Helen of Troy Limited Q3 FY2026 earnings call

• Scott emphasized disciplined execution despite a challenging environment, focusing on investing in brands, innovation, and talent to restore growth. He highlighted product innovation underway and upcoming launches in fiscal 2027, and discussed organizational changes to put the consumer at the center. • Brian discussed financial results, noting consolidated net sales decreased 3.4%, gross profit margin decreased 200 basis points, and SG&A ratio increased. He mentioned progress on tariff mitigation strategies, supplier diversification, and focus on revenue improvement over cost reduction. • Operational highlights included new product launches like Osprey and Hydro Flask cooler collaboration, Olive and June trend-right collections, and Honeywell air purifiers, along with delivering $29 million of free cash flow despite tariff drag.

Overall, net sales outperformed expectations. Home and outdoor net sales declined 6.7%, beauty and wellness decreased 0.5%, and international sales fell 8.1%. Olive and June continued to outperform profitability expectations with nearly $38 million in sales. Home and outdoor segment saw strong demand for travel, technical, and lifestyle packs but had softness in insulated beverageware. Beauty and wellness segment had a strong contribution from Olive and June at $37.7 million but was impacted by tariff-related disruption, soft consumer demand, and lower international sales.

• Tightened top-line range to $1.758 billion to $1.773 billion, with home and outdoor net sales $812 to $819 million and beauty and wellness $946 to $954 million. • Lowered adjusted EPS expectations to $3.25 to $3.75 due to less than full pricing realization, consumer trade-down, and less favorable mix. • Expect full-year GAAP SG&A ratio 38% to 40% and adjusted effective tax rate 13.4% to 14.7%. • Focus on revenue improvement versus cost reduction to recapture operating leverage.

• Tariffs continuing to impact gross profit and operating income, with residual impact from stop shipments carrying into Q4. • Consumer trade-down behavior and more promotional environment leading to margin pressure. • Geopolitical and supply chain risks related to China, including ongoing dynamics in the China market affecting international sales.

Q: Rupesh Parikh asked about turning around declining categories and if earnings power has bottomed.

A: Scott Azel said they're encouraged by growth in certain brands, focusing on innovation, commercial excellence, and providing resources to right opportunities. Brian Grass noted shift to revenue improvement over cost reduction for sustainable growth.

Q: Bob Labick asked about consumer-centric innovation, how long it takes to translate to top line.

A: Scott Azel said they're investing in underinvested brands for growth, expecting improvement in Q4 and FY 2027. Brian Grass mentioned innovation in Hydro Flask and other brands with strong pipelines.

Q: Peter Grom asked about category demand trends and 4Q outlook.

A: Scott Azel said brands with tight propositions will win, and Brian Grass discussed 4Q factors like unfavorable pricing realization, consumer trade-down, and focus on revenue improvement.

Q: Susan Anderson asked about innovation focus and leverage.

A: Scott Azel said they'll focus on underperforming brands, and Brian Grass discussed leverage plans, tightening balance sheet, and considering divestitures strategically.

Q: Olivia Tong asked about revenue rebase in FY '27 and steady-state operating margin.

A: Brian Grass said they're working to recapture revenue, focusing on revenue improvement first, then margin expansion, with plan to get back to double-digit EBIT margin over time but with steps involved.