Helen of Troy (HELE) is trading sharply higher today after reporting 1Q20 (May) earnings last night. HELE is a consumer products company with a wide variety of products.
This includes housewares (food prep, cooking, cleaning, while owned brands include OXO, Good Grips, Hydro Flask), health & home (humidifiers, water filtration systems, blood pressure monitors while owned brands include PUR and licensed brands include Honeywell and Braun), and beauty (hair dryers, grooming tools while owned brands include Hot Tools, Brut, Pert, and Sure).
Adjusted EPS rose 10.2% yr/yr in MayQ to $2.06 while revenue rose 6.1% yr/yr to $376.3 mln. Both metrics were well ahead of market expectations. HELE also raised full year adjusted EPS guidance to $8.40-8.65 from $8.25-8.50.
Housewares was the star of the show as segment sales jumped 23.6% yr/yr to $144.9 mln, primarily due to "point of sale growth and incremental distribution with existing domestic brick and mortar customers, an increase in overall online sales, and new product introductions," according to the press release. Its health & home segment had revenue growth of just 5.2% as it was lapping a strong quarter last year and its beauty segment had growth of 3.4%.
CEO Julien Mininberg said, "Continued investment behind our Leadership Brands paid off handsomely.... We continue to gain significant ground online with strong double-digit growth to now represent 23% of [total] sales. Housewares had a stellar quarter, and strong Beauty appliance sales drove growth in that segment."
After the stock sold off in early January on a modest EPS beat in NovQ, HELE has now posted huge back-to-back beats in FebQ and MayQ. The company has been in a transformational period the past few years with management putting more of a focus on innovation and operational integration. Also, the company sold its nutritional supplement segment in December 2017, which we think was a smart move as it was not a core business and was a drag on overall results.
In addition to earnings, we were pleased when HELE announced a $400 mln share buyback authorization in May 2019. This is a huge amount, representing 11% of shares outstanding. That should help buoy the stock in the coming months.
In sum, this was another good quarter for HELE. The company tends to be pretty hit or miss around earnings, which we find a bit surprising as consumer product stocks tend to be fairly predictable. However, the back-to-back strong results are a positive sign that the changes being made at the company are having an impact.