Helen of Troy Limited reported that its Home & Outdoor segment, which includes the Hydro Flask, Osprey Packs, and OXO brands, incurred a double-digit revenue decline in the fiscal second quarter ended August 31. Freshly minted company CEO Scott Uzzell, who has been with the company only since last month, told participants on his first conference call with analysts as HELE’s top dog that they would give some perspective on challenging external factors on Thursday, October 9.
“But let me be clear, it’s up to us whether we grow or not,” Uzzell said, already owning the issues that place the overall business, but especially the Hydro Flask beverage ware segment. “While we expect the environment to remain challenging, our North Star must be to keep the consumer at the center of everything we do. Consumers are seeking a better value proposition for their limited share of wallet. We can deliver that proposition across a strong portfolio of brands with innovative products that resonate with the consumer and exceed their expectations with differentiated features, thoughtful designs and superior performance.”
Home & Outdoor segment revenue decreased 13.7 percent to $208.7 million in fiscal Q2, compared to $241.9 million in the prior-year second quarter, with a 14.0 percent decline in the organic business, partially offset by 0.2 percent upside from foreign currency translation.
The remaining decrease reportedly reflects ongoing broader demand weakness across both the home and insulated beverageware categories, including continued POS declines in beverageware due to heightened competition and net distribution losses.
Assistant CFO Tracy Schuerman said this softness was further pressured by retailer inventory adjustments and lower sales in the closeout channel.
In an earnings release delivered on Thursday morning, October 9, the company attributed the following to the downturn in the segment:
- lower replenishment orders from retail customers in the insulated beverageware and home categories, partially due to retailer inventory rebalancing in response to softer demands trends;
- continued competition, a net distribution loss year-over-year and cancellation of direct import orders in response to higher tariffs in the insulated beverageware category;
- a decrease in (wholesale) club channel sales in the insulated beverageware and home categories in response to higher tariffs; and
lower closeout channel sales.
“These challenges were somewhat mitigated by strong demand for technical, travel and lifestyle packs, increased sales from expanded distribution in the home category and additional sales generated from a new product launch in the insulated beverageware category,” Schuerman shared.
Company CFO Brian Grass said the domestic market remained under pressure from tariffs on direct import orders, cautious consumer spending, and lower replenishment from retail partners as they manage inventory levels amid a cautious view of the consumer environment. This was partially offset by OXO distribution gains and continued strong performance in food storage, bath, and kitchen gadgets at retail.
Internationally, the Home & Outdoor segment sales grew, driven by Osprey.
Osprey Brand
Osprey reportedly posted strong growth in the quarter, led by technical and travel packs.
“In the U.S. technical pack market, Osprey remains the No. 1 brand with share – more than 3x larger than the next competitor,” Grass said. “Consumers are rewarding the brand’s sustainability leadership, including our move to 100 percent recycled fabrics and elimination of PFAS-based durable water repellent across all textile products.”
He said performance remains a differentiator as well.
“Our new Archeon series featuring an abrasion-resistant 100 percent recycled fabric performed so strongly in testing that our machines could not wear it down. That level of quality is resonating with consumers. The limited edition Archeon Fujin backpack created in collaboration with Carryology sold out in just 24 hours,” the CFO added.
Hydro Flask Brand
Hydro Flask highlights were said to include the new Micro Hydro, which Grass said is “proving to be highly fashionable and versatile, compact enough for everyday carry yet functional across wellness, outdoor and travel occasions.” He said early adoption has been strong, and they see an opportunity to build this into a distinct franchise.
“Our new 24-ounce Travel Tumbler and Travel Bottle also drove nice growth during the quarter, reflecting continued demand for performance hydration and the brand’s ability to continue to expand into adjacent sizes, shapes, form factors, and categories,” he noted.
OXO Brand
Grass said the brand’s fundamentals remain strong at OXO.
“Consumers are responding well to Twist & Stack food storage solutions for their durability and secure ceiling lids,” the CFO detailed. “Our Rapid Brewer is earning outstanding feedback for speed, versatility and thoughtful design. And the new Compact Conical Burr Coffee Grinder was recognized by Forbes as the best value pick in its category, praised for consistent grind quality and slim user-friendly design.”
He said other recent launches continue to grow, including OXO Ceramic Bakeware and additions to the emerging OXO Tot feeding line, further reinforcing OXO’s reputation for solving everyday problems with high-quality intuitive products.
Wrapping up the Outdoor & Home segment brand highlights, Grass said, “Despite near-term demand variability and ongoing retail inventory adjustments, OXO, Hydro Flask and Osprey continue to show positive consumer traction. We are prioritizing innovation, brand relevance and sustainability, the core elements that will restore growth and deliver long-term value in Home & Outdoor.”
Segment Profitability
Home & Outdoor adjusted operating margin decreased approximately 540 basis points to 9.6 percent of sales, reflecting the impact of higher tariffs on cost of goods sold, which reduced operating margin by approximately 240 basis points. This partially offset by the favorable comparative impact of higher distribution center expenses in the prior-year Q2 period.
Segment operating loss was $72.6 million, or negative 34.8 percent of segment net sales revenue, in the quarter, compared to operating income of $31.2 million, or 12.9 percent of segment net sales revenue, in the year-ago second quarter. Operating loss in the second quarter of fiscal 2026 included $85.5 million of pre-tax asset impairment charges.
The remaining 670 basis point decrease in segment operating margin was primarily due to:
- the impact of higher tariffs on cost of goods sold;
- higher retail trade and promotional expense;
- increased share-based compensation expense;
- higher outbound freight costs; and
- the impact of unfavorable operating leverage.
These factors were said to be partially offset by lower commodity and product costs, reduced marketing expense and the favorable comparative impact of higher distribution center expense in the prior-year Q2 period.
Home & Outdoor Segment Outlook
- On a full year basis, HELE expects Home & Outdoor segment net sales to decline between 11.8 percent and 9.7 percent.
- For the fiscal third quarter, segment net sales are forecast decline of in a range of 12.8 percent to 8.7 percent.
Consolidated Helen of Troy Fiscal Q2 Summary
- Consolidated net sales revenue of $431.8 million in Q2, compared to $474.2 million in the prior-year quarter.
- Gross profit margin of 44.2 percent in Q2, compared to 45.6 percent in the year-ago quarter.
- Operating margin of negative 73.1 percent, which includes pre-tax non-cash asset impairment charges of $326.4 million, compared to 7.3 percent in Q2 last year.
- Non-GAAP adjusted operating margin of 6.2 percent in Q2, compared to 9.8 percent in the prior-year Q2 period.
- GAAP diluted loss per share of $13.44, which includes after-tax non-cash asset impairment charges of $12.77, in the second quarter, compared to diluted earnings per share of $0.74 per share in the prior-year second quarter.
- Non-GAAP adjusted diluted EPS of 59 cents per share in fiscal Q2, compared to $1.21 in the prior-year second quarter.
- Net cash used by operating activities of $10.5 million in Q2, compared to net cash provided by operating activities of $44.6 million in Q2 last year.
- Non-GAAP adjusted EBITDA margin of 8.4 percent in the most recent quarter, compared to 11.8 percent in the Q2 period last year.
“I joined Helen of Troy last month with a deep admiration for its global brands, differentiated product solutions, solid financial foundation, and dedicated associates,” offered CEO Uzzell. “While I continue to listen and learn, I am confident in our ability to engineer a great comeback story. We made progress in the second quarter, but there are no quick fixes as we work to get back on a path to growing market share and driving sustainable growth. Moving forward, the consumer will be at the center of everything we do. We will invest in our associates to inspire new innovations that deliver unique solutions designed to win in the marketplace and generate future attractive returns for our shareholders.”
“While we are not satisfied with our results, the second quarter marked a step forward with net sales and adjusted earnings per share at the better end of our guidance,” added Grass. “We continue to adapt to significant business disruption and cost headwinds, which are considered in our outlook for the remainder of the year. I’m encouraged by the measures we implemented during the quarter to enhance our execution, operational efficiency, and go-to-market effectiveness, while taking decisive action to fuel more product-driven growth across the portfolio. We are making a concerted effort to maintain ongoing investment in the health of our brands, while optimizing our productivity as we navigate a difficult environment.”
Image, data and table courtesy Helen of Troy Limited
