Sales declined slightly in the third quarter for El Paso-based Helen of Troy, but the company is optimistic about its position amidst rising inflation and supply chain challenges.
On its earnings conference call Thursday, Helen of Troy CEO Julien Mininberg said the company’s consolidated net sales revenue was nearly $622 million for the quarter that ended Nov. 30, 2021, a decline of 2% compared to a year ago.
But Helen of Troy’s most recent earnings report was still stronger than its 2020 fiscal year, with sales up 31.6%.
“We see this result as a strong testament to the power of our transformation flywheel, the quality of our diversified portfolio of Leadership Brands, the effectiveness of our inflation mitigation tactics and the strength of our organization, as well as the power of our culture,” Mininberg said.
The company’s “leadership brands” include OXO, Hydro Flask, Osprey, Vicks, Braun, Honeywell, PUR, Hot Tools and Drybar.
Thursday’s report also reflected the changing habits of consumers as more return to brick-and-mortar shopping. The company reported its online sales were down 7.4% from fiscal year 2021, but its sales at stores remain strong.
Online sales represented 23% of total sales for Helen of Troy in its third quarter, Mininberg said on Thursday’s call.
“That’s like $0.5 billion worth of sales on the one hand. On the other hand, brick-and-mortar is not dead,” Mininberg said. “Five years ago, everybody was talking about brick-and-mortar making it. Brick-and-mortar is doing extremely well and that channel rebalancing is occurring.”
Mininberg also addressed the impact of inflation and supply chain issues on its third-quarter sales, and said the company’s actions to offset some of the impacts included raising prices.
“We are currently in the middle of our fiscal ’23 budget process and are working hard to mitigate as much of the expected fiscal ’23 inflation as possible and to deliver core earnings growth,” said Matt Osberg, chief financial officer of Helen of Troy, on the conference call.
The company is also re-working some products after running into trouble with the Environmental Protection Agency, which raised concerns about the labeling of some of its products. That hurt Helen of Troy’s most recent earnings report.
The company said its health and home segment’s net sales revenue fell by $46.3 million, or 18.5%, due to a decrease in sales, including a decrease in sales from air filtration products related to the EPA compliance issue.
Sales of its beauty line increased in the third quarter, by $25.3 million, or 15.3%. According to the company, the growth was driven in part by holiday shoppers buying early to get ahead of possible supply chain issues.
“Revlon, Drybar and Hot Tools again led the growth in Beauty with demand increasing across all channels driven by more activities such as social gathering, back-to-office and back-to-school,” Mininberg said.
Net sales revenue in Helen of Troy’s housewares segment also increased, by $23.7 million, or 10.7%.
“As the coronavirus pandemic endures, consumers have settled into routines that continue to involve a lot more home cooking and a greater need to organize, clean and supply their households. We believe these habits are likely to remain sticky even after the pandemic,” Mininberg said.
In late December, Helen of Troy acquired Osprey, a brand of outdoor gear, for $414 million.
“With more than half of its sales outside of the United States, the brand increases our international presence, especially in EMEA (Europe, the Middle East and Africa) and Asia Pacific, the two international regions where we are most focused,” Mininberg said.
