Dive Brief:

• Helen of Troy — which owns direct-to-consumer brands including Hydro Flask, Drybar and Vicks — saw third-quarter consolidated net sales drop 10.6% year over year to $558.6 million from $624.9 million, according to a company press release Thursday. The company’s operating income fell about 14% year over year to $77.2 million while net income decreased by more than 30%.
• All of the company’s business segments — consisting of home and outdoor, health and wellness, and beauty — saw net sales revenue decrease. 
• As part of its existing restructuring plan called Project Pegasus, Helen of Troy announced it would reduce its global workforce by about 10%. The reduction is a result of the company’s decision to centralize “certain functions under shared services,” particularly within its operations and finance divisions. 

Dive Insight:

Helen of Troy’s latest earnings results reflect a decrease in discretionary spending from consumers that impacted all its product categories. 

The company’s beauty sector saw lower consumer demand for hair appliances, while home and outdoor experienced decreased sales for filtration products. Helen of Troy said its overall decline in consolidated net sales was impacted by a variety of factors, including “lower consumer demand, shifts in consumer spending patterns” and “reduced orders from retail customers due to higher trade inventory levels.” 

Chief Executive Officer Julien Mininberg said inventory levels were now below what they were at the end of last fiscal year, dropping from $585.8 million to $536.8 million year over year. 

The company remained optimistic by raising its outlook.

“Regarding our outlook for this fiscal year, we are raising the bottom of our range for both sales and adjusted EPS. Consumption remains soft in certain of our categories and some retailers are continuing to reduce their orders as they sell down their inventory,” Mininberg said in a statement. “We are, however, encouraged to see trade inventory at some key retailers start to better align with sell through, as well as stabilization and modest improvement in market share for certain categories such as beauty appliances.”

After acquiring outdoor backpack brand Osprey in 2021, Helen of Troy announced it acquired haircare brand Curlsmith in April 2022. As for acquisition prospects in this new year, the company is actively searching.

“On the M&A side, we are actively looking at a number of different projects. What I can tell you is that we're not really seeing the types of assets that we would like that will fit our criteria,” Jack Jancin, senior vice president of corporate business development, told analysts on a call Thursday. “We're rather picky with selecting and bringing new assets in, they need to sweeten our mix ... So at this point in time, we're continuing to look but we're not seeing anything that is getting us to lean in at least at this point in time.” 

In October, Helen of Troy expressed optimism in Bed Bath & Beyond’s turnaround plan — a retailer which it supplies several product lines to, such as its kitchenware brand OXO. That said, in recent years it had been limiting its concentration with the struggling retailer, who issued a “going concern” warning on Thursday.