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HELEN OF TROY LTD (HELE)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY2025 revenue was $485.9M, down 0.7% YoY, with adjusted diluted EPS of $2.33 (down 4.9% YoY); GAAP EPS rose 24% to $2.22 on a $64.6M transitional tax benefit despite a $51.5M Drybar impairment .
  • Versus consensus, Q4 revenue beat ($485.9M vs $481.7M*) while adjusted EPS modestly missed ($2.33 vs $2.38*); adjusted EBITDA came in below the Street ($84.3M vs $87.9M*) .
  • Management suspended FY2026 guidance due to rapidly changing global tariff actions, targeting <20% of COGS exposed to China tariffs by end FY2026 and planning to offset 70–80% of tariff impact via diversification, pricing, and cost moves .
  • Operational positives: Wellness strength (flu spike, air purification demand), OXO and Osprey growth, and a better-than-expected Olive & June contribution ($23M) .
  • Catalyst: withdrawal of FY2026 outlook and tariff mitigation plan (pricing, supplier diversification, China purchase freeze) drive near-term narrative, with Q1 implied softness and defensive cost posture highlighted on the call .

What Went Well and What Went Wrong

What Went Well

  • Wellness outperformed expectations (late flu spike → stronger POS in Braun/Vicks; air purification demand tied to LA wildfires) and saw replenishment orders late in the quarter .
  • OXO and Osprey posted growth; OXO gained market share and distribution, while Osprey maintained #1 position and expanded in lifestyle and kid carrier categories .
  • Olive & June exceeded expectations with ~$23M revenue, strong gel system launches and retail expansion; included in Bain Insurgent Brand list and #1 nail brand at Target .
  • CEO: “We reported fourth quarter net sales and adjusted diluted EPS that met the Outlook range…strength in Wellness, OXO, Osprey, and International…better-than-expected Olive & June” .

What Went Wrong

  • Drybar impairment ($51.5M pre-tax; $47.6M after tax) drove GAAP operating margin down to 0.4% (vs 13.5% prior year); SG&A ratio rose 120 bps on acquisition costs and higher marketing .
  • Organic declines: Beauty hair appliances and insulated beverageware pressured net sales (organic -4.9% consolidated), with competitive intensity and softer demand cited .
  • Guidance visibility: FY2026 outlook withdrawn amid tariffs (management stepping back from long-term algorithm), Q1 flagged as particularly soft with retailers pausing direct imports from China .

Financial Results

MetricQ4 2024Q3 2025Q4 2025 (Actual)Q4 2025 (Consensus)
Revenue ($USD Millions)$489.2 $530.7 $485.9 $481.7*
GAAP Diluted EPS ($)$1.79 $2.17 $2.22 —
Adjusted Diluted EPS ($)$2.45 $2.67 $2.33 $2.38*
Gross Profit Margin (%)49.0% 48.9% 48.6% —
GAAP Operating Margin (%)13.5% 14.2% 0.4% —
Adjusted Operating Margin (%)17.0% 16.6% 15.4% —
Adjusted EBITDA ($USD Millions)$94.3 $96.8 $84.3 $87.9*
Adjusted EBITDA Margin (%)19.3% 18.2% 17.4% —

Segment breakdown (Q4 YoY):

SegmentQ4 2024Q4 2025YoY ChangeGAAP Op Margin (%) Q4 2024GAAP Op Margin (%) Q4 2025Adjusted Op Margin (%) Q4 2024Adjusted Op Margin (%) Q4 2025
Home & Outdoor Net Sales ($USD Millions)$223.3 $219.8 -1.6% 15.7% 14.7% 18.7% 17.9%
Beauty & Wellness Net Sales ($USD Millions)$265.9 $266.1 +0.1% 11.7% -11.4% 15.6% 13.4%

Key KPIs:

KPIQ4 2024Q4 2025
SG&A Ratio (%)34.7% 35.9%
Net Cash from Operations ($USD Millions, quarter)$73.6 $35.0
Free Cash Flow ($USD Millions, quarter)—$27.1
Inventory ($USD Millions, period-end)$396.0 $452.6
Total Debt ($USD Millions, period-end)$665.7 $916.9
Net Leverage Ratio (x)—2.96
Domestic Mix (%)78.5% 76.6%
International Mix (%)21.5% 23.4%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Consolidated Net SalesFY2026n/aNo FY2026 outlook due to tariff uncertaintyWithdrawn
EPS/EBITDAFY2026n/aNo FY2026 outlookWithdrawn
China Tariff Exposure (COGS)FY2026n/aTarget <20% exposure by end of FY2026New target
Tariff Mitigation (%)FY2026n/aPlan to offset 70–80% of tariff impactNew plan
FY2025 Consolidated Net SalesFY2025$1.888B–$1.913B (narrowed Jan-8) Actual $1.908BDelivered within range
FY2025 Adjusted Diluted EPSFY2025$7.15–$7.40 (narrowed Jan-8) Actual $7.17Delivered near low end
FY2025 Adjusted EBITDAFY2025$292M–$295M (narrowed Jan-8) Actual $289.3MSlightly below range
FY2025 Free Cash FlowFY2025$145M–$155M (lowered Jan-8) Actual $83.1MBelow prior range

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q4 FY2025)Trend
Tariffs & Supply Chain DiversificationQ3: macro uncertainty, no tariff specifics; Q2: focus on DC remediation and mix headwinds Paused China purchases; aim <20% COGS exposure by end FY2026; dual sourcing; price actions considered Escalation of tariff risk; accelerated mitigation
Wellness DemandQ3: weakest illness season in 8 years; headwind to B&W Late flu spike boosted Braun/Vicks; air purification demand from LA wildfires; some replenishment Stabilizing with episodic boosts
Beauty Hair AppliancesQ2/Q3: softness, competition, net distribution decline Continued softness; higher marketing reinvestment; Drybar pipeline refresh; Drybar impairment Still challenged; brand revitalization ongoing
InternationalQ2: growth; Q3: strength in Home & Outdoor; mix shift Broad-based outperformance; international mix rose to 23.4% Strengthening
Olive & JuneQ3: acquisition closed Dec-16; expected accretion $23M Q4, retail expansion (CVS/Walmart), brand accolades Positive contributor
Leverage/InterestQ3: net leverage 2.35x; lowered interest expense Net leverage ~3x; 81% debt swapped at fixed SOFR 3.7% (FY26) Higher leverage post acquisition; interest costs hedged

Management Commentary

  • CEO: “We are not in a position to provide fiscal ’26 guidance…we are also stepping back from the long-term algorithm we laid out at our Investor Day in October 2023.”
  • CFO: “We believe we can offset 70% to 80% of the tariff impact in fiscal ’26 based on tariffs currently in place.”
  • CEO: “We are leaning into areas of opportunity, including international…as well as value reframing across our portfolio.”
  • CFO on Q1: “We’re expecting softness in Q1…retailers paused direct import orders from China…unfavorable impact on Q1 revenue.”
  • CEO on brand health: “We implemented revitalized consumer and data-centric brand strategy…expanded distribution footprint globally…Pegasus contributed to a 60 bps increase in gross margin.”

Q&A Highlights

  • Supplier diversification: Majority with existing suppliers; minority new; moves intended to be cost neutral excluding one-time CapEx, capability build, and inventory buffers .
  • Pricing: Contemplated and targeted rather than across-the-board; item-level thresholds with retailer collaboration; Osprey currently less exposed .
  • Tariff impact sizing: Directionally “over $200M” FY26 gross impact at current rates; with 70–80% mitigated via levers (supplier costs, pricing, spend adjustments) .
  • Cash flow: Expect positive free cash flow for FY26 despite defensive posture .
  • Demand outlook: Anticipate softer consumer environment; Q1 highlighted as seasonally weakest, compounded by retailer import pauses and China nationalism pressuring international revenue .

Estimates Context

  • Q4 FY2025: Revenue beat ($485.9M vs $481.7M*), adjusted EPS slight miss ($2.33 vs $2.38*), adjusted EBITDA miss ($84.3M vs $87.9M*).
  • Q3 FY2025: Adjusted EPS beat ($2.67 vs $2.58*), revenue slight miss ($530.7M vs $532.9M*), EBITDA near inline ($96.8M vs $95.0M*).
    Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Near-term narrative is dominated by tariff uncertainty: no FY26 guidance, aggressive supply chain diversification, and contemplated pricing actions; expect Q1 to be weak as retailers pause China direct imports .
  • Revenue quality improved in Wellness and International; Olive & June accelerates Beauty portfolio relevance and growth within nails, partially offsetting hair appliance softness .
  • Margin compression (adjusted operating margin 15.4%, -160 bps YoY) reflects mix and higher growth investment; Pegasus savings continue but were not enough to offset mix and SG&A increases in Q4 .
  • Balance sheet leverage increased to ~3x post Olive & June and buybacks; interest rate swaps provide visibility (81% fixed at ~3.7% FY26), supporting cash preservation strategy .
  • Modeling FY26: Management targets <20% China COGS exposure by end FY26 and 70–80% tariff mitigation; consider scenario analysis on pricing elasticity and international shift to buffer U.S. tariff impact .
  • Trading stance: Watch for tariff policy developments and retailer import behavior; sentiment likely hinges on visibility to mitigation timelines and early read on Q1 demand trajectory .
  • Medium-term thesis: Portfolio revitalization (Drybar pipeline, OXO innovation, Osprey category expansion) plus international growth should re-accelerate as tariff mitigation lands and mix normalizes .
Notes:
* Values retrieved from S&P Global.