By Dhirendra Tripathi
Investing.com – Helen of Troy stock (NASDAQ:HELE) rose more than 6% on Thursday as the company put packaging-related issues with the U.S. Environmental Protection Agency behind it to lift its annual guidance after accounting for higher inflation.
By the end of next month, the company expects to return to usual levels of shipping activity for the vast majority of filtration and humidifier products affected by EPA’s objection to claims made by the company on the packaging of those items sold in the U.S.
After booking $13.1 million as EPA compliance costs for inventory on hand in the first quarter as well as storage and legal expenses, the company took a charge of another $3 million in the second quarter to account for the incident.
The settlement of those issues and the ramp-up in sales gave the company the confidence to raise its guidance for the year. Consolidated net sales for the year are seen at $2.04 billion at midpoint. Core net sales are seen at $2.01 billion at center of the range.
The company said it is managing cost pressure through better product mix, price increases, forward buying of inventory to delay cost effects, utilizing previously negotiated shipping contracts at rates below current market prices, and implementing other cost reduction initiatives.
Second-quarter consolidated net sales declined over 10% to $475.2 million, led by lower sales of health and home products due to EPA-related issues. Sales of housewares rose while those of beauty products were mostly flat.
Profit fell 41% to $51.31 million. Both sales and earnings came in well ahead of estimates.