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Helen of Troy Ltd (NASDAQ:HELE) shares fell 4.89% in premarket trading Thursday after the consumer products company revealed significant revenue and profit declines in its Q2 FY26 earnings presentation. The company, which recently appointed a new CEO, is implementing aggressive measures to mitigate tariff impacts while continuing to invest in product innovation across its brand portfolio.
Executive Summary
Helen of Troy reported Q2 FY26 net sales of $431.8 million, down 8.9% from $474.2 million in the same period last year, with organic sales declining 16.0%. Adjusted diluted EPS fell sharply to $0.59, a 51.2% decrease from $1.21 in Q2 FY25. The company cited tariff-related disruptions and softness at retail as primary factors behind the disappointing results.
As shown in the following overview of Helen of Troy’s business segments and brands:
The company operates through two business segments: Beauty & Wellness, which generated $1,001.3 million in FY25 net sales, and Home & Outdoor, which contributed $906.3 million. Its diverse brand portfolio includes well-recognized names such as OXO, Hydro Flask, Osprey, Braun, PUR, Honeywell, Vicks, Hot Tools, Drybar, Curlsmith, Revlon, and Olive & June.
Quarterly Performance Highlights
Helen of Troy’s Q2 financial performance showed significant deterioration across key metrics. Gross margin contracted by 140 basis points to 44.2%, while adjusted operating margin fell to 6.2% from 9.8% in the prior year. Adjusted EBITDA margin declined by 340 basis points to 8.4%. The company did manage to generate positive free cash flow of $23 million year-to-date, though this was less than half the $55.9 million produced in the same period last year.
The following chart details these key financial metrics:
The revenue decline was attributed to several factors, with tariff-related disruptions accounting for $22.6 million of the $42.4 million total decrease. Other negative contributors included reduced business volume, retailer inventory management, and a slower cold and flu season in Asia Pacific. These declines were partially offset by the positive impact of the Olive & June acquisition.
Tariff Impact & Mitigation
Tariff-related issues represent a central challenge for Helen of Troy, with the company projecting a gross unmitigated tariff impact of $55-65 million for fiscal 2026. Management has developed a comprehensive mitigation strategy focused on supplier diversification, cost negotiations, and expense management.
As illustrated in this detailed breakdown of tariff impacts and mitigation efforts:
The company expects to reduce the net impact on operating income to less than $20 million in FY26 through these mitigation actions. For FY27, despite a projected gross unmitigated impact of $100-110 million, Helen of Troy aims to limit the net effect to less than $10 million.
A key component of this strategy is supplier diversification, with plans to reduce exposure to China tariffs:
The company aims to decrease its China sourcing to 25-30% of consolidated Cost of Goods Sold by the end of fiscal 2026, implementing a dual sourcing strategy to mitigate risk. This represents a significant shift in the company’s supply chain approach.
Leadership & Strategic Initiatives
Helen of Troy appointed G. Scott Uzzell as its new Chief Executive Officer on September 1, 2025. Uzzell brings relevant experience from previous roles at Nike and Converse, which the company hopes will help revitalize its operations and strategy.
The key messages from the presentation highlight the new CEO’s focus areas:
Uzzell’s priorities include re-energizing Helen of Troy, implementing a consumer-centric corporate structure, strengthening the brand portfolio, improving asset efficiency, and maintaining shareholder-friendly policies. The company also reported progress on improving go-to-market effectiveness, advancing tariff mitigation strategies, and reducing costs.
To offset tariff impacts and improve profitability, Helen of Troy is implementing price increases averaging 7-10%, which became largely effective at the end of September. The company characterizes fiscal 2026 as "a tale of two halves," with the first half heavily impacted by tariff-related trade disruption and the second half expected to benefit from price increases and improved direct import purchasing.
Product Innovation
Despite financial challenges, Helen of Troy continues to invest in product innovation across its brand portfolio. The company highlighted several new product launches and brand achievements in its presentation.
In the Home & Outdoor segment, Osprey introduced its award-winning Archeon Fūjin capsule series:
The Osprey x Carryology collaboration won the 2024 Carry Awards for Best Carry-On Backpack, featuring bluesign® APPROVED materials and a Japanese deity-inspired design.
In the Beauty & Wellness segment, several brands received recognition in the 2025 Allure Best of Beauty Awards:
Products from Curlsmith, Olive & June, Drybar, and Revlon were among the winners, demonstrating the company’s continued strength in product development despite financial headwinds.
The company also showcased innovative new products like the Hydro Flask Mini Bottle:
This 6.7oz mini bottle is designed for versatile use cases including turmeric shots, espresso, salad dressing, and various other applications, highlighting the company’s focus on meeting evolving consumer needs.
Forward-Looking Statements
Helen of Troy provided a cautious outlook for fiscal 2026, projecting consolidated net sales of $1.739 billion to $1.780 billion, representing a decline of 8.8% to 6.7% compared to the previous year. By segment, Home & Outdoor net sales are expected to decline 11.8% to 9.7%, while Beauty & Wellness is projected to decrease by 6.2% to 4.0%.
The company’s adjusted diluted EPS guidance ranges from $3.75 to $4.25, a significant decline of 47.7% to 40.7% year-over-year:
These projections reflect ongoing challenges from tariffs, retailer inventory management, and consumer spending patterns. However, management expressed confidence in the company’s long-term prospects, citing its portfolio of trusted brands, go-to-market capabilities, and asset-light approach as reasons for investor optimism.
The market reaction suggests continued skepticism about Helen of Troy’s near-term recovery, with shares falling nearly 5% in premarket trading following the presentation. This follows a difficult period for the stock, which had already declined approximately 50% over the past six months according to previous earnings reports.
As Helen of Troy navigates these challenges, the effectiveness of its tariff mitigation strategies and the new CEO’s ability to reinvigorate growth will be critical factors for investors to monitor in the coming quarters.
Full presentation:
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