Shares of Helen of Troy (NASDAQ:HELE) are limping through Tuesday’s opening trade with a loss of more than 30% after the company’s reported disappointing results for FQ1 and lowered its outlook for FY25 due to “more pronounced challenges” that included shipping disruptions at its Tennessee distribution facility.
“We are disappointed with the start to our fiscal year,” CEO Noel Geoffroy said, adding that, “we battled an unusual number of internal and external challenges in the quarter.”
The El Paso-based consumer products company earned an adjusted profit of $0.99 per share, down from $1.94 a year ago and $0.60 below expectations, while total revenue of $416.8M was $29M short of Wall Street’s estimates.
Both of the company’s main businesses contracted in the current quarter with Home & Outdoor sales down 8.6% and Beauty & Wellness down 15.2%, resulting in an overall drop of 12.2% in total sales.
The company’s cash position also deteriorated with cash and cash equivalents down 59% to $16.1M, while free cash flow dropped 85% to $16.2M. The company’s debt position improved, however, as total long-term and short-term debt dropped by 10% to $748.4M.
For 2025, Helen of Troy (HELE) expects net sales to decline by 3.5% to 6% to be within a range of $1.885B-$1.935B versus the earlier projection for sales to be down 1% to 2%. This is largely due to lingering inflation and further consumer spending softness that has increased the company’s macro uncertainty. The Street expects FY25 sales of $1.99B.
Due to the disruption in the company’s Tennessee distribution facility, Home & Outdoor sales are now expected to be down 1% to 3% compared to the previous expectation for a gain of 1% to 4%. Beauty & Wellness sales are now expected to be down 5% to 8% versus the prior estimate of down 1.5% to 4.5%.
Adjusted earnings are now projected to be between $7.00 to $7.50 per share, down from $8.70 to $9.20 per share and below the consensus estimate of $8.93 per share. Free cash flow is now expected to be between $220M to $240M from $255M to $275M, previously.
For FQ2, the company now expects a decline in net sales of 4% to 7% and adjusted EPS to decline by 35% to 45%.