Sales of Hydro Flask grew 36.8 percent to $29.1 million in the fiscal second quarter ended August 31, helping to prop up sales and profits at its new parent company.
Helen of Troy Limited (Nasdaq:HELE), which acquired Hydro Flask in March, reported net sales reached $368.2 million during the period, down 0.3 percent from the prior fiscal second quarter as growth from its Housewares and Health & Home segments offset significantly softer sales at its Beauty and Nutritional Supplements segments.
Housewares net sales increased by 34.4 percent, driven by Hydro Flask. The growth was partially offset by a 2.4 percent decline in net revenues at its core business. The company said successful new product introductions were offset by a soft retail environment and lower consumer store traffic in the United States, which is contributing to smaller and less frequent replenishment orders from key retailers.
Adjusted operating margin at the Housewares segment improved 4.2 percentage points, primarily due to margin accretion from the Hydro Flask acquisition, partially offset by expected margin compression from new product categories in the core business.
“We are very pleased with Hydro Flask’s growth and performance, which contributed $29.1 million of net sales during the quarter, fueling a 34.4 percent increase in net sales in our Housewares segment, and was accretive to adjusted operating margin,” said Julien R. Mininberg, CEO of Helen of Troy.” Although Housewares experienced a slight decline in its core business in the second quarter, based on point-of-sale activity, we believe this segment remains on track to meet our expectations for the full year,” he added.
Citing a weaker than expected retail environment and softness in Beauty and Nutritional Supplements, Helen of Troy lowered its net sales expectations for the full fiscal year, while maintaining its consolidated full-year adjusted EPS outlook.
For fiscal year 2017, the company now expects consolidated net sales revenue in the range of $1.55 billion to $1.59 billion. The company is maintaining expectations for consolidated GAAP diluted EPS of $4.37 to $4.77, which includes an after-tax non-cash asset impairment charge of $5.1 million and a patent litigation charge of $1.5 million. The company is also maintaining its adjusted diluted EPS (non-GAAP) outlook in the range of $5.85 to $6.35, which excludes after-tax non-cash asset impairment charges, patent litigation charges, share-based compensation expense and intangible asset amortization expense and includes incremental adjusted diluted EPS (non-GAAP) from the Hydro Flask acquisition.
The company’s sales outlook includes incremental sales from the Hydro Flask acquisition, now estimated in the range of $85 million to $90 million for the period subsequent to closing in fiscal year 2017, compared to original expectations of $60 million to $65 million, and continues to include a combined negative impact of approximately 3 percent of consolidated net sales from the re-measurement of its Venezuela income statement at the new DICOM rate, foreign currency fluctuations, rationalization of low profit business in the Health & Home segment and the overhang from excess cold/flu inventory in the retail channel due to a weak season last year.
Image courtesy of Hydro Flask
