Helen of Troy Reports Decline in Q3 Financial Performance, Completes Acquisition of Olive & June

Helen of Troy Limited reported a decline in financial performance for the third quarter and first nine months of fiscal 2025, as detailed in its recent 10-Q filing. For the three months ended November 30, 2024, the company recorded net sales revenue of $530.7 million, a decrease of 3.4% from $549.6 million in the same period last year. The decline was primarily attributed to a 9.3% drop in the Beauty & Wellness segment, which faced softer consumer demand and increased competition. In contrast, the Home & Outdoor segment saw a 4.3% increase in sales, driven by growth in insulated beverageware and home categories.

The company's operating income for the third quarter fell to $75.1 million, down 29.7% from $106.9 million a year earlier, resulting in an operating margin of 14.2%, compared to 19.5% in the prior year. Net income also decreased significantly, dropping 34.6% to $49.6 million, with diluted earnings per share (EPS) falling to $2.17 from $3.19. The decline in profitability was influenced by higher selling, general, and administrative expenses, which rose 18.1% to $180.7 million, and the unfavorable comparative impact of a prior year gain from the sale of the El Paso facility.

In terms of strategic developments, Helen of Troy completed the acquisition of Olive & June, a nail care brand, on December 16, 2024, for an initial cash consideration of $229.4 million, with potential contingent payments of up to $15 million based on performance. This acquisition aligns with the company's ongoing strategy to expand its brand portfolio and geographic reach. Additionally, the company is continuing its Project Pegasus restructuring initiative, which aims to enhance operational efficiency and reduce costs, with pre-tax restructuring charges of $6.9 million incurred in the first nine months of fiscal 2025.

Operationally, Helen of Troy's total assets increased to $2.97 billion as of November 30, 2024, up from $2.84 billion at the end of the previous fiscal period. The company reported a significant rise in cash and cash equivalents, which reached $40.8 million, compared to $18.5 million in February 2024. However, the company also faced challenges, including a decline in online sales, which accounted for 29% of total net sales, down from 31% in the prior year. The company is actively working to enhance its distribution capabilities and e-commerce platform to adapt to changing consumer preferences.

Looking ahead, Helen of Troy anticipates continued challenges due to macroeconomic conditions, including inflation and changing consumer spending patterns. The company remains focused on executing its Elevate for Growth strategy, which aims for organic sales growth and margin expansion through strategic acquisitions and investments in brand development. The ongoing restructuring efforts under Project Pegasus are expected to yield annualized pre-tax operating profit improvements of approximately $75 million to $85 million by the end of fiscal 2027, providing a foundation for future growth.