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Helen of Troy’s Shares Drop 9% On Lowered Guidance Despite Revenue Beat

EditorVenkatesh Jartarkar
Published 10/04/2023, 04:45 PM
Updated 10/04/2023, 04:45 PM
© Reuters.

Shares of Helen of Troy (NASDAQ: HELE) took a 9% hit on Wednesday due to the company's lower-than-anticipated guidance, despite a turnaround plan in progress. This came in the wake of a 5.7% decrease in revenue to $491.6 million, which nonetheless surpassed market estimates. This aligns with the InvestingPro Tips, which indicate a declining trend in earnings per share and an accelerating decline in revenue.

The company also forecasted a full-year revenue decline ranging between 2.8% and 5.2%. The reduced outlook is understood to be a consequence of increased Selling, General & Administrative (SG&A) expenses, primarily stemming from heightened marketing and distribution costs. This is in line with the InvestingPro Data, which shows a Revenue Growth of -6.89% in LTM2024.Q1 and a Gross Profit Margin of 44.32% in the same period.

In the face of these challenges, Helen of Troy reported an adjusted Earnings Per Share (EPS) at $1.74, surpassing market expectations. This was partly attributed to an improvement in gross margins by 420 basis points, resulting from efficient inventory management and reduced freight costs. Interestingly, InvestingPro Tips suggests that the company's liquid assets exceed short term obligations, which could have contributed to this performance.

Despite the revenue outperformance and the EPS beat, investors' concerns over the company's full-year outlook seem to have overshadowed these positive aspects, leading to the significant dip in share price. The company's P/E Ratio stands at 17.74 as per InvestingPro Data, suggesting that the market is pricing in these concerns. Yet, analysts predict the company will be profitable this year, according to InvestingPro Tips.

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For more insights like these, consider subscribing to InvestingPro, which offers real-time metrics and valuable tips for various companies. Currently, InvestingPro lists five additional tips for Helen of Troy, providing a more comprehensive understanding of the company's financial health and future prospects.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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