While facing challenging comparisons against over-sized growth in the year-ago quarter, Hydro Flask continues to find brisk growth across its retail channels.

“Hydro Flask continues to make progress in its key existing and emerging channels such as direct to consumer, web retailer, collegiate, natural foods and in customization,” remarked Julien Mininberg, CEO of Helen of Troy on a conference call with analysts, “Hydro Flask with its number one market share position in insulated beverage bottles continues to enjoy excellent point of sale performance across channels we track; retailer inventory levels are largely in line with consumer takeaway.”

Overall sales in the Housewares category moderated to a 2.6 percent gain in the third quarter ended November 30, reaching to $128.0 million in revenue. That’s down from a growth rate of 11.8 percent in its fiscal six months, although still up a healthy 8.2 percent in the nine months.

The gain was particularly boosted by online sales, as well as incremental distribution with existing customers, international growth, and new product introductions for both Hydro Flask and OXO brands. The growth was partially offset by the unfavorable impact of lower store traffic and soft consumer spending at traditional brick and mortar retail, and the unfavorable comparative impact of strong sales into the club channel in the same period last year. Segment net sales also benefitted from the favorable impact of net foreign currency fluctuations of approximately $0.2 million, or 0.2 percent.

OXO, which makes kitchen, cleaning, and garden products and accessories, “saw solid POS progress in customers that we track, led by our products in the food storage, barware and bath categories. This was partially offset by lower club channel sales compared to last year’s especially strong club business,” said Mininberg.

Housewares’ adjusted operating margin increased 0.5 percentage points, primarily due to a higher mix of Hydro Flask sales, lower incentive compensation expense and the favorable impact of increased operating leverage from net sales growth partially offset by higher marketing, advertising and new product development expense.

Overall, Helen of Troy reduced its guidance for growth in the Housewares segment.

Said Mininberg, “While we are pleased with POS, we are seeing shifting dynamics between the online, and brick and mortar channels that may impact replenishment for OXO. As such, we have become more cautious in our outlook for this business in the fourth quarter. These dynamics, combined with our recent decision to delay the launch of certain key Hydro Flask new products caused us to revise our outlook for Housewares as a segment.”

The Housewares segment is expected to see 7 percent to 9 percent revenue growth for the full fiscal year 2018. When it reported second-quarter results on October 5, it had forecast Housewares net sales growth of 8 percent to 10 percent.

Addressing “a lot of talk in the market about what’s the status of Hydro Flask,” including concerns over inventory levels across the water bottle space, in the Q&A session, Mininberg stressed that the brand still has momentum while facing challenging year-ago comparisons and is seeing “healthy retail orders.” The CEO stated, “Hydro Flask year-to-date has grown, Hydro Flask will grow for the fiscal year 2018, and that’s no mean feat growing over, doubling in the prior year, and Hydro Flask having especially strong Q3 in the year ago base but nonetheless keeps on chugging, so we like that.”

He added that while there was some excess inventory earlier last year in the overall category, “looking healthy these days.” He added that some holiday promotions from Hydro Flask as well as competitors such as Yeti and S’well has been “very good for inventory, I think not only for them but frankly also for us.”

Finally, regarding the delay, Mininberg said Hydro Flask continues to explore adjacencies in the water hydration space and one planned launch was delayed until the early parts of fiscal 2019. He said the brand is “very careful to get those products just right.”

Mininberg concluded on Hydro Flask, “So, strongly positive, slightly less positive than when we started the whole fiscal year, and that’s caused some noise during the fiscal year, has attracted a lot of commentary and discussion but the net outcome is going to be another winning year for Hydro Flask.”

Photo courtesy Hydro Flask