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HELEN OF TROY LTD (HELE)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 FY25 revenue was $530.7M (-3.4% YoY) with GAAP EPS $2.17 and adjusted EPS $2.67; gross margin expanded 90 bps to 48.9% while adjusted operating margin rose 30 bps to 16.6% .
  • Home & Outdoor grew 4.3% YoY to $246.1M with adjusted operating margin up to 18.4%; Beauty & Wellness fell 9.3% to $284.6M amid the weakest global illness season in eight years (ex-COVID) .
  • FY25 outlook updated: net sales $1.888–$1.913B, GAAP EPS $4.60–$5.02 (lowered), adjusted EPS $7.15–$7.40 (narrowed), adjusted EBITDA $292–$295M (narrowed), FCF $145–$155M (lowered), ending net leverage 2.85x–2.75x (raised) .
  • Catalysts: Olive & June acquisition (expected $17–$18M Q4 net sales, $0.05–$0.07 adj EPS accretion, $3–$4M adjusted EBITDA in FY25) and continued progress on Project Pegasus margin initiatives; watch wellness demand trajectory and tariff risk management .

What Went Well and What Went Wrong

What Went Well

  • Home & Outdoor momentum: segment revenue +4.3% YoY to $246.1M; adjusted operating margin expanded to 18.4% (from 16.9%) on lower commodity costs and improved inventory obsolescence .
  • International strength and distribution gains across Hydro Flask, OXO, and Osprey drove growth; “we have grown our U.S. weighted distribution by 11% YTD and gained meaningful distribution internationally” .
  • Project Pegasus on track, contributing to gross margin expansion and investment “fuel”; CEO: “Project Pegasus remains on track...having a positive impact on our gross profit margin and providing critical fuel for reinvestment” .

What Went Wrong

  • Wellness headwind: “weaker-than-expected winter and illness season” cut Q3 sales by ~$10M; expected $15–$20M headwind in Q4, with U.S. illness incidents at an 8-year low (ex-COVID) .
  • Beauty softness and category shifts: hair appliances below $100 remain weak; management noted bifurcation toward higher-priced items, with continued work needed in >$100 appliances .
  • Cash flow and leverage: FY25 FCF cut to $145–$155M from $180–$200M and net leverage target raised to 2.85x–2.75x given lower revenue, strategic inventory builds, and Olive & June funding .

Financial Results

Quarterly Trend – Key Metrics

MetricQ1 FY2025Q2 FY2025Q3 FY2025
Revenue ($M)$416.8 $474.2 $530.7
GAAP Diluted EPS ($)$0.26 $0.74 $2.17
Adjusted Diluted EPS ($)$0.99 $1.21 $2.67
Gross Margin (%)48.7% 45.6% 48.9%
Operating Margin (%)7.4% 7.3% 14.2%
Adjusted Operating Margin (%)10.3% 9.8% 16.6%
Adjusted EBITDA ($M)$52.4 $55.8 $96.8
Adjusted EBITDA Margin (%)12.6% 11.8% 18.2%

Year-over-Year – Q3 FY25 vs Q3 FY24

MetricQ3 FY2024Q3 FY2025
Revenue ($M)$549.6 $530.7
GAAP Diluted EPS ($)$3.19 $2.17
Adjusted Diluted EPS ($)$2.79 $2.67
Gross Margin (%)48.0% 48.9%
Operating Margin (%)19.5% 14.2%
Adjusted Operating Margin (%)16.3% 16.6%
Adjusted EBITDA ($M)$97.8 $96.8
Adjusted EBITDA Margin (%)17.8% 18.2%

Segment Breakdown – Q3 FY25 vs Q3 FY24

SegmentRevenue ($M) Q3 FY24Revenue ($M) Q3 FY25YoY GrowthGAAP Op Margin Q3 FY24GAAP Op Margin Q3 FY25Adj Op Margin Q3 FY24Adj Op Margin Q3 FY25
Home & Outdoor$235.9 $246.1 +4.3% 21.0% 16.4% 16.9% 18.4%
Beauty & Wellness$313.7 $284.6 -9.3% 18.3% 12.2% 16.0% 15.0%
Total$549.6 $530.7 -3.4% 19.5% 14.2% 16.3% 16.6%

KPIs

KPIQ3 FY2025Notes
Domestic Net Sales ($M; % of total)$400.5; 75.5% Mix shift vs LY
International Net Sales ($M; % of total)$130.2; 24.5% International strength
Inventory ($M)$450.7 Higher due to thermometry and tariff strategy
Total Debt ($M)$733.9 Sequential +$21M
Net Leverage Ratio (TTM)2.35x Before Olive & June Q4 accretion
Cash from Operations (9M) ($M)$78.2 YTD basis
Free Cash Flow (9M) ($M)$56.1 YTD basis

Versus Estimates

  • S&P Global consensus (EPS, revenue, EBITDA) was not accessible at time of writing due to data limits; management stated results were “within our top and bottom-line expectations” provided in October .
  • Implication: Street models likely need to reflect wellness headwinds and updated FY25 guidance (see Guidance Changes) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Consolidated Net Sales ($B)FY25$1.885–$1.935 $1.888–$1.913 Narrowed
GAAP Diluted EPS ($)FY25$4.69–$5.45 $4.60–$5.02 Lowered
Adjusted Diluted EPS ($)FY25$7.00–$7.50 $7.15–$7.40 Narrowed (slightly raised low end)
Adjusted EBITDA ($M)FY25$287–$297 $292–$295 Narrowed
Free Cash Flow ($M)FY25$180–$200 $145–$155 Lowered
Net Leverage Ratio (x)FY25 YE1.90–1.80 2.85–2.75 Raised
Home & Outdoor Net Sales YoYFY25-2.3% to +1.4% -0.7% to +0.6% Raised
Beauty & Wellness Net Sales YoYFY25-9.0% to -7.5% -10.3% to -9.0% Lowered
Interest Expense ($M)FY25$44–$46 $50.3–$51.7 Raised
GAAP Effective Tax Rate (%)FY2527.3–29.5 25.8–27.6 Lowered
Adjusted Effective Tax Rate (%)FY2520.7–21.3 18.6–19.4 Lowered
Weighted Avg Diluted Shares (M)FY2523.1 23.1 Maintained
Olive & June – Net Sales ($M)Q4 FY25N/A$17–$18 New
Olive & June – Adjusted EBITDA ($M)FY25N/A$3–$4 New
Olive & June – Adjusted EPS Accretion ($)Q4 FY25N/A$0.05–$0.07 New

Earnings Call Themes & Trends

TopicQ1 FY25 (Prior)Q2 FY25 (Prior)Q3 FY25 (Current)Trend
Tennessee DC automationShipping disruption impacted Q1 sales; automation startup issues increased costs Remediation substantially completed; minimal impact in Q2; target efficiency by FY25 YE Operating as designed in Q3; expect targeted efficiency by FY25 YE Improving execution
Wellness illness seasonSofter 23/24 season cut replenishment orders Continued category softness; fans/thermometers partially offset 8-year low illness incidence; ~$10M hit in Q3, $15–$20M in Q4 Worsening vs assumptions
Marketing investmentPlanned higher spend raised SG&A by ~560 bps Incremental marketing pressured margins Growth investment up ~140 bps YoY; aiding share gains Investing for brand health
International & distributionInternational growth offset headwinds Higher international sales; new/expanded retail distribution U.S. weighted distribution +11% YTD; strong int’l gains Strengthening
Project PegasusOn track; margin fuel On track; savings cadence reiterated On track; driving gross margin expansion Sustained benefit
Beauty appliancesPressure across below-$100 devices Category moderating; bifurcation toward premium Work needed in >$100 devices; Revlon volumizer #1 in units Mixed; premium focus
Tariffs & supplier diversification——Building strategic inventory; diversifying outside China; cautious planning Risk mitigation underway
Retail bankruptcies——Container Store bankruptcy noted; variability across customers External risk elevated
Olive & June acquisitionAgreement announced (Nov) —Closed Dec 16; high margin consumables; accretive Portfolio enhancement

Management Commentary

  • CEO: “We are pleased with our third quarter results that are within the outlook range... despite... a weak cough, cold and flu season globally... Project Pegasus remains on track... providing critical fuel for reinvestment” .
  • CEO on portfolio shaping: “We... enhanced our portfolio with the acquisition of Olive & June... immediately accretive... complements our existing beauty portfolio and broadens us beyond the hair category” .
  • CFO: “Growth investment... increased approximately 140 basis points year-over-year... adjusted operating margin increased 30 basis points to 16.6%” .
  • CFO on outlook drivers: illness season well below historical averages; Olive & June adds $17–$18M net sales and $0.05–$0.07 adjusted EPS in Q4; adjusted EBITDA now $292–$295M .

Q&A Highlights

  • Tennessee DC benefits: Vision unchanged (distribution cost rate target mid-3% over time); Olive & June DTC synergies likely upside not yet assumed .
  • Tariffs planning: Diversify suppliers outside China; build inventory prudently; pursue changes that make sense even if tariffs don’t materialize .
  • Q4 revenue range drivers: Continued Home & Outdoor strength, wellness headwind ($15–$20M), variability across retailers .
  • Long-term targets: Remain intact; more detail at April outlook; beauty needs progress in premium appliances; wellness stability subject to seasonality .
  • Inventory: Higher than expected due to thermometry build and tariff strategy; retailer wellness inventory elevated given low illness season .

Estimates Context

  • S&P Global consensus for Q3 FY25 EPS/revenue/EBITDA was not accessible at time of writing; management said results tracked internal outlook ranges .
  • Street models likely to lower wellness assumptions, raise interest expense, incorporate Olive & June accretion and narrowed adjusted EBITDA range per guidance .

Key Takeaways for Investors

  • Home & Outdoor strength and international distribution gains offset wellness softness; margin quality improved via Pegasus despite higher brand investments .
  • Wellness exposure remains a swing factor; management quantifies ~$10M Q3 and $15–$20M Q4 impact from the weak illness season—watch weekly POS and retailer replenishment .
  • FY25 guide de-risked: lowered GAAP EPS and FCF, higher interest and leverage; monitor cash conversion into Q4 amid inventory strategies and tariff planning .
  • Olive & June adds a high-margin consumables growth vector with immediate accretion; potential further upside from distribution and DC synergies not yet in forecasts .
  • Execution risk in Beauty premium appliances persists; Revlon continues #1 unit item in category, but >$100 tools need innovation traction .
  • Operational cadence improving at Tennessee DC; targeted efficiencies by FY25 YE should provide medium-term margin tailwind .
  • Trading lens: Near-term sentiment hinges on wellness POS visibility and any tariff headlines; medium-term thesis supported by portfolio mix shift, Pegasus savings, and accretive M&A .

Additional Relevant Press Releases (Q3 FY25 Context)

  • Acquisition of Olive & June completed on Dec 16, 2024; expected CY2024 net sales ≈$92M; financing via $235M revolver; swaps fixed 3.9% on 56% floating-rate debt .
  • ICR Conference participation announced for Jan 13, 2025 (investor engagement) .