Helen of Troy Limited Reports Second Quarter Fiscal 2026 Results

Consolidated Net Sales Decline of 8.9%
GAAP Diluted Loss Per Share of $13.44
Adjusted Diluted EPS of $0.59 ⁽¹⁾

Provides Fiscal 2026 Outlook:
Consolidated Net Sales of $1.739-$1.780 Billion
GAAP Diluted Loss Per Share of $29.90-$29.40
Adjusted Diluted EPS of $3.75-$4.25

EL PASO, Texas–(BUSINESS WIRE)–Helen of Troy Limited (NASDAQ: HELE), designer, developer, and worldwide marketer of branded consumer home, outdoor, beauty, and wellness products, today reported results for the three-month period ended August 31, 2025.

Executive Summary – Second Quarter of Fiscal 2026 Compared to Fiscal 2025

• Consolidated net sales revenue of $431.8 million compared to $474.2 million
• Gross profit margin of 44.2% compared to 45.6%
• Operating margin of (73.1)%, which includes pre-tax non-cash asset impairment charges⁽²⁾ of $326.4 million, compared to 7.3%
• Non-GAAP adjusted operating margin of 6.2% compared to 9.8%
• GAAP diluted loss per share of $13.44, which includes after-tax non-cash asset impairment charges of $12.77, compared to diluted earnings per share of $0.74
• Non-GAAP adjusted diluted EPS of $0.59 compared to $1.21
• Net cash used by operating activities of $10.5 million compared to net cash provided by operating activities of $44.6 million
• Non-GAAP adjusted EBITDA margin of 8.4% compared to 11.8%

Mr. G. Scott Uzzell, Chief Executive Officer, stated: “I joined Helen of Troy last month with a deep admiration for its global brands, differentiated product solutions, solid financial foundation, and dedicated associates. While I continue to listen and learn, I am confident in our ability to engineer a great comeback story. We made progress in the second quarter, but there are no quick fixes as we work to get back on a path to growing market share and driving sustainable growth. Moving forward, the consumer will be at the center of everything we do. We will invest in our associates to inspire new innovations that deliver unique solutions designed to win in the marketplace and generate future attractive returns for our shareholders.”

Mr. Brian L. Grass, Chief Financial Officer, stated: “While we are not satisfied with our results, the second quarter marked a step forward with net sales and adjusted earnings per share at the better end of our guidance. We continue to adapt to significant business disruption and cost headwinds, which are considered in our outlook for the remainder of the year. I’m encouraged by the measures we implemented during the quarter to enhance our execution, operational efficiency, and go-to-market effectiveness, while taking decisive action to fuel more product-driven growth across the portfolio. We are making a concerted effort to maintain ongoing investment in the health of our brands, while optimizing our productivity as we navigate a difficult environment.”

Consolidated Results – Second Quarter Fiscal 2026 Compared to Second Quarter Fiscal 2025

• Consolidated net sales revenue decreased $42.4 million, or 8.9%, to $431.8 million, compared to $474.2 million, driven by a decrease from Organic business of $76.1 million, or 16.0%. The Organic business decrease was due to a decline in Beauty & Wellness primarily driven by lower sales of thermometers, heaters, and hair appliances and a decline in Home & Outdoor resulting from a decrease in the insulated beverageware and home categories. The Organic business decline was partially offset by the contribution from the acquisition of Olive & June, LLC (“Olive & June”) of $33.4 million, or 7.0%, to consolidated net sales revenue and strong demand for technical, travel and lifestyle packs in Home & Outdoor.

• Consolidated gross profit margin decreased 140 basis points to 44.2%, compared to 45.6%. The decrease in consolidated gross profit margin was primarily due to the unfavorable impact of higher tariffs on cost of goods sold, which decreased consolidated gross profit margin by approximately 200 basis points, and higher retail trade and promotional expense year-over-year. These factors were partially offset by the favorable impact of the acquisition of Olive & June within Beauty & Wellness, lower commodity and product costs, partly driven by Project Pegasus initiatives, and favorable inventory obsolescence expense year-over-year.

• Consolidated selling, general and administrative expense (“SG&A”) ratio increased 310 basis points to 41.0%, compared to 37.9%. The increase in the consolidated SG&A ratio was primarily due to increased share-based compensation expense, higher outbound freight costs, the impact of the Olive & June acquisition and the impact of unfavorable operating leverage due to the decrease in net sales. These factors were partially offset by the favorable comparative impact of higher distribution center expense in the prior year period primarily due to additional costs and lost efficiency associated with automation startup issues at the Company’s Tennessee distribution facility.

• The Company recognized non-cash asset impairment charges of $326.4 million ($294.0 million after tax) primarily due to the sustained decline in the Company’s stock price, to reduce goodwill by $292.6 million and other intangible assets by $33.8 million, which impacted both the Beauty & Wellness and Home & Outdoor segments.

• Consolidated operating loss was $315.7 million, or (73.1)% of net sales revenue, compared to consolidated operating income of $34.9 million, or 7.3% of net sales revenue. The decrease in consolidated operating margin was primarily due to pre-tax non-cash asset impairment charges of $326.4 million, an increase in the aforementioned consolidated SG&A ratio and a decrease in consolidated gross profit margin, primarily due to the unfavorable impact of higher tariffs.

• Interest expense was $14.2 million, compared to $13.2 million. The increase in interest expense was primarily due to higher average borrowings outstanding to fund the acquisition of Olive & June, increased inventory due to forward buys in advance of tariffs and borrowings to fund higher tariff costs, partially offset by a lower average effective interest rate compared to the same period last year.

• Income tax benefit as a percentage of loss before tax was 6.4%, compared to income tax expense as a percentage of income before tax of 22.0% for the same period last year. The decrease in the effective tax rate is primarily due to the tax effects of the impairment charges in fiscal 2026 and increases in tax benefits for discrete items, partially offset by valuation allowances on intangible asset deferred tax assets.

• Net loss was $308.6 million, compared to net income of $17.0 million. Diluted loss per share was $13.44, compared to diluted earnings per share of $0.74. The decrease is primarily due to the recognition of an after-tax asset impairment charge of $294.0 million and lower operating income exclusive of the asset impairment charges.

• Non-GAAP adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $36.2 million, compared to $55.8 million. Non-GAAP adjusted EBITDA margin was 8.4% compared to 11.8%.

On an adjusted basis (non-GAAP) for the second quarters of fiscal 2026 and 2025, excluding asset impairment charges⁽²⁾, intangible asset reorganization⁽⁵⁾, restructuring charges, amortization of intangible assets, and non-cash share-based compensation, as applicable:

• Adjusted operating income decreased $19.5 million, or 41.9%, to $26.9 million, or 6.2% of net sales revenue, compared to $46.4 million, or 9.8% of net sales revenue. The decrease in adjusted operating margin was primarily driven by the impact of higher tariffs on cost of goods sold, which unfavorably impacted adjusted operating margin by approximately 200 basis points, higher retail trade and promotional expense, higher outbound freight costs and the impact of unfavorable operating leverage. These factors were partially offset by the favorable impact of the acquisition of Olive & June within Beauty & Wellness, lower commodity and product costs, partly driven by Project Pegasus initiatives, favorable inventory obsolescence expense year-over-year and the favorable comparative impact of higher distribution center expense in the prior year period primarily due to additional costs and lost efficiency associated with automation startup issues at the Company’s Tennessee distribution facility.

• Adjusted income decreased $14.0 million, or 50.8%, to $13.5 million, compared to $27.5 million. Adjusted diluted EPS decreased 51.2% to $0.59, compared to $1.21. The decrease in adjusted diluted EPS was primarily due to lower adjusted operating income and higher interest expense, partially offset by a decrease in adjusted income tax expense.

Segment Results – Second Quarter Fiscal 2026 Compared to Second Quarter Fiscal 2025

Home & Outdoor net sales revenue decreased $33.2 million, or 13.7%, to $208.7 million, compared to $241.9 million. The decrease was primarily driven by:

• lower replenishment orders from retail customers in the insulated beverageware and home categories, partially due to retailer inventory rebalancing in response to softer demands trends;
• continued competition, a net distribution loss year-over-year and cancellation of direct import orders in response to higher tariffs in the insulated beverageware category;
• a decrease in club channel sales in the insulated beverageware and home categories in response to higher tariffs; and
• lower closeout channel sales.

These factors were partially offset by strong demand for technical, travel and lifestyle packs, higher sales from expanded distribution in the home category and incremental sales from a new product launch in the insulated beverageware category.

Home & Outdoor operating loss was $72.6 million, or (34.8)% of segment net sales revenue, compared to operating income of $31.2 million, or 12.9% of segment net sales revenue. Operating loss in the second quarter of fiscal 2026 included $85.5 million of pre-tax asset impairment charges. The remaining 670 basis point decrease in segment operating margin was primarily due to:

• the impact of higher tariffs on cost of goods sold;
• higher retail trade and promotional expense;
• increased share-based compensation expense;
• higher outbound freight costs; and
• the impact of unfavorable operating leverage.

These factors were partially offset by lower commodity and product costs, reduced marketing expense and the favorable comparative impact of higher distribution center expense in the prior year period. Adjusted operating income decreased 44.6% to $20.1 million, or 9.6% of segment net sales revenue, compared to $36.3 million, or 15.0% of segment net sales revenue.

Beauty & Wellness net sales revenue decreased $9.2 million, or 4.0%, to $223.1 million, compared to $232.3 million. The decrease was primarily driven by a decrease from Organic business of $42.3 million, or 18.2%, primarily due to:

• a decline in thermometry primarily due to evolving dynamics in the China market, including a shift away from cross-border ecommerce toward localized fulfillment models, heightened competition from domestic sellers benefiting from government subsidies and lower replenishment due to a weaker illness season last year in Asia;
• a decline in Beauty primarily due to softer consumer demand, increased competition, a net distribution loss year-over-year and the cancellation of direct import orders from China in response to higher tariffs;
• a decrease in heater sales driven by reduced direct import orders from China in response to higher tariffs; and
• a decrease in water filtration primarily driven by softer consumer demand and increased competitive promotional activity.

The Organic business decline was partially offset by the contribution from the acquisition of Olive & June of $33.4 million, or 14.4%, to segment net sales revenue.

Beauty & Wellness operating loss was $243.1 million, or (109.0)% of segment net sales revenue, compared to operating income of $3.7 million, or 1.6% of segment net sales revenue. Operating loss in the second quarter of fiscal 2026 included $240.9 million of pre-tax asset impairment charges. The remaining 260 basis point decrease in segment operating margin was primarily due to:

• the impact of higher tariffs on cost of goods sold;
• higher retail trade and promotional expense;
• increased share-based compensation expense;
• higher outbound freight costs;
• increased marketing expense; and
• the impact of unfavorable operating leverage.

These factors were partially offset by the favorable impact of the acquisition of Olive & June, favorable inventory obsolescence expense year-over-year and lower commodity and product costs. Adjusted operating income decreased 32.4% to $6.9 million, or 3.1% of segment net sales revenue, compared to $10.2 million, or 4.4% of segment net sales revenue.

Balance Sheet and Cash Flow – Second Quarter Fiscal 2026 Compared to Second Quarter Fiscal 2025

• Cash and cash equivalents totaled $22.4 million, compared to $20.1 million.
• Accounts receivable turnover⁽⁶⁾ was 72.2 days, compared to 69.0 days.
• Inventory was $528.9 million, compared to $469.6 million.
• Total short- and long-term debt was $893.2 million, compared to $713.2 million.
• Net cash provided by operating activities for the first six months of the fiscal year was $47.9 million, compared to $69.9 million for the same period last year.
• Free cash flow⁽¹⁾⁽⁷⁾ for the first six months of the fiscal year was $23.0 million, compared to $55.9 million for the same period last year.

Fiscal 2026 Annual Outlook

The Company is continuing to assess the incremental tariff cost exposure in light of continuing changes to global tariff policies and the full extent of its potential mitigation plans, as well as the associated timing to implement such plans. The Company is also continuing to assess the disruptive impact that tariffs are having on the Company’s markets and retailer adaptation to tariff costs and uncertainty. To mitigate the Company’s risk of ongoing exposure to tariffs, it has initiated significant efforts to diversify its production outside of China into regions where it expects tariffs or overall costs to be lower and to source the same product in more than one region, to the extent it is possible and not cost-prohibitive. The Company now expects to reduce its cost of goods sold exposed to China tariffs to between 25% and 30% by the end of fiscal 2026, compared to the prior expectation of less than 25%. The Company is also continuing to implement other mitigation actions, which include cost reductions from suppliers and price increases to customers on products subject to tariffs. In addition to the uncertainty from evolving global tariff policies, the Company expects unfavorable cascading impacts on inflation, consumer confidence, employment, and overall macroeconomic conditions, all of which are impossible to predict at this time and outside of the Company’s control.

In the first quarter of fiscal 2026, the Company adjusted its measures to reduce costs and preserve cash flow, outlined in its fourth quarter fiscal 2025 earnings release, as the environment continued to evolve. While the Company resumed targeted growth investments during the second quarter of fiscal 2026, the Company remains disciplined in its approach given continued tariff volatility. The measures in place continue to include the following:

• Suspension of projects and capital expenditures that are not critical or in support of supplier diversification or dual sourcing initiatives;
• Actions to reduce overall personnel costs and pause most project and travel expenses remain in place;
• A resumption of optimized marketing, promotional, and new product development investments focused on opportunities with the highest returns;
• A resumption of targeted inventory purchases from China in the short term, with a measured approach in expectation of softer consumer demand in the short to intermediate term; and
• Actions to optimize working capital and balance sheet productivity.

Through the combination of tariff mitigation actions and these additional cost reduction measures, the Company now believes it can reduce the net tariff impact on operating income to less than $20 million, compared to the prior expectation of less than $15 million, based on tariffs currently in place and the expectation that the Company will successfully implement price increases to retailers that become effective in the second half of fiscal 2026.

The Company expects full year fiscal 2026 consolidated net sales revenue in the range of $1.739 billion to $1.780 billion, which implies a decline of 8.8% to 6.7%, compared to the prior fiscal year. The consolidated net sales outlook reflects the following expectations by segment:

• Home & Outdoor net sales decline of 11.8% to 9.7%, compared to the prior fiscal year; and
• Beauty & Wellness net sales decline of 6.2% to 4.0%, compared to the prior fiscal year, which includes an expected incremental net sales contribution in the range of $109 million to $112 million from the Olive & June acquisition.

The Company expects third quarter net sales revenue in the range of $491 million to $512 million, which implies a decline of 7.5% to 3.5%, compared to the third quarter of fiscal 2025. The consolidated net sales outlook reflects the following expectations by segment:

• Home & Outdoor net sales decline of 12.8% to 8.7%, compared to the third quarter of fiscal 2025; and
• Beauty & Wellness net sales decline of 2.9% to growth of 1.0%, compared to the third quarter of fiscal 2025, which includes an expected incremental net sales contribution in the range of $36 million to $39 million from the Olive & June acquisition.

The sales outlook reflects the Company’s view of continued consumer spending softness, especially in certain discretionary categories, as well as its view of increased macro uncertainty, a more promotional environment, and an increasingly stretched consumer, including the impact from:

• lower direct import orders following tariff-related pullbacks, with recent improvement and select programs shifting to warehouse replenishment;
• ongoing impact from the shift from cross border ecommerce to localized distribution and sustained competitive pressure from government-subsidized domestic sellers in China;
• lapping prior-year tariff-related order pull-forward, resulting in sales headwinds in the fourth quarter;
• strategic price increases largely implemented during the month of September, partially offset by expected unit volume declines due to price elasticity;
• an average cough, cold, and flu season;
• continued softer consumer demand and increased competition;
• consumer trade-down behavior, expected to persist, reflected in heightened deal-seeking and a greater emphasis on essential categories; and
• conservative retailer inventory management in response to demand trends.

The Company expects fiscal 2026 GAAP diluted loss per share of $29.90 to $29.40 and non-GAAP adjusted diluted earnings per share in the range of $3.75 to $4.25, which implies an adjusted diluted EPS decline of 47.7% to 40.7%, compared to the prior fiscal year.

The Company expects third quarter fiscal 2026 GAAP diluted EPS of $1.85 to $2.05 and non-GAAP adjusted diluted EPS in the range of $1.55 to $1.80, which implies an adjusted diluted EPS decline of 41.9% to 32.6%, compared to the third quarter of fiscal 2025.

The Company’s adjusted diluted EPS outlook reflects:

• pressures from a more promotional environment, consumer trade-down behavior, and an unfavorable product mix;
• higher commodity and product costs driven by direct tariff-related costs offset by Project Pegasus initiatives and strategic price increases largely implemented in September;
• growth investments to support future revenue expansion and new product development;
• the comparative impact of unfavorable operating efficiencies related to automation startup of the Tennessee distribution facility in the prior year; and
• the impact of unfavorable operating leverage due to the decline in revenue.

The Company continues to expect these factors to be partially offset by cost reduction measures implemented in the first six months and continuing throughout the year. The Company’s consolidated net sales and EPS outlook also reflects the following assumptions:

• September 2025 foreign currency exchange rates will remain constant;
• full year fiscal 2026 expected interest expense in the range of $56 million to $57 million;
• third quarter fiscal 2026 reported GAAP effective tax rate range of (10.0)% to (16.0)% and adjusted effective tax rate range of 22.0% to 25.0%, and fiscal 2026 reported GAAP effective tax rate range of (0.8)% to (0.6)% and adjusted effective tax rate range of 15.0% to 16.0%; and
• full year fiscal 2026 estimated weighted average diluted shares outstanding of 23.0 million.

The likelihood, timing and potential impact of a significant or prolonged recession, any fiscal 2026 acquisitions and divestitures, future asset impairment charges, future foreign currency fluctuations, additional interest rate changes, or share repurchases are unknown and cannot be reasonably estimated; therefore, they are not included in the Company’s outlook.

Debt Covenants

As of August 31, 2025, the Company was in compliance with all covenants as defined under the terms of its credit agreement. The Company expects it is possible that a continuation of negative sales trends and the unfavorable impact of tariffs and other macroeconomic conditions may require an amendment to the credit agreement to address potential compliance with certain financial covenants. The Company will likely proactively seek an amendment during the third fiscal quarter to implement for a limited period of time (1) an extension of the time period for the temporary adjustments to the maximum leverage ratio, and (2) a reduction in the minimum interest coverage ratio. The Company has discussed the potential amendment with the administrative agent and a majority of the lender group. While there can be no assurance that negotiations with the lender group will be successful, preliminary indications are that the Company’s lenders will be supportive of this potential amendment. The Company’s inability to obtain any amendment to its credit agreement could result in an event of default under the credit agreement, which could have a material adverse effect on its business, financial condition and liquidity.

Conference Call and Webcast

The Company will conduct a teleconference in conjunction with today’s earnings release. The teleconference begins at 9:00 a.m. Eastern Time today, Thursday, October 9, 2025. Institutional investors and analysts interested in participating in the call are invited to dial (877) 407-3982 approximately ten minutes prior to the start of the call.

Contacts

Investor Contact:
Helen of Troy Limited

Anne Rakunas, Director, External Communications

[email protected]

ICR, Inc.

Allison Malkin, Partner

[email protected]

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