Helen of Troy (NASDAQ:HELE) reported fiscal second-quarter 2027 results that met its sales outlook and exceeded its adjusted earnings expectations, aided by growth in its Home & Outdoor segment, improving cash flow and a net benefit from tariff refunds that the company plans largely to reinvest.
Chief Executive Officer Scott Uzzell said the company remains focused on a multiyear effort to strengthen its operating foundation before pursuing broader growth. “Our recovery will not be linear,” Uzzell said, describing fiscal 2027 as a year for demonstrating progress in brand growth, marketplace execution, organizational capabilities and balance-sheet discipline.
Sales growth led by Home & Outdoor
Uzzell said Osprey again led growth within Home & Outdoor, supported by consumer demand, product introductions and improvements in international distribution. OXO benefited from inventory-composition actions, distribution gains and new products, while Hydro Flask was aided by inventory actions, innovation and a partial recovery of tariff-related disruption in its corporate channel.
International sales rose 3.7%, led by Hydro Flask, OXO and Osprey. The company cited new products, expanded distribution and improved execution in selected markets, including a new Australian distributor.
Within Beauty & Wellness, management highlighted growth at Vicks and Braun, supported by distribution gains, comparisons with prior tariff-related items and new products. Olive & June also posted another solid quarter, driven by consumer demand, replenishment orders and new or expanded distribution.
However, Uzzell said some Beauty brands continue to face softer demand and require additional work on commercial execution and demand creation. During the quarter, the company appointed a new leader for the Beauty & Wellness business.
Tariff refunds lift profitability, fund reinvestment
Chief Financial Officer Brian Grass said second-quarter results included approximately $26.9 million of gross pretax tariff refunds. After planned reinvestment, the company recorded an estimated net pretax benefit of about $4 million, equal to roughly $0.12 per diluted share after tax.
For the full fiscal year, Helen of Troy expects gross refunds covering the full amount of paid IEEPA tariffs of $80.5 million. The company plans to reinvest between $66.5 million and $70.5 million, resulting in an estimated net pretax benefit of $10 million to $14 million and an adjusted diluted EPS benefit of $0.30 to $0.45.
Management said it intends to use the funds for foundational and longer-term investments, including brand-building, product development, packaging, consumer insights, growth strategy and inventory cleanup. Grass said about 25% of the spending is expected to generate a fiscal 2027 return, while other investments are intended to better position the company for fiscal 2028.
Grass cautioned that the refunds do not fully offset the broader cumulative impact of tariffs. The company has also faced unreimbursed tariffs, supply-chain diversification expenses, longer lead times, disruption to certain revenue streams and higher interest expense associated with cash tariff payments.
Consolidated gross margin increased 800 basis points to 52.2%. The company attributed approximately 560 basis points of the gain to tariff refunds net of higher tariff costs, along with lower retail trade and promotional spending. These benefits were partly offset by inflation in commodities, fuel, freight, currency and supply availability, as well as less favorable inventory obsolescence.
The SG&A ratio increased 540 basis points to 46.4%, reflecting tariff-refund reinvestment, spending on the organization, go-to-market structure and brands, as well as higher packaging costs and divestiture litigation costs. Adjusted EBITDA increased $13.2 million, while adjusted EBITDA margin improved 280 basis points.
Balance sheet improves as inventory and debt decline
Helen of Troy generated $56.5 million in cash flow from operations and $38 million in free cash flow during the first half. Inventory ended the quarter at $480 million, down $49 million from a year earlier. The percentage of active inventory improved by seven percentage points in the first half, and management is targeting a 12-percentage-point improvement by year-end.
Total debt fell to $673 million, down $221 million from the prior-year period and $108 million since the beginning of the fiscal year. Net leverage declined to 3.0 times from 3.5 times at the end of the first quarter. The company now expects to end fiscal 2027 with net leverage of 2.7 times or lower.
Full-year outlook revised
The company narrowed its fiscal 2027 net sales outlook to $1.768 billion to $1.822 billion. It expects Home & Outdoor sales of $851 million to $876 million and Beauty & Wellness sales of $917 million to $946 million.
- Base-business adjusted EBITDA guidance was maintained at $193 million to $196 million.
- Consolidated adjusted EBITDA guidance was raised to $203 million to $210 million, including the net tariff-refund benefit.
- Base-business adjusted EPS guidance was narrowed to $3.30 to $3.70.
- Consolidated adjusted EPS guidance was raised to $3.60 to $4.15.
- Free cash flow guidance was raised to $120 million to $140 million, despite a $9 million increase in planned capital expenditures.
For the third quarter, Helen of Troy expects sales of $478.3 million to $504.5 million and consolidated adjusted EPS of $2.05 to $2.40. That estimate includes a projected tariff-refund benefit of $0.66 to $0.77 per share, as the company expects to recognize its remaining $51.8 million in gross IEEPA tariff refunds during the quarter.
Management said the outlook reflects continuing inflationary and supply-disruption risks related largely to conflict in the Middle East, as well as elevated fuel costs, higher interest and mortgage rates, discretionary-category softness, cautious retailer inventory management and a more promotional competitive environment.
Uzzell said the company remains confident in its strongest brands but expects a challenging consumer environment. He said Hydro Flask faces a more saturated and promotional beverageware market, while management seeks to maintain the brand’s premium positioning through consumer messaging, product innovation and expansion into adjacent categories.
About Helen of Troy (NASDAQ:HELE)
Helen of Troy Limited is a global consumer products company that develops, markets and distributes branded products across the home and outdoor, beauty, and health and wellness categories. Its portfolio includes household and organization products, drinkware and outdoor equipment, personal-care appliances, hair-care products, and consumer health products.
The company’s principal brands include OXO, Hydro Flask, Osprey, Drybar and Hot Tools. Helen of Troy also markets certain health and wellness products under licensed brands, including Vicks, Braun and Honeywell, as well as beauty products under selected licensed and owned brands.
