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May 31, 2023
Helen of Troy Q1 2024 Earnings Report
Net sales declined, gross profit margin and operating margin improved, and free cash flow increased.
Key Takeaways
Helen of Troy Limited reported first quarter fiscal 2024 results, with consolidated net sales declining by 6.6%. However, the company saw improvements in gross profit margin and operating margin. Free cash flow also showed a significant increase. The company reiterated its full fiscal year outlook for sales, adjusted EPS, margin expansion, and free cash flow.
Consolidated net sales revenue decreased by 6.6% to $474.7 million.
Gross profit margin increased by 380 basis points to 45.4%.
GAAP diluted EPS was $0.94, compared to $1.02 in the prior year.
Free cash flow was $109.2 million, an increase of $223.8 million compared to the same period last year.
Forward Guidance
The company continues to expect consolidated net sales revenue in the range of $1.965 billion to $2.015 billion and non-GAAP adjusted diluted EPS in the range of $8.50 to $9.00. Free cash flow is expected to be $250 million to $270 million.
Positive Outlook
- Majority of net sales growth to be concentrated in the third quarter of fiscal 2024.
- Adjusted diluted EPS growth to be concentrated in the third and fourth quarters of fiscal 2024.
- Benefits of debt deleveraging to be more fully realized in the second half of the year.
- Lower inbound freight and product costs expected in the second half of the year.
- Net leverage ratio is expected to end fiscal 2024 at 2.0x to 1.85x.
Challenges Ahead
- Continued slower economy and uncertainty in spending patterns, especially for some discretionary categories.
- Year-over-year decline of $35 million from the removal of Bed, Bath & Beyond revenue.
- Similar sized reduction from the Pegasus SKU rationalization initiative.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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