Helen of Troy Limited (HELE) is currently facing a challenging operating environment marked by weak consumer demand, heightened macroeconomic uncertainty, and a financially strained consumer base. These factors have significantly impacted the company’s performance, leading to a downward revision of its fiscal 2025 outlook.
HELE is struggling with rising costs, particularly in selling, general and administrative (SG&A) expenses. The SG&A ratio expanded considerably in the first quarter of fiscal 2025, driven by increased marketing costs, operational inefficiencies from automation issues at the Tennessee distribution facility, and rising health insurance and product liability expenses. This resulted in a significant decline in adjusted operating income and margin.
The company’s first-quarter fiscal 2025 results reflected the impact of these pressures, with both revenue and earnings missing Zacks Consensus Estimates and declining year-over-year. Net sales fell by 12.2%, primarily due to reduced sales of hair appliances and prestige hair care products in the Beauty & Wellness unit, along with lower demand for humidifiers. Adjusted earnings per share declined by 49% due to reduced adjusted operating income and higher tax rates.
Given the operational challenges, heightened macroeconomic uncertainty, and a financially-stressed consumer base, management has revised its fiscal 2025 forecast downward. The company now anticipates consolidated net sales revenues in the range of $1.885-$1.935 billion, representing a decline of 6% to 3.5% compared with the previous expectation of a 2% decline to 1% growth. Adjusted earnings per share are projected to range from $7.00 to $7.50, indicating a decline of 15.8% to 21.4%.
In light of these challenges, investors may consider exploring alternative investment options in the consumer staples sector. The article highlights The Chef’s Warehouse (CHEF), Vital Farms (VITL), and Nomad Foods (NOMD) as potential alternatives, each carrying a favorable Zacks Rank and displaying strong growth prospects.
HELE’s stock has significantly underperformed the market, declining by 57.4% year-to-date, compared to the industry’s 32.8% decline and the Zacks Consumer Staple sector’s 6.2% appreciation. These factors underscore the severity of the challenges facing the company and highlight the need for a strategic approach to navigate the current environment.
