID-19 spread, Helen of Troy moved quickly and decisively to help ensure the safety and health of our associates around the world, and the communities where we operate. We were equally decisive on actions to help improve liquidity and reduce the impact on cash flow. Even amidst the crisis, we remain focused on our strategic plans and the long-term interests of our shareholders. With the resumption of more normalized retail, consumer, and economic activity unknown, we are now holding cash and cash equivalents of close to $400 million and have taken difficult but necessary steps to temporarily reduce our personnel costs and discretionary spending. We believe acting now, and with an approach of shared sacrifice, best serves our goal to mitigate a portion of the business impact of the coronavirus while preserving the high-performance organization, systems, and brands we have worked so hard to build and maintain. I could not be prouder of how our global teams have adapted in order to maintain the health of our business and support our consumers and customers, while also taking care of themselves and their families.”

Mininberg concluded: “As we look to the future, we are seeing positive sales trends in key Helen of Troy brands after the initial shock of lock down in early March. Our Braun, Vicks, PUR and Honeywell products are supporting consumer health at a time of extreme need, and our OXO products are providing convenience, comfort and solutions as families spend unprecedented amounts of time at home. We are working around the clock to meet as much of the ongoing demand for thermometers, humidifiers, air purifiers and water purifiers as possible. We are also working with suppliers and retailers to provide consumers with OXO kitchen, cleaning and storage products, as well as volumizers in Beauty, where demand is high in channels that are open. While encouraging, we do expect to see a net adverse impact to our results for the first quarter and full year fiscal 2021. Although still very early, we are making plans to continue selectively investing in the key Phase II initiatives once the economic situation allows. With our diversified portfolio of leading, trusted brands, a strong balance sheet with low net leverage, and a corporate culture driven to rise to the challenge, we believe Helen of Troy is well positioned to navigate the current unprecedented situation and emerge strong.”

Photo courtesy Helen of Troy