Helen of Troy Ltd. reported sales in its Housewares segment, which includes Hydro Flask and OXO, increased 12.1 percent in its fiscal fourth quarter ended February 28.
Sales reached $162.5 million compared to $144.9 million a year ago.
The increase was driven by an Organic business increase of $17.1 million, or 11.8 percent, primarily due to higher demand for OXO brand products as COVID-19 continued to keep consumers at home cooking, baking and organizing, which resulted in increases in online, brick & mortar, and international sales. These factors were partially offset by an adverse impact from Winter Storm Uri, the COVID-19 related impact of reduced store traffic at certain retail brick & mortar stores, increased competitive activity and strong new product releases in the prior-year period.
Operating income in the Housewares segment increased 16.0 percent to $16.2 million, or 10.0 percent of segment net sales revenue, compared to $14.0 million, or 9.6 percent of segment net sales revenue. The 0.4 percentage point increase was primarily due to favorable operating leverage, a more favorable channel mix, lower marketing expenses, and travel expense reductions due to COVID-19. These factors were partially offset by a less favorable product mix, higher inbound and outbound freight and distribution expense, and higher annual incentive compensation. Adjusted operating income increased 10.7 percent to $19.0 million, or 11.7 percent of segment net sales revenue, compared to $17.1 million, or 11.8 percent of segment net sales revenue.
Companywide, consolidated net sales revenue increased $67.0 million, or 15.1 percent to $509.4 million compared to $442.4 million. The growth was driven by an Organic business increase of $53.9 million, or 12.2 percent, primarily reflecting growth in online, international and brick & mortar channel sales. The Drybar Products acquisition also contributed $10.4 million of incremental net sales revenue for the eight-week period prior to the first anniversary of the acquisition. These factors were partially offset by the adverse impact from February Winter Storm Uri which prevented the company from shipping approximately $15 million of orders before the end of the quarter, COVID-19 related store traffic declines at certain retail customers and a decline in its non-core business.
Consolidated operating income was $24.5 million, or 4.8 percent of net sales revenue, compared to an operating loss of $2.7 million, or 0.6 percent of net sales revenue. The increase in consolidated operating margin was primarily due to a higher gross profit margin and the comparative impact of lower non-cash asset impairment charges year-over-year. These factors were partially offset by an increase in the SG&A ratio.
Net Income was $22.2 million, or $0.90 per diluted share, compared to a net loss of $3.2 million, or $0.13 per diluted share. Diluted EPS improved primarily due to higher operating income in the Beauty segment, which includes the favorable comparative impact of lower after-tax non-cash asset impairment charges, restructuring charges and acquisition-related expenses year-over-year, higher operating income in the Housewares segment, and the favorable impact of lower weighted average diluted shares outstanding. These factors were partially offset by an adverse impact of approximately $0.20 per diluted share from Winter Storm Uri, reduced operating income in the Health & Home segment and a lower income tax benefit.
Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) decreased 16.8 percent to $48.6 million compared to $58.4 million.
In its other segments, Health & Home net sales revenue increased $42.8 million, or 23.0 percent, to $228.6 million, compared to $185.9 million. The increase was driven by an Organic business increase of $40.6 million, or 21.9 percent, primarily due to continued strong consumer demand for healthcare and healthy living products in domestic and international markets, primarily in thermometry and air purification, in both brick & mortar and online channels, mainly attributable to COVID-19. These factors were partially offset by declines in non-strategic product categories, a far below average cough/cold/flu season due to social distancing and remote schooling related to COVID-19, and an adverse impact from Winter Storm Uri on end-of-quarter shipments. Operating loss was $1.7 million, or 0.7 percent of segment net sales revenue, compared to operating income of $16.3 million, or 8.8 percent of segment net sales revenue. The 9.5 percentage point decrease in segment operating margin was primarily due to increased marketing and new product development expense, higher inbound freight expense, higher distribution costs, higher annual incentive compensation, and increased legal and other professional fees. These factors were partially offset by favorable operating leverage and a more favorable product mix. Adjusted operating income decreased 92.6 percent to $1.5 million, or 0.7 percent of segment net sales revenue, compared to $20.8 million, or 11.2 percent of segment net sales revenue in the same period last year.
Health & Home brands include Vicks, Braun, Honeywell, and PUR.
Beauty net sales revenue increased $6.7 million, or 6.0 percent, to $118.3 million, compared to $111.6 million. The increase was driven by the incremental net sales revenue contribution from Drybar Products of $10.4 million, or 9.3 percent growth, for the eight-week period prior to the first anniversary of the acquisition. Sales for the five-week period subsequent to the acquisition anniversary date are included in Organic business sales. These factors were partially offset by an Organic business decrease of $3.8 million, or 3.4 percent due to a decline in Personal Care and an adverse impact from Winter Storm Uri on end-of-quarter shipments. Operating income was $10.0 million, or 8.5 percent of segment net sales revenue compared to an operating loss of $33.0 million, or 29.6 percent of segment net sales revenue. The 38.1 percentage point increase in operating margin reflects the favorable comparative impact of lower non-cash asset impairment charges, lower restructuring charges and lower acquisition-related expenses year-over-year. The increase in operating margin also reflects a more favorable product mix, reduced royalty expense as a result of the extension of the Revlon trademark license, lower amortization expense, lower bad debt expense, and travel expense reductions due to COVID-19. These factors were partially offset by increased marketing expense, increased inbound and outbound freight expense, higher personnel expense related to the acquisition of Drybar Products, and higher legal and other professional fees. Adjusted operating income increased 39.6 percent to $22.4 million, or 18.9 percent of segment net sales revenue, compared to $16.0 million, or 14.4 percent of segment net sales revenue.
The Beauty segment includes Pert, Revlon, Hot Tools Professional, Infusium, Brut, Bed Head by Tigi, Sure, and Drybar.
Julien R. Mininberg, CEO, stated: “Our fourth-quarter results cap off an extraordinary year for Helen of Troy and an outstanding second year of our Phase II Transformation. I am very proud of the agility our organization demonstrated as we worked together with even more passion to address COVID-19’s unprecedented challenges to all aspects of the business. These efforts drove us past the $2 billion sales milestone, grew our market share for several key brands, and delivered outstanding operating cash flow, adjusted operating income, and adjusted EPS growth in fiscal 2021. During the year, our Leadership Brands once again led the way, now making up more than 81 percent of our sales and online sales grew to now represent 26 percent of total sales. Our strategic focus on international continued to bear fruit. The diversified nature of our portfolio provided consistency, with some categories benefiting from changed consumer behavior and some of our categories posting another year of strong growth based on the timeless power of consumer-centric innovation and outstanding execution. We were not shy about using this strength to further invest in projects intended to power our value creation flywheel, such as new product innovations for fiscal 2022 and beyond, IT, Direct-to-Consumer, expanded production and distribution capacity, and investments in much healthier inventory levels.”
“As we look to fiscal 2022, our all-weather portfolio of Leadership Brands is well suited to continue serving consumers. As COVID-19 lingers it favors our health-related brands. Other brands such as Hydro Flask, Drybar, Revlon, and HOT Tools are expected to benefit further as the post-pandemic landscape takes shape, and OXO is positioned to succeed in most environments. We have taken steps to address the uncertainties from the continued path of COVID-19 and the emerging inflationary environment. We are working with our supply chain partners and have implemented cost mitigation measures to help offset expected inflation and will make pricing decisions to further address the situation as it evolves. We believe these actions will help us deliver on our Phase II average annual growth targets from our new elevated base and that adjusted EPS growth in fiscal 2022 is achievable. Our balance sheet has never been stronger, and we have ample liquidity and operational capability to fuel growth with a combination of organic expansion and acquisition. We believe our key strategic initiatives position us well to create significant additional shareholder value over the course of the remaining three years of Phase II.”
Due to the high level of business uncertainty related to the unpredictable path of the evolving COVID-19 pandemic, ongoing disruption in global supply chains and the volatility in the cost and availability of commodities, freight and other resources, the company is not providing an outlook for fiscal 2022 at this time.
Photo courtesy Helen of Troy