Helen of Troy Ltd (NASDAQ:HELE) Reports Mixed Q2 Results, Stock Falls on Weak Outlook

Helen of Troy Ltd (NASDAQ:HELE) reported financial results for its second quarter of fiscal year 2026, delivering a performance that narrowly surpassed analyst expectations on the top and bottom lines. The market's initial reaction, however, was negative, with the stock trading down nearly 4% in pre-market activity following the announcement.

Earnings and Revenue Versus Estimates

The company’s results presented a mixed financial picture when measured against Wall Street forecasts. While Helen of Troy exceeded projections, the underlying figures revealed significant pressures.

• Revenue: Consolidated net sales revenue reached $431.8 million, beating analyst estimates of approximately $426.0 million. Despite this beat, it represents an 8.9% decline compared to the $474.2 million reported in the same quarter last year.
• Earnings Per Share (EPS): The non-GAAP adjusted diluted EPS came in at $0.59, surpassing the consensus estimate of $0.5365. However, this figure is less than half of the $1.21 adjusted EPS earned in the prior-year period.

Market Reaction and Press Release Summary

The pre-market stock decline suggests investor focus remained on the company's stark year-over-year profit compression and several one-time charges that led to a substantial GAAP loss. The earnings report was dominated by a significant non-cash asset impairment charge of $326.4 million, primarily attributed to a sustained decline in the company's stock price. This charge resulted in a GAAP diluted loss per share of $13.44.

Key operational highlights from the press release include:

• Segment Performance: Both core segments experienced sales declines. The Home & Outdoor segment saw a 13.7% drop in net sales, while the Beauty & Wellness segment declined by 4.0%, though the latter was partially buoyed by the acquisition of Olive & June.
• Profitability Pressures: Gross profit margin contracted by 140 basis points to 44.2%, driven largely by the impact of higher tariffs. The adjusted operating margin also fell to 6.2% from 9.8% in the previous year.
• Leadership Commentary: CEO Julien R. Mininberg, who joined the company last month, expressed confidence in engineering a "great comeback story" but acknowledged there are "no quick fixes" as the company works to regain market share.

Forward Outlook and Analyst Comparisons

The company provided a cautious outlook for the remainder of the fiscal year, which appears to be a key factor in the market's tepid response. Helen of Troy's guidance for the full fiscal year 2026 includes:

• Sales Guidance: The company expects consolidated net sales revenue between $1.739 billion and $1.780 billion. This range, which implies a decline of 6.7% to 8.8%, falls short of the analyst sales estimate of $1.783 billion for the full year.
• EPS Guidance: The forecast for non-GAAP adjusted diluted EPS is set between $3.75 and $4.25. This guidance, implying a decline of 40.7% to 47.7%, also comes in below the current analyst EPS estimate of $4.614 for FY2026.

For the upcoming third quarter, the company's sales outlook of $491 million to $512 million is below the analyst estimate of $518.97 million, while its adjusted EPS guidance of $1.55 to $1.80 is also beneath the $1.9686 analyst consensus.

Conclusion

Helen of Troy's second-quarter results highlight a company in a challenging transitional phase. While it managed to exceed lowered expectations, the significant year-over-year declines in sales and profitability, coupled with a substantial impairment charge and a full-year outlook that trails analyst forecasts, have overshadowed the earnings beat. The market's negative reaction reflects concerns about the company's near-term growth trajectory and its ability to navigate headwinds such as tariffs and softer consumer demand. The path to the "comeback" referenced by its new CEO appears to be a long-term endeavor.

For a more detailed look at historical earnings and future analyst estimates for Helen of Troy Ltd, you can visit the earnings and estimates page.

Disclaimer: This article is for informational purposes only and does not constitute financial advice or a recommendation to buy or sell any securities.