Helen of Troy - Earnings Call - Q4 2020

Transcript

Speaker 0

Greetings, and welcome to the Helen of Troy Limited Fourth Quarter twenty twenty Earnings Call. At this time, all participants will be in a listen only mode. A brief question and answer session will follow the formal presentation. Please note that this conference is being recorded. At this time, I'll turn the conference over to Jack Jason, Senior Vice President of Corporate Business Development.

Sir, you may begin.

Speaker 1

Thank you, operator. Good afternoon, everyone, and welcome to Helen of Troy's fourth quarter and fiscal twenty twenty earnings conference call. Today, each member of our earnings team is in their homes and in different locations across The United States. Since this is the first time we are conducting our earnings call remotely, we hope you will pardon any technical glitches. Before discussing today's agenda, I would like to call your attention to a change in how we define our sales.

As detailed in this afternoon's earnings release, we now define core as strategic business that we expect to be an ongoing part of our operations and non core as business that we expect to divest within a year of its designation as non core. Previously referred to as core business, organic business now refers to net sales revenue associated with product lines or brands after the first twelve months from the date the product line or brand is acquired, excluding the impact that foreign currency remeasurement had on our reported net sales. The agenda for the call this afternoon is as follows. I'll begin with a brief discussion of forward looking statements. Mr.

Julian Minenburg, the company's CEO, will comment on the financial performance of the quarter and year, our response to the COVID crisis and discuss current business trends. Then Mr. Brian Grass, the company's CFO, will review the financials in more detail and reflect on considerations from the COVID-nineteen pandemic uncertainty as we enter fiscal year 2021. Following this, we will open up the call to take your questions. This conference call may contain certain forward looking statements that are based on management's current expectation with respect to future events or financial performance.

Generally, the words anticipates, believes, expects and other words similar are words identifying forward looking statements. Forward looking statements are subject to a number of risks and uncertainties that could cause anticipated results to differ materially from the actual results. This conference call may also include information that may be considered non GAAP financial information. These non GAAP measures are not an alternative to GAAP financial information and may be calculated differently than the non GAAP financial information disclosed by other companies. The company cautions listeners not to place undue reliance on forward looking statements or non GAAP information.

Before I turn the call over to Mr. Minenburg, I would like to note that a copy of today's earnings release has been posted to the Investor Relations section of our website at ww.helenoftroy.com. The earnings release contains tables that reconcile non GAAP financial measures to their corresponding GAAP based measures. The release can be obtained by selecting the Investor Relations tab on the company's homepage and then the News tab. I will now turn the conference call over to Mr.

Minnenberg.

Speaker 2

Thanks, Jack. Good afternoon, everyone, and thanks for joining us. On behalf

Speaker 1

of Helen of Troy, I would

Speaker 2

like to share my heartfelt hope that you, your families and loved ones are staying safe and healthy during this extraordinary time. As we all know, COVID-nineteen has brought unprecedented disruptions to the global community, which in turn is experiencing an unparalleled impact on economic activity across most sectors in all geographies. Situation is so dynamic that each day brings new developments. In response, we are rapidly and continually adapting our business and leaning into categories where our leadership brands play a vital role right now, such as Vicks, Braun, Pure and parts of Honeywell and OXO. We have also taken major steps to protect our people, increase our liquidity, temporarily reduce our costs and safely continue our operations.

We have done all of this guided by our values with a focus on preserving the outstanding capabilities and systems we have built during our transformation. We came into the crisis with momentum and believe our actions have positioned us to serve all of our four major stakeholder groups: our associates, consumers, customers and shareholders. We will give detail in each of these areas during today's call. Given the highly unpredictable nature of the COVID-nineteen situation, we will not be providing guidance for fiscal twenty twenty one at this time. While we are taking actions every day to work through the current crisis, we remain focused on our Phase two plans and financial targets.

With such a broad range of topics to discuss, my comments will first give perspective on our excellent fourth quarter and full year results. They mark an outstanding conclusion to the first year of our Phase II transformation. Next, I will discuss our response to COVID-nineteen and how we are positioning Helen of Troy to navigate the current crisis. Finally, I will share recent trends we are now observing related to our business as the crisis evolves. Brian will then share a deeper view into our financials, including more insight on the business and environment as we move forward.

Now I would like to turn to our performance in the 2020. We finished the quarter well ahead of our expectations. Net sales grew 14.9% with organic business growth of 13.4%. Sales growth was double digit in each of our three business units. Leadership Brands led the way, growing 15.7% during the quarter.

The online channel continued to be a major growth driver, up approximately 39% year over year, contributing 24% of total fourth quarter sales. Customer replenishment continued to be healthy following the strong sell through of our products during the holiday season. Separately, late in the fourth quarter, thermometer demand further increased as COVID-nineteen began spreading across the globe. Turning to the full year, across nearly every key measure, fiscal twenty twenty was the strongest result in Helen of Troy's history. We grew both total organic net sales 0.2%.

We are delighted to deliver that acceleration on top of the 5.8% total net sales growth in each of our last two fiscal years, particularly in light of tariff related disruptions, unfavorable foreign currency exchange and the operational challenges from three consecutive years of significant organic growth. Leadership Brands grew 9.4% in fiscal twenty twenty and accounted for approximately 80% of overall sales. Six of the eight Leadership Brands grew for the year. Our digital initiatives continued to generate results with online sales up over 34% during the fiscal year to represent 24% of total sales. Adjusted operating margin expanded 50 basis points in a year when we raised our growth investments to the next level.

Adjusted diluted EPS grew 15.4%, a meaningful acceleration on top of the 11.3% growth in fiscal twenty nineteen and eleven point six percent growth in fiscal twenty eighteen. Operating cash flow grew over 35% year over year, demonstrating the strength of our flywheel and helping us maintain strong liquidity and low leverage even after the Drybar acquisition. On a strategic level, our multiyear growth investment marketing, e commerce, consumer centric innovation and global shared services have added throughout the share that last month, our two Housewares leadership brands were recognized by the NPD Group during their seventh Annual Home Industry Performance Awards for calendar year 2019. Hydro Flask was recognized for delivering the largest dollar share increase in the portable beverage category. OXO won the award for the largest dollar share increase in food storage and OXO also earned NPD's new award as the brand delivering the largest overall market share increase in the total U.

S. Housewares industry. This is the third consecutive year in which OXO's market share gains have been honored by NPD, the segments during the fourth quarter and the full fiscal year. I'll begin with Beauty, which delivered an outstanding quarter and its best year of sales growth in at least a decade. Total Beauty sales increased 23.1% in the fourth quarter, well above our expectations.

This included approximately five weeks of Drybar sales. Beauty organic revenue growth was 16.1%, also ahead of our expectations and representing its fifth consecutive growth quarter. For the full fiscal twenty twenty, total Beauty sales increased 10.4%, including Drybar, very strong. For Beauty appliances, fiscal twenty twenty marks the third consecutive year of growth momentum, resulting in substantial market share gains. Over the past three years, the improvement to our Beauty segment has accelerated under new leadership, Significantly more focused on developing the online channel, digital marketing, new products based on deep consumer insights for the retail and also the professional markets and further improvements to the caliber of our organization have all paid off.

Similar efforts were also made internationally in Beauty over the past two years, especially in EMEA, leading to growth and greatly improved profitability in Europe. During fiscal twenty twenty, we increased Beauty investment in digital marketing to support new appliance innovation in both brick and mortar and online. These efforts, along with highly innovative new products, have helped grow the overall appliance category itself. A welcome turnaround from a shrinking trend in recent years shows that during the latest fifty two week period, Helen of Troy further grew its number one share position in the online channel for U. S.

Retail significantly. Syndicated data in brick and mortar shows that during the latest fifty two week period, we grew our number two domestic share position in U. S. Retail appliances. First mover innovations, such as the creation of the volumizer category of appliances, continue to be a major driver and are a key focus area for us going forward.

The Revlon and Hot Tools One Step Volumizer innovations have earned more than 40,000 consumer reviews with ratings of 4.4 stars and up, depending on the site. We are extremely proud accomplishment and plan to build on our success with new product offerings later in fiscal twenty twenty one that incorporate further consumer centric insights across our beauty appliance portfolio, including Drybar. In Housewares, the segment capped an outstanding year by delivering an impressive fourth quarter with net sales up 15%, also topping our expectations. Housewares grew a remarkable 22.4% for the full fiscal year against a very tough year ago compare. Both OXO and Hydro Flask finished strong and both posted healthy growth for the full year.

Our investments in innovation, new distribution, marketing and e commerce are paying off with customers and consumers online and in brick and mortar, providing solid ROIs and growing our market shares. OXXO's unique and enduring excellence in universal design and clearly defined positioning influences all touch points across the consumer journey. OXO is all about better performance through better design and quality that makes every day better. The two new NPD awards for OXO mentioned earlier confirm what we are seeing in our customer POS data. OXO's overall excellence and meticulously planned stream of consumer centric innovation resonate with consumers and win in the marketplace.

Hydro Flask has had simply a fantastic fiscal twenty twenty. Its distribution continued to expand as did its sell through, resulting in high double digit growth for the quarter and the year. According to third party syndicated data, the fifty two week period ending in February, Hydro Flask added incremental market share gains to further expand its position as the number one player in The U. S. Metal beverage bottle market.

During the quarter, we continued to grow the brand internationally. Domestically, we began to see high volume customers strategically expand OXO shelf HypoPlast shelf space to meet growing consumer demand. In February, we began shipping our twenty twenty spring collection. The new product lineup includes a variety of innovations such as the new Trail Series, which is 25% lighter with no reduction in thermal performance, new colors and a new finished texture. Spring Collection also further expands Hydro Flask beyond the bottle with new lunch boxes and packs.

The Just One More strategy for Hydro Flask continues to produce results in the quarter with loyal customers and consumers adding new sizes, colors, caps and accessories to their collection. Looking ahead, we expect Hydro Flask to continue benefiting from multiple long term growth drivers. These include further expanding distribution and shelf space, just one more, okay, maybe just two more among households that have already discovered Hydro Flask, new innovation in existing categories, new entries beyond the bottle, further growth and expansion internationally, more direct to consumer, collegiate and much more customization. Net, we think HydroGlass has a wide array of white space opportunities. Turning to Health and Home, our largest and most global business, we are focusing on delighting consumers with trusted solutions for healthy living and peace of mind, especially when they need us most.

Health and Home's excellent fourth quarter results were ahead of our expectations with net sales up 10.5%. Sales in February were primarily correlated to the severity of winter weather and cough, cold and flu incidents that is generally more concentrated in our fourth quarter, the 2020 season fall averages. And the incidence of cough, cold and flu symptoms was only slightly greater than last year's below average season. Pediatric fever was the one symptom area where we did see higher incidence. Additionally and separately, the spread of COVID-twenty nineteen in Asia, Europe and into The U.

S. Added to Health and Home sales in thermometry, humidifiers, inhalants and air purifiers. Now turning to our response to COVID-nineteen. We came into the crisis very healthy. We have strong business results,

Speaker 3

a

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trusted and diversified portfolio of leadership brands with significant market positions, exceptional people united by a powerful culture, highly capable global systems under our shared services and a proven ability to stay nimble. As the crisis unfolds, we acted quickly and decisively to protect our people and reduce our costs, doing so in a way that focuses on protecting the capabilities built during our transformation. On the product side, a key response area for us has been to provide essential health products that consumers need now. Thermometers under our Vicks and Braun brands, humidifiers and inhalers under the Vicks brand and air and water purifiers under our Honeywell and Pure brands. All of these are critical at this time, are highly trusted and are in high demand.

We are working 20 fourseven to maximize supply and support customers and consumers. Outside of the health arena, with families nesting at home, spending more time in the kitchen and more focus on cleaning and on storage as they pantry load, our largest leadership brand OXO is also seeing elevated demand online and in those brick and mortar stores that remain open. We have adapted our shipments and marketing focus to meet the major shifts towards online shopping as key retailers temporarily close major portions of their brick and mortar footprints. Our response in the area of protecting our people has been comprehensive and proactive from the start. It's led by a task force of senior leaders coordinating across all of our global sites.

Measures include a work from home policy, social distancing in our distribution centers, frequent and elevated cleaning protocols across all sites and a lockdown on nearly all business travel. Such a dynamic situation, we will continue to adapt quickly to changes. Our cost interventions fall into two major categories: personnel cost reductions and significant delays in our fiscal twenty twenty one discretionary spending. Most became effective by treating the reductions like light switches that we are dimming or turning off our underlying infrastructure of people and citizens just as quickly and with minimal disruption when business conditions warrant. We greatly prefer this approach to permanent layoffs or reductions.

It preserves our ability to run the business now as well as the speed with which we can respond as the environment changes. On the personnel side, we have temporarily reduced salaries and wages across almost all parts of the company, While this was a very difficult decision to widespread layoffs in order to retain talent, protect what we have built and preserve as many jobs as possible, suspension of merit increases and promotions and other personnel measures have also been implemented. This approach of shared sacrifice reaching all levels of the organization is highly consistent with our culture. Our people supported this approach and continue to do exemplary work driving the business and keeping the company fully operational. I am proud, but not at all surprised that they are doing so with the passion, the dedication and the ownership mindset that is the signature of all Helen of Troy people all around the world.

In our distribution centers, we are reducing our external temporary labor and furloughing some full time employees to match demand. For furloughed associates covered under the company's health insurance plans, Helen of Troy is paying both the employee portion and the company portion of the premiums so they can maintain their coverage during the health crisis. Our second category of temporary measures focuses on reductions and delays to discretionary spending such as brand and product spend, travel and certain capital expenditures. Our fiscal 'twenty one budget earmarked several substantial and incremental investments in our Leadership Brands and in key Phase two strategic initiatives. We believe we are making the right short term business choices to delay some of these investments until later this year, and some will likely now fall into fiscal twenty twenty two.

The largest bucket for discretionary spending is marketing expense for our leadership brands, so we have also taken action on this front. We are adapting our spend to match consumer demand and our supply. For some initiatives, spending has been reduced, while for others, a meaningful portion will be delayed until we have better visibility on demand and recovery. For those brands that are extremely relevant right now, we will continue to spend. In all cases, however, to keep the pump primed for the recovery period, we will make appropriate but reduced investments needed to help our brands stay top of mind.

We continue to choicefully invest in new product development. Consumer centric innovation is the lifeblood of our leadership brands. Innovation keeps them differentiated and is a core strategy in our transformation. The launches we are working on now will be key building blocks in the recovery period in fiscal twenty twenty two and beyond. I'd now like to turn to the third and final area of my prepared remarks by reflecting on some current trends related to the COVID-nineteen pandemic that we are seeing during our first quarter and thoughts on the future as we navigate the crisis and plan for growth on the other side.

One key trend area already mentioned is the greatly increased need for health related products and awareness of their importance in people's lives. With the current intensive media focus on health, all generations are getting a rapid fire education on the importance of owning the types of products we sell under the Braun, Vicks and Honeywell brands. As an example, households are reminded that they should have a high quality thermometer. On ear thermometers, compliance and demand for probe covers is way up as users look to ensure accuracy and hygiene and reduce the risk of contagion. Businesses are increasingly focusing on monitoring the temperature of their employees to help keep them safe and their sites operational.

Inhalants such as Vicks VapoPads and cough suppressing inhalants like Vicks VapoSteam are in increasing demand as consumers take care of their families. Also in high demand and getting additional media attention are our highly rated and market leading humidifiers such as from our Vicks and Honeywell models. Demand is also up for our air purifiers, including our highly rated and market leading Honeywell models, which help improve indoor air quality. With strong sales in the fourth quarter and supply constraints from the COVID related factory shutdowns in China, we are working very hard to maximize production and delivery from our factory partners in China, Mexico and The United States. Another key trend is wellness.

People are looking to protect themselves and their families through hygiene and cleanliness as they spend more time at home and more time with families together. Water purifiers like Pure's pitcher and faucet mounts play an increasing role as do their replacement filters that are certified to reduce a wide range of contaminants. Demand is up for both, especially as water in single use plastic bottles remains increasingly undesirable and unavailable. With cleaning top of mind to help protect the wellness of families, cleaning products from OXXO are seeing elevated demand online and in stores that remain open. A third trend is the necessity of keeping more food and home essentials on hand and cooking more at home.

Families are discovering and rediscovering the joy that comes from cooking and baking together, especially with kids, old and young, in the house 20 fourseven. Several core categories of OXO products are seeing elevated demand online and in stores that are open, particularly in food prep, baking, home organization and storage containers. And the fourth trend we are seeing is the continued consumer interest in our highly popular Beauty Volumizer appliance franchises. Demand online in the stores that are open is higher than our supply. The steps we are taking to ramp up to full capacity at our key suppliers and add new ones are helping, which will in turn allow us to meet much more of the demand and position us to be more fully in stock now and also post crisis.

As we look to the future, we are fortunate to have a seasoned leadership team and a capable infrastructure. While this is not the first crisis many of our leaders running Helen of Troy have worked through, it is our first pandemic of this magnitude. We believe the set of carefully considered actions we have taken to bring the company through the crisis will make a substantial difference in protecting our cash, our business, our people and our high performing organization. We will continue to adapt quickly as the situation evolves. Once the economy returns to some level of normalcy, we expect to lean back into all parts of our flywheel, including the key initiatives for the second year of Phase two of our transformation.

Examples on the shared service side include further geographic diversification of our supply chain and upgrading our IT capabilities to match our growth. Meanwhile, we remain focused on other key aspects of our strategic plan, such as continuing to invest in our leadership brands. Key example is on the OXO, we're a partnership with one percent for the Planet, an organization that champions environmental awareness and action, enabling brands to give back to a global network of nonprofits that champion environmentally responsible initiatives. OXO has spent thirty years making high quality products that last, engineered for functionality and durability. It's why we guarantee our tools for life.

Approximately 90% of the impact the product will have on the environment is decided in the design process. OXO's core competency in design and engineering makes us uniquely qualified to develop tomorrow's tools, which will continue to be thoughtfully designed through the lens of environmental responsibility. OXXO's partnership with one percent is a perfect fit for the brand and parallels the rapidly growing interest that all of our stakeholders have in environmental and social responsibility. Another key example is the Drybar integration, which remains on track and is a very positive reflection on the high level of collaboration across all departments and the Drybar team. That team is now rapidly becoming a fully integrated part of Helen of Troy.

We are proud that nearly all of the Drybar people we asked to join us in January accepted our offer and are hard at work on the brand. In conclusion, while things are difficult right now, we believe tomorrow can be improved by successfully managing the challenges we are all facing today. I remain optimistic that we are making the right choices for our associates, consumers, customers and shareholders. While much uncertainty remains, the current crisis will eventually pass and the new normal will emerge. We entered the crisis with strength and momentum.

We see plenty of reason to believe that Helen of Troy will brave the crisis. And we are confident that we will come out strong on the other side. Before turning the call over to Brian, I would like to share that Bill Sasecka, a Director serving on our Board since 02/2009, announced his intention to retire at the end of his term in August. Over the past decade, Bill provided the company with a wealth of global consumer products industry knowledge and a leadership experience from his very successful thirty years in marketing and senior management for Claro, Avon and later at the LPGA. The rest of the Board and I are thankful and grateful to Bill for his service to Helen of Troy.

His grace, exemplary character, consumer mindset and counsel have been an instrumental part of our success. We wish him the very best. With that, I will now turn the call over to Brian.

Speaker 4

Thank you, Julian. Good afternoon, everyone, and thank you for joining us. I'd like to echo Julian's comments and pass along my sincere wishes for the health and safety of you, your families and your colleagues. The health and safety of our associates has been our greatest consideration since COVID-nineteen began and it will continue to be as we move forward. As humbling as it has been, I've never been more proud of the company in the spirit of togetherness within it.

I want to start by reiterating that the fundamentals of Helen of Troy's businesses remain strong. Even though the current operating environment has presented its share of challenges and uncertainty, our view of the longer term opportunities we see ahead to further grow our business is not a the strategies we have a With our proven diversified business model and product portfolio, efficient and scalable operating platform, strong balance sheet and ample liquidity, I believe we are well positioned to actively manage the things in our control and successfully navigate the current crisis and a protracted economic downturn if that should occur. Before discussing the quarter in more detail, I would like to make a couple of broad points. First, consistent with our strategy of focusing on our leadership brands, during the 2020, we committed to a plan to divest certain assets within our mass market personal care business and recorded an after tax non cash impairment charge of $36,400,000 related to its goodwill and intangible assets. The assets to be divested include intangible assets, inventory and fixed assets related to the company's mass channel liquids, powder and aerosol products under brands such as Pert, Brut, Sure and Infusium.

We expect the divestiture to occur within fiscal twenty one. Identified assets as held for sale. Now define core as strategic business that we expect to be an ongoing part of our operations and non core as business that we expect to divest within a year of its designated. Previously referred to as core business, organic business now refers to net lines or brands after the first twelve months from the date the product line or brand is acquired, excluding the impact foreign currency remeasurement had on reported net sales. Today's earnings release contains tables that show core and non core revenue by segment for the fourth quarter and fiscal years into 2020 and 2019.

We've also included tables that present consolidated core and non core revenue and adjusted EPS for fiscal twenty twenty, 2019 and 2018. Finally, our upcoming investor presentation will include four years of consolidated core and non core revenue and adjusted EPS. Second, as we noted in today's earnings release, we are deferring providing our outlook for the current fiscal year due to the rapidly evolving COVID-nineteen pandemic and the related business uncertainty. We expect to return to our historic practice of providing annual outlook once visibility improves. Now I'll turn to a discussion of our fourth quarter results.

We achieved strong results in the fourth quarter with adjusted diluted EPS growth above our expectations largely due to strong performance in particular Beauty. We made the growth investments we referred to on our third quarter release and were able to lean in even further behind the strength of the fourth quarter. This resulted in compressed margins for the quarter, but still allowed us allowed for adjusted EPS that was ahead of our expectations and even more support behind our leadership brands, another example of the value creation flywheel at work. Consolidated sales revenue was $442,400,000 a 14.9% increase over the prior year, driven by double digit organic growth in all three business segments and five weeks of contribution from Drybar. Consolidated sales in the online channel grew approximately 39% year over year to comprise approximately 24% of our consolidated net sales in the fourth quarter.

The sales from our leadership brands grew 15.7% in the quarter, which includes 1.8 percentage points of growth from Drybar. This was another great quarter for our Housewares segment, which posted an organic business increase of 15% on top of 8.1% organic business growth in the same period last year. Segment saw robust demand for both OXO and Hydro Flask brands both online and in store. Health and Home organic business increased 10.8% primarily due to new product introductions and increased demand particularly in thermometry due to higher pediatric fever and the impact of COVID-nineteen toward the end of the fourth quarter. These factors were partially offset by lower sales due to net distribution changes year over year.

Beauty organic business increased cyclical growth in both online and brick and mortar in the appliance category and in personal care. Drybar contributed net sales of $6,000,000 or 6.7 percentage points of Beauty sales growth resulting in total segment growth of 23.1. Consolidated gross profit margin was 43.5% compared to 40.9%. The 2.6 percentage point increase is primarily due to a more favorable product mix within all three business segments and a lower mix of shipments made on a direct import basis. These factors were partially offset by a lower mix of personal care sales in the Beauty segment.

Consolidated SG and A was 34.4% of net sales compared to 29.2%. The 5.2 percentage point increase is primarily due to higher advertising and new product development expense, higher royalty expense, an increase in amortization expense and higher annual incentive compensation expense. These factors were offset by lower share based compensation. As mentioned on our third quarter call, we had a shift in advertising and new product development expense from the third to the fourth quarter and we were able to lean into spending even further than originally planned during the quarter. The year over year increase in advertising spending increased our SG and A ratio by approximately 2.9 percentage points, while still allowing us to exceed our full year We believe the investments made in the fourth quarter will benefit our businesses and keep our brands resonating with consumers in both GAAP operating loss was $2,700,000 or minus 0.6% of net sales and included non cash impairment charges of 41,000,000 This compares to operating income of $44,100,000 or 11.5% of net sales in the same period last year.

On an adjusted basis, consolidated operating margin was 12.2% compared to 13.9% in the same period last year. The 1.7 percentage point decrease primarily reflects higher advertising and new product development expense, higher annual incentive compensation expense, loyalty expense. These factors were partially offset by a more favorable product mix and Turning to segment performance. Housewares adjusted operating margin decreased 6.3 percentage points to 11.8%, primarily reflecting higher advertising and new product development expense to support strategic initiatives and higher freight and distribution expense to support retail customer shipments. These factors were partially offset by the impact of a more favorable product mix and increased operating leverage from sales growth.

Health and Home adjusted operating margin decreased 1.4 percentage points to 11.2%, primarily reflecting higher royalty expense and higher new product development expense. These factors were partially offset by the margin impact of a more favorable product mix and increased operating leverage from sales growth. Beauty adjusted operating margin increased four percentage points to 14.4%, primarily due to the margin impact of a more favorable product mix, increased operating leverage from sales growth and lower freight expense partially offset by an increase in advertising and new product development. Tax loss was 48.1% compared to income tax expense as a percentage of pre tax income of 7.9% for the same period. Year over year change is primarily due to the recognition of a tax benefit from the impairment charges reported in the 2020.

Loss from continuing operations was $3,200,000 or $0.13 per diluted share compared to income from continuing operations of $37,700,000 or $1.47 per diluted share in the prior year. Non GAAP adjusted income from continuing operations grew to $47,800,000 or $1.88 per diluted share compared to $46,600,000 or $1.82 per diluted share. This represents a 3.3% increase in adjusted diluted EPS, which reflects higher adjusted operating income and the impact of lower weighted average shares outstanding, partially offset by higher interest expense. Despite the lower growth in the fourth quarter, adjusted diluted EPS growth in the 2020 was 18.4% compared to 11.7 in the first half. Looking at fiscal twenty twenty as a whole, we over delivered against our investments in the short and long term health of our businesses.

We delivered sales growth of 9.2% operating margin by 50 basis points, grew adjusted EPS by 56%, fourteen years of the company. Now moving on to our financial position for fiscal twenty twenty compared to fiscal twenty nineteen. Accounts receivable turnover was three point three days for the same period last year. Our accounts receivable balance was $348,000,000 compared to $280,300,000 at the end of fiscal twenty nineteen. Inventory turnover was three times compared to 3.3 times in fiscal twenty nineteen.

Inventory was $256,300,000 compared to $302,300,000 The decline in inventory primarily reflects strong demand for Hydro Flask and Volumizer products, while a strong demand for Health and Home products driven by COVID-nineteen at the end of the fourth quarter. Net cash provided by operating activities from continuing operations increased 35.3% to $271,300,000 for fiscal twenty twenty. The increase was primarily driven by higher cash earnings and a decrease in cash used for inventory. These factors were partially offset by an increase in cash used for receivables. Total short and long term debt was $339,300,000 compared to $320,800,000 Our leverage ratio was approximately 1.2 times at the end of fiscal twenty twenty.

This compares to approximately 1.3 times at the end of fiscal twenty nineteen. Our free cash flow growth in fiscal twenty twenty allows to keep our debt and leverage at very comfortable levels even with the acquisition of Drybar in January. While we are not providing a formal outlook for fiscal twenty twenty one, I do want to share with you how we are thinking about our business in the current environment and some early trends we are seeing. We are experiencing favorable demand trends for some of our products, while others are being adversely impacted due to retail store closures and consumer uncertainty. During most of fiscal twenty twenty, we had strong momentum in our Housewares and Beauty segments, which continued into the beginning of fiscal twenty twenty one.

At the end of the fourth quarter, the company also began to experience increased demand for certain products in the Health and Home segment, particularly in Thermometry. So far this trend has continued into fiscal twenty twenty one and become more pronounced in other product categories such as humidification, water purification and air purification. Additionally, at the beginning of fiscal twenty twenty one, the company began to experience products as consumers engage in pantry stocking, cleaning, nesting and cooking at home. Some of you may recall that our OXXO business grew consistently through the Great Recession a decade ago. Our discretionary nature were more dependent on the retail brick and mortar channel are generally experiencing unfavorable sales trends despite strong demand for our products in most of the channels that are still open for business such as online, grocery, mass and club.

Overall, our revenue is being adversely impacted by the effect of brick and mortar store closures, limited hours of operation and lower store traffic simply because the weight of brick and mortar and the retail environment in our business. We are also experiencing supply chain disruptions with some third party manufacturers, which are adversely affecting our ability to meet consumer demand in those product categories where it is strong. As such, we expect the net effect of COVID-nineteen will adversely impact our revenue for the first quarter and full fiscal twenty twenty one. As part of our comprehensive approach to preserve our cash flow and adjust our cost structure to lower expected revenue, We have implemented a number of measures that will remain in place until there's greater certainty, a reopening of retail customer doors and improved consumer demand. These measures include graduated salary reduction for all associates including named executive officers and the other members of the company's executive leadership team, a reduction in the cash compensation of the company's Board of Directors, suspension of merit increases, promotions and new associate hiring until further notice, furlough of associates in specific areas directly tied to sales volume with assistance to those associates to maintain health insurance coverage as well as a reduction of external temporary labor and reduced work hours reduction or deferral of marketing expense as we lean into brands with strong current demand and reduced investment in other key brands without sacrificing brand awareness limited reduction of investment in new product development launches in anticipation of more normalized economic activity, elimination of travel expense in the short term in 2021 and reduction in consulting costs that are not critical.

03/24/2020, we borrowed approximately $200,000,000 under our revolving credit facility, part of our comprehensive precautionary approach to increase our cash position and maximize our financial flexibility light of the volatility in the global markets resulting from the COVID-nineteen pandemic. After giving effect to the borrowing, the remaining amount available for borrowings under the facility was 536,400,000.0 and our cash and cash equivalents on hand was approximately $393,000,000 As previously announced, we entered into an amendment of our credit agreement in March. The amendment extended the maturity from 12/07/2021 to 03/13/2025. Further, the amendment increased the revolving commitment from $1,000,000,000 to $1,250,000,000 The amendment also reduced the interest spread within our pricing grid and made favorable changes to covenants and borrowing limitations, including a new leverage definition that allows for the subtraction of cash and cash equivalents when calculating our leverage ratio. As a result of our COVID-nineteen response actions, strong revenue growth at the end of fiscal twenty twenty and lower inventory levels, we've continued to generate strong cash flow growth in March and April and our liquidity has further improved since the pandemic began.

As of yesterday, our pro form a net leverage was 0.9 times. We have approximately $380,000,000 of cash and cash equivalents on hand. We have approximately $6.00 $5,000,000 of remaining availability under our credit agreement. Although we expect our free cash flow to take a step back in fiscal twenty twenty one as we build healthy inventory levels and the retail environment looks for stability, we expect our balance sheet and liquidity position to remain strong. In summary, while we are humbled by the tragedy of COVID-nineteen and its unprecedented impact on our society, strong balance sheet, ample liquidity, diversified product portfolio and scalable operating platform combined with our COVID-nineteen response actions and Phase two transformation plan lead us to believe we are well positioned to store the company through the challenges of the current environment.

We are prepared for a variety of long term scenario the variety of longer term scenarios that could occur. If the economy were to deteriorate further for a protracted period of time, we believe we have the balance sheet strength and liquidity to navigate the economic cycle and we could take further actions to reduce spending and productivity necessary. If the economy were to improve as we emerge from the crisis, we believe we are poised to capitalize on the investments made in fiscal twenty twenty and those planned for fiscal twenty twenty one. Our businesses have strong momentum leading into the crisis and we expect to continue to feed that momentum as brick and mortar retail stabilizes, online channel thrives and the consumer adjusts to a new normal. And with that, I'd like to turn it back to the operator for questions.

Speaker 0

Thank you. At this time, we'll now be conducting a question and answer session. Thank you. Our first question is coming from the line of Olivia Tong with Bank of America. Please proceed with your question.

Speaker 5

I want to dig further into your visibility on demand across your key business segments over the balance of The U. Your channels. If you can give us a sense of either performance utility from early March to now, if you could also discuss the retail relationships and also how you're going about planning for the next few quarters given potentially very different scenarios we could be in? And then secondly, what you're doing on advertising to create awareness in Raun, VIX, Honeywell to the extent that you have product to satisfy the demand while also supporting some of the more discretionary businesses? Thanks.

Speaker 3

Got you. Yes. Hi, Olivia, thanks. A bunch of things in there and nice to talk to you. Sorry, it's a virtual one today, but you come through loud and clear.

In terms of the questions, starting with the demand that we're seeing now in our prepared remarks, you heard, I hope, some bright spots. There's some significant attention to our products, first of all, starting in Health and Home, and we are seeing a lot of demand in all the categories mentioned, and thermometers included in first among them for obvious reasons on COVID-nineteen. Extends beyond that though into the humidifiers, the inhalants, I think cold and cough, cough especially. And in the case of the water purifiers and importantly also air purifiers. In OXO, where other brands specifically, you heard the comments that we made and OXO has been holding up especially well online and the stores that are opened that the year over year comps are very, very good and in fact ahead of year ago.

In the case of beauty, we're also seeing now and it's getting better week by week, especially as the supply situation unfolds, to see significant demand, especially around the volumizer franchise and also to see the growth week over week and depending on which store, stores like Target, Walmart, Amazon are three very large examples in our top five customer group that are experiencing that trend on beauty. So this is good to see. In terms of supporting them, we are supporting them, especially where the stores are open. There's the company has gotten very good online. We're far from perfect, but we're miles ahead of where we were just a couple of years ago.

So we're supporting the dotcoms very precisely. We can advertise on their sites and on Amazon tremendous amounts of support in terms of digital marketing where we have product and where the customer is able to shop. So that's happening. And in the case of demand in general, where it's poor is in the places where the stores are closed obviously. And with brick and mortar still bigger than online in terms of total sales, that's why Brian made the comments of its net, got some damage in it, just like everybody else.

But with Helen of Troy, more developed online than pretty much anyone else that we're aware of in our industry, we think we're faring better than most and also having those health care products makes a big difference. I think there was another question inside your comments. I may have missed that one, Olivia, sorry.

Speaker 5

No, no worries. I guess, one, I also asked you about the divestiture, why now? Because we know it's not your favorite business, but is there something else you're looking to do, a desire to create liquidity or something else? Just trying to better understand the timing given where deal multiples are now post versus pre COVID. Thanks.

Speaker 4

Olivia, it's Brian. I can start, maybe then Julian can jump in. I just want to address, it's not liquidity driven. We had made the decision to do this far well, not far before, but sometime during the fourth quarter before COVID-nineteen had begun becoming what it is today. So no, it wasn't liquidity driven.

We just feel it's the right time to focus on our leadership brands. And we think the asset is better off in somebody else's hands who can give it the time and attention it deserves.

Speaker 3

Yes. And my build on that, Olivia, is we've seen some tremendous strength in the Leadership Brands. You heard the numbers we just reported for the and then over the last three years plus in Beauty now, there are three years in Beauty and many quarters in a row. We've demonstrated not only the ability to grow in appliances, but now also the ability to grow the appliances sufficiently to make the whole segment grow the biggest in a decade that you heard in the prepared remarks. In terms of the personal care, Brian said, it's probably better off in the hands of a company for which that's core, those types of mass markets, personal care products.

And in our case, it's not only a matter of focus, just a matter of where we're having success and where we want to put the next dollar. And from a liquidity standpoint, it's far from our tremendous amount of liquidity now into the crisis. So it's not like we're selling the furniture. And then in terms of what we do with the proceeds and all of that, quality problems to have if the time comes. And at that moment, we'll put it to work on something that's core and strategic for us.

Speaker 5

Great. And then just lastly, just a little bit more color around the decision to delay the guidance for fiscal twenty twenty one. Obviously, understand it's a very challenging backdrop. But is it like can you talk about like what your biggest worries are? Is it just the COVID-nineteen obviously is a big piece?

Is it recession? Or is there something specific internally as you look into 2021 that kind of gives you pause? Because obviously, I understand that there are many divergent trends and all that. Thanks.

Speaker 3

It's a great question. I'm very glad you asked so that all can hear in the public call here. The sole reason we're not giving guidance is COVID-twenty one uncertainty. And I think the vast majority of other companies have done exactly the same. It's I don't know if I can say this the right way, but I'll try, which is I think it would almost be irresponsible for us to give guidance at this point for the simple reason that not only do we not know, from a future standpoint the shape of the, pathogen, what it will take, the course it will take, but I think anyone who says they do is almost certainly wrong.

And I don't want to judge for other people, but I think it would be very hard for a serious company to say, you know, we've got this and we know exactly where it's going and we can see entire next, you know, twelve months. I don't think anyone can say that with certainty. And in the case of Helen of Troy, there's no other reason, whether it's a V shape, a W shape, an L shape, a U shape, and we've heard it all. What we're doing is looking at our business, and the prospects that we have and making what we think are the best decisions. But there's no other reason whatsoever on the subject of guidance.

Brian, I know you had to build there.

Speaker 4

No, would just say, I mean, knowing when stores retail stores will open in earnest and be open consistently and when the consumer will be in those stores is a huge kind of gap in visibility that's very difficult to give guidance against. We're also we were chasing demand in a few areas leading into the crisis. And then there was Chinese New Year and the crisis on top of that, which has put a lot of disruption into the supply chain that we also still have to work through. And so you combine some supply disruption from COVID-nineteen along with low visibility on demand, and I think that points you in the direction of that giving guidance would be irresponsible, as Julian said.

Speaker 0

The next question is from the line of Bob Labick with CJS Securities.

Speaker 6

Great to hear your voices, and I hope everyone on the call is doing well and safe and healthy. Wanted to start, maybe you could talk a little bit about some of the hurdles for some of your brands to shift to almost nearly 100% online. Is there enough inventory in the marketplace? Are you forced to use air cargo to replenish? And maybe specifically talk a little bit about because you mentioned Amazon obviously.

And

Speaker 2

have they

Speaker 6

I've read that they had shifted to not taking on inventory of nonessential items. How does that impact or how has that impacted Hydro Flask or Drybar or things like that? Just give us a little sense of what's going on with some of the lack of bricks and mortar retail and how you're trying to get supply to market?

Speaker 3

Yes, you bet. It's a great question and nice to hear from you, Bob. We've been in our quiet period for a long time, so it's nice to come out and be able to chat. In the case of the shift to online, it is big. I think it's important that people know and I think they do that not all brick and mortar is closed in the drug channel.

The pharmacy stores are open and in the mass market channel, these are Walmart, Target as two huge examples, generally open. Not every department and not every place are perfect, but there is a footprint out there. And then when it comes to online stores that are closed like an ulta.com as an example, but there's so many others, worthy of bedbathandbeyond.com and on it goes. There's plenty of online activity that's surging and is multiples of its historical run rates even taking into account the growth. So if something's growing 25%, 30% year over year to see it double its size and then grow on top of that, this is what we're talking about.

So these are big. In terms of us supplying those, your point about essentials is important. Originally, and this is like a month ago or maybe even three weeks ago, big players like Amazon were restricting the product assortment to what they would call essentials and they would have literally have a list with a capital E of what's in and what's not. And then over the course of the last two or three weeks, the list of essentials has been growing longer and longer. And we and I'm sure other companies, but certainly we have many of our products added to the essential list including I'd say probably 90% of Hydro Flask at this point.

And so you see a lot of new SKUs being handled by those players. Our own DTC website, so think of oxo.com, hydroflask.com etcetera has been very active because consumers are ordering from us directly on the Internet and we're fulfilling from our distribution centers without any retailer involved. We've also kept the post office and FedEx and all of that in good spirits as we ship a lot of that product. So there's enormous activity in this space and our people are really rising to the occasion. In terms of the amount of demand, as Brian said, it's not enough to overcome all of brick and mortar.

But as I said before, for a company that's well developed in that case, we don't have to ship that much more onto online. Extremely active in this space. And from a digital marketing standpoint, to Olivia's question earlier, we're very active on supporting the businesses to keep things moving and to make sure we get good ROI and top of mind and all of that. And then on the supply side, we're working very, very hard to make sure there's enough product. It's always the SKUs that are in the highest demand are the hardest to keep in stock.

And we are having some problems as Brian called out in those areas with the combination of chasing demand last going into last quarter, the epic result that we just posted today from last quarter, the Chinese New Year, COVID-nineteen itself sweeping through the China factory base and now ourselves replenishing demand to our supply as quickly as we can to feed all of that.

Speaker 4

Brian, Yes, you have other comments sorry. I know you asked about airfreight. Yes, we have done that selectively, where from a demand perspective and a cost perspective, There's a situation now where it's become very costly to do that. So we have to be even more choiceful when we decide to do it or not do it. But yes, it's something we did in the fourth quarter.

Speaker 6

Got it. Okay, great. Then just one

Speaker 3

One last just want to say on certain areas sorry, just want to make sure people knew that in the Healthcare Essentials, our standard is a little different for the airfreight. We'll lean in a little bit more there just because we appreciate the essentiality and it's we still want to profitable and do all the right things on the one hand. On the other hand, people just need the product.

Speaker 6

Got it. Okay. And then just last quick one for me. You mentioned the Drybar integration is kind of on track. But just can you give us a sense, I don't remember if we knew this from before the world seems to have changed so much.

How much of their sales were online? How is their ability to sell online other retail sites? And then also as it relates to them, how are the synergies in manufacturing and procurement going? Or is that impacted in the short term?

Speaker 3

Yes. The second one first, not impacted. We're making very good progress on the subject of manufacturing. We're bigger by maybe ten, twenty times something like this, I'd have to do the math. On the appliance side, especially than dry bar and get a little bit more ability to leverage our scale and a much broader supplier base.

We know the dry bar suppliers well, and we've been working with them and one of them is a current major supplier to us. And we've been working with them, they're cooperating nicely. So the terms and the scale advantages are going well. The other is one that we know well, but don't work with as much and we're working now to improve the overall situation for the benefit of both. On the liquid side, the team is fully intact in dry bar and is very active in supplying the liquids.

Back to the first question of how Drybar is doing in the.com and all of that, people should know a couple of things and we've announced before that the salons themselves which are all closed today represent roughly the 20%, 80% or 20% of the Drybar sales for products. The 80% is primarily split between Ulta and Sephora, both of which on a brick and mortar side are closed, but are booming online. And so the dry bar sales online for those two Ulta and Sephora are doing extremely well, but it's not enough to overcome the brick and mortar. And in the case of the Drybar stores, there's an active direct to consumer aspect and that is extremely active right now. And if you were on their mailing list, for example, you'd see a lot of offers and reminders and good things for home like dry shampoos and taking care of yourself at a time when wellness matters and people got kids climbing the walls and all that, just to give people a chance to take care of themselves during that time.

I know Brian's got some builds here.

Speaker 4

Julien, I think you covered all the points I would have made.

Speaker 6

All right. Thank you very much.

Speaker 3

Sure. Thanks, Bob.

Speaker 0

Thank you. Our next question is from the line of Rupesh Parikh with Oppenheimer. Please proceed with your question.

Speaker 3

So the first year I want

Speaker 7

to start is Health and Home. So we get a lot of questions on your thermometer business. So just want to get a sense of your ability to ramp up capacity and also whether you currently serve the B2B channel and whether that's an opportunity going forward?

Speaker 3

Yes, it's a great question. So thermometers are booming in general. Nobody likes the reason, like COVID-nineteen, but we don't cause the problem. We're very glad to be a part the solution, to the extent that we can be there for people. We have production facilities, that we work with, these are third parties, through China, and also in Mexico.

And some parts, for example, the probe covers for the infrared thermometers or the Braun ear thermometers, the same product, is in The United States. So it's not just a China thing or a transport thing. This is a capacity thing. So on the subject of capacity, we've been greatly improving the capacity out of Mexico, significant numbers, double digit kind of increases to get the maximum number of intro admin for red thermometers into the marketplace now. And we don't have the Pacific Ocean to cross there.

So there's a speed aspect to it as well. In the case of the probe covers where the demand is more than doubled and that's a very important for hygiene, for helping to prevent contagion and also the accuracy of the thermometer measurements themselves. That demand is easily running at 2x. That's made in The United States and then we've made significant double digits improvements in the capacity there as well. And on China, as the factory production comes back online, it's actually generally almost full strength now.

There are some government interventions in China, especially in March, where a lot of the product was being directed in China during their peak for COVID. As that has come down and their restrictions are easing, that product is flowing much better now. And we work with multiple suppliers across all different models there. So there's lots of different places to do the different types. On the B2B side, it is an opportunity.

And as I mentioned in my remarks, I'm glad your customers are picking up on it, not what we said, but with a B2B, which is that employers are going safe and they're increasingly wanting to measure temperatures on people's way in the door, especially in a no contact or noninvasive types of things for it as an example of that. We make a lot of forehead thermometers and now the B2B demand is extremely high. From a sales channel standpoint, it creates a development opportunity for us. While I can't predict what the new normal will be like on the other side of COVID-nineteen, if you think back to nineeleven, the kind of airport security that is here to this day, what's that twenty years on, there's just a new normal in that world. I wouldn't be surprised if there's a new normal in the temperature checking world, but it's hard to predict such things in the heat of the moment.

Either way, it's an opportunity for us.

Speaker 7

Okay, great. And then going back, I guess this is following on to Olivia's question earlier. Just in terms of trends, so at least in retail, it appears at least in recent weeks you've seen acceleration maybe driven by some of the stimulus out there. So if you look at some of your more discretionary product offerings like maybe Hydro Flask, have you also seen maybe I guess consumers retrenching late March, early April and then feeling better or maybe seamless is helping and trends picking up? Like any more color just in terms of how some of those discretionary categories are performing recently?

Speaker 3

Yes. I'll make a broad comment and then specifically we are seeing week over week demand improve. So this is just true in general. It's especially true online and it's now also true in the brick and mortar stores that are open and it's also true for Hydro Flask. So whether you're talking about volumizers, the OXO products that we called out specifically and we can go through which categories it's helpful to you and other beauty products and now also Hydro Flask.

You say, well, why now? It's because of the essentials listing. So the online for Hydro Flask, the essentials listing has improved and that has helped us considerably. And then consumers themselves, it's possible what you say would be speculative for me to confirm or deny, but I think it makes sense that as consumers feel more comfortable that they've got the stimulus checks and they can have at least some visibility into the current situation, the idea of making purchases like that maybe makes a little more sense than two or three weeks ago. Consumers are also just kind of clamoring.

Think I don't just common sense that the two words that Hydro Flask stands for in its selling line, which are let's go, probably is about the best two word summary of how 7,000,000,000 people on the planet Earth feel, which is let's get outside and do some stuff. And I think, it's springtime in the Northern Hemisphere. The weather is improving. The restrictions are loosening, and people are chomping at the bit.

Speaker 7

Great. Thank you for all the color. I'll pass it along.

Speaker 3

Yes. Hopefully, it's enough. I really can't predict the future. Nobody can, but I can say the week over weeks, they're simply improving and that they're meaningful improvements. And I can say that the trends, it's not like, oh, this week is better than last week.

So we'll tell you, it's been every week for the last couple of weeks. And the trends I just mentioned are all happening. The Health and Home, it's a bit different. That one is more symptom and COVID driven. So that's different than how consumers feel or how brick and mortar stores are behaving.

It's simply that people want to have humidifiers and air purifiers, water purifiers and they need thermometers. You'll see recommendations and there's some pretty big and widespread newspaper articles on humidifiers. Our products, I think there were five recommended in one very prominent newspaper, national distribution. And they highlighted three favorite products, sorry, five favorite products, three of them were ours. So it means that, we're getting pretty good attention.

I think people are also getting an education now, especially millennials and others who might think, don't need that. That's for my parents, thermometer, humidifier, something like that. And now they're all looking to buy them. So there's just good trends out there.

Speaker 0

Thank you. Our next question is from the line of Linda Bolton Weiser with D. A. Davidson. Please proceed with your question.

Speaker 8

Hi. How are you? So I just wanted to kind of clarify. I mean, tone, quite frankly, is very positive across categories that I wouldn't expect it even. I guess just in thinking forward, I mean, I think there's a consensus view out there that we're in a severe recession.

And in the last recession, your revenue did decline. I think it was in the mid single digits, if I'm remembering correctly. And your portfolio is not exactly the same, but it's largely the same as it was back then, I guess, with the addition of Hydro Flask. So how should we think about the overall portfolio this time around versus the last recession? Maybe once we get past this surge in demand for certain COVID related stay at home items, How should we think about that about your business a couple of quarters out?

And maybe you could also talk about just the trading down phenomenon in some of your more premium priced product lines and whether you anticipate there might be some of that, that might happen? Thanks.

Speaker 3

Sure. Yes, it's a good question. Nobody is immune to recession, but I think it's important to break products into two groups. One is things people need, so think of staples and separately things people would like, but maybe there's a substitute that's trading down or cheaper to your point. I think it's also good to look at the last major recession and ask, well, what happened?

So you've already answered one, which is you can see what our portfolio did. We've made some significant improvements in our portfolio since then. But if the question of what happened last time, there's a good mathematical answer. And like you said, we had not such a big decline. Some products that you might think are premium and essential premium yet essential like OXO, you know, think kitchen things, you might think, oh, people will trade down like crane opener when you could buy the $2 can opener, especially if you just don't have a job.

And nonetheless, during the great recession about a decade ago, OXO grew 25%. The drivers of that recession were very different. So this was there was no global pathogen. There was no pandemic. There was no multi trillion dollar government stimulus directly to consumers at that time.

Was through the TARP program and there it was mostly asset and banking. There were other things happening a decade ago that are happening today. So I don't know if it's directly comparable. I can also say that a lot of our products are thriving. So think of the Health and Home ones that we've mentioned in this environment because of the essentiality.

And on things like beauty, the volumizers are the demand is so strong that even in this environment, we can't keep up with this from a supply standpoint. We're working very hard to improve that by the way, but, seeing good stuff. And on the store closures, it's the difference this time. That wasn't true last time that all the stores were closed for a month or something, but that is the case this time. And there's not a great cure for that.

You can't buy at a store that is not open and you can't go to a store if you're supposed to stay in your house. And that last thing I'd say is very different is online. Helen of Troy was a low single digit online player a decade ago. Today, it's a 24% online players reported in the numbers we gave just an hour ago. And those numbers are significantly better and the market for online products is way more penetrated.

Younger people are buying Amazon Prime and none of these things existed a decade ago. So there's a little perspective and some comparison, but it's not the same, it's not the same drivers, not the same recessionary environment.

Speaker 4

Yes, this is Brian. I'd just add, I mean, the weight of beauty ten years dramatically different than it is today. Beauty was a core business at that time. We had acquired OXXO and we hadn't even acquired the healthcare type business. So we have a healthcare business today.

We have a business OXXO that grew consistently and robustly last time this occurred. And we have a lower weight of beauty. And what we do have in beauty is very high in demand now, and we've seen that consistently. And as Julian said, the trends have actually improved. So we we have we're having trouble keeping up with the demand for for the volumizer in our beauty, business.

And then I would agree that we weren't as we weren't penetrated online like we are today, and I think we're ahead of our peers in terms of online penetration. So I think our portfolio actually works in our favor. And the comparison to ten years ago is relevant, but I think we're a different company than we were then.

Speaker 3

Yes. And on the downside, I'd say Drybar will the salons are closed right now, start right there. But also, it's much higher end product, and it's one that's more discretionary. So, women will, I believe, soon enough, they'll want some time away, they'll want some me time, they'll want some pampering, they always want to look good. And I wouldn't be surprised if there's a rush on nails, hair color, I think roots and also haircuts and blowout style and the social events and travel and all that pick up over time.

All the reasons why Dry Bars thrive so much will presumably be back on the back in the saddle.

Speaker 8

Okay. That's all for me. Thank you.

Speaker 3

Sure, Linda. Nice to talk to you.

Speaker 0

Thank you. Our final question is from the line of Steve Marotta with CLK and Associates. Please proceed with your questions.

Speaker 9

Good evening, Julien, Brian and Dan. Julien, would you say that the largest supply demand dislocation of all your product lines is currently occurring in thermometers? And I diligently took notes in what you're doing to endeavor to remedy the supply chain from a thermometer. So based on current levels of demand, current levels that the supply chain can catch up to that?

Speaker 3

Sure. Yes, it's let's start with the first one. Just repeat. The second one I get. The first one is to make sure I hear it one more time,

Speaker 9

You've noted a couple of product categories that are current where demand is currently outstripping supply where you're chasing product volume managers being one of them. I'm asking is thermometers the leading category where demand is outstripping?

Speaker 3

Yeah. I'd say the answer is yes. I'd have to go back and triple check just to make sure I don't take you down the wrong path. But I believe the answer is, yes. It's not alone, though because of the volumizer comment.

And so it's important to know it's not just that one. We're seeing demand, very high in a couple of other categories. On the thermometer side, you know, we're talking historic kind of situation. Unlike others, the only other pandemic I'm aware of in the lifetime probably is the swine pandemic, which was roughly a decade ago, it was February, not like that period of time. And at that time, it's not the kind of situation that we're in now because I don't think too many people died from swine flu and there was none of the social distancing and two week incubation and the quarantine and other things that are being seen today.

So I don't think that those two pandemics are so comparable. So the thermometer thing is off the charts. And then high fever spikes are highly correlated to the early symptomology for this disease. Thermometer a big deal. That's the driver.

So yes, I think it's likely that that's the outsized. And Brian, I think you had a comment on this and then we'll move to Steve's other question.

Speaker 4

Yes. The there's definitely a constraint in thermometers, but the advantage we have there is some of our key SKUs are manufactured in Mexico, so the lead time is shorter. And then the things that aren't manufactured in Mexico, because they're small lend themselves to being efficient from an air freight perspective. So we can more efficiently air freight the supply when we're constrained on the thermometers than we can in hair dryers and some of the bigger items. So yes, it is their demand is very, very strong and hard to keep up with it from a supply perspective.

But our supply chain structure and the nature of the devices do make it better in terms of being able to ramp up the supply and get the product here when we need it. So it's a little bit better in that sense, but still a challenge because the demand is so strong.

Speaker 3

Yes. And I think I mentioned earlier and also in the Western Hemisphere thermometers, we're the overwhelming market leader by twenty, thirty, 40 share points is kind of numbers. In the number of probe covers we sell, think of it as like a number like $1,000,000,000 that is a big number. The demand is multiples of that. So it's not like we could just one more shift and make a few more.

Of course, we've done all of that, maxed out the molds, maxed out the shift work, maxed out all the materials, all the stuff has been done. We've also made some, I'd call it, clever interventions with the suppliers to increase the capacity from there and taking numbers up like 20%, 30%, this kind of thing. And in the case of the ear thermometers, it's also the case we've increased the capacity. And in China, where there's plenty of production, the demand is overwhelming. So we're getting the absolute most we can out of the supply chain there.

And every single day we're shipping thermometers. People should not hear that just because they see it out of stock in the store that we don't have any. It's that we're allocating what we have, making more as fast as we can and putting it into the market, but the demand is high enough that there's just not enough. In the case of volumizers, it's a completely different driver. It's just the product is extremely hot and people want them.

And even in this environment, it's hard to create enough. So we brought on other suppliers, other component suppliers like motors and we have expedited to the point where it pays out like we're trying to say on some sort of air freight.

Speaker 4

COVID-nineteen had an extreme impact on the ability to have volumizers to meet demand. It happened right on top of Chinese New Year and know, it took a while for factories to be able to have the labor or the components, to be able to do production again because the componentry was also limited by other factor factories that weren't able to open. So COVID nineteen had a had a very large impact on on the demand. And as Julian said, our capacity has ramped up now to ninety, ninety five, getting close to a 100%, But there's lead times on production from China and airfreight is very expensive right now. So we will have to be choiceful on what costs we choose to add to meet the demand.

Sure. That's helpful. Thank you very much.

Speaker 3

Yeah. Pleasure. You had a second question in there. I don't know if it got enough attention, Steve.

Speaker 9

I'll take it offline. You're all good. Thanks.

Speaker 3

Okay. Yes, no problem. And I hope people do understand it's important that they know that the supply it's not like we don't have product. We don't have enough product, which is a good problem to have, but we would like to be able to satisfy the market in full and that's where the twenty fourseven is happening. And then in other areas, we're doing fine on that.

I think the net of it all and Brian mentioned this in his prepared remarks is there's not enough stores open to overcome all the goodness. So the net is tough to grow in the environment. But every single place where we can be successful we are. And the places where the demand is surging, we're selling literally everything we have. And in the places where we can help develop or feed the market like online where we're strong, we are not only feeding it, the market itself is strong.

And then we're supporting those brands to make sure that consumers have awareness, get facts out, the digital marketing, when the press inquires, we answer the very best we can, to keep the information accurate in the marketplace and to make sure people know what to do at a time when everybody's worried about health and wants to do the very best for their family. And when it comes to more discretionary things like the OXO type of products, maybe you've seen it in your own homes, the demand for cooking related, cleaning related, storage, this kind of stuff is super high. And the products are benefiting meaningfully from that, situation and that being close together. And as we put in our script, children old and young, and I could say that at the age of 55, I'm doing a lot more cooking than I ever have in my life.

Speaker 0

Thank you. There are no additional questions at this time. Would like to make any final comments?

Speaker 3

Yes. Thank you, operator. We appreciate everyone being here with us today as well as your support. We're very, very proud of our strong fourth quarter and the full year performance we just posted for fiscal twenty twenty. We're also proud of the outstanding start that that represents for Phase two.

That was the first year of Phase two and it was a great one. We are working very hard to address the COVID-nineteen crisis to continue to advance our Phase two plan and to emerge strong as the economy reopens. We look forward to speaking with many of you and this will happen in the coming days and weeks. We thank you very, very much and hope you have a wonderful evening. Thank you.

Speaker 0

This concludes today's teleconference. You may disconnect your lines at this time. We thank you for your

Speaker 3

participation.