Helen of Troy Raises FY27 Profit Outlook as Q2 Margins Expand

Helen of Troy Ltd. (NASDAQ: HELE) increased its fiscal 2027 adjusted earnings and cash-flow forecasts after stronger second-quarter profitability, as higher gross margin, operating leverage and a partial benefit from tariff refunds outweighed continued weakness in parts of its Beauty business.

For the quarter ended August 31, 2026, net sales rose 2.1% to $440.9 million from $431.8 million a year earlier. Growth across all three Home & Outdoor brands, as well as gains in Wellness and international markets, offset a 4.5% decline in the broader Beauty & Wellness segment.

Gross margin expanded to 52.2% from 44.2%, helped by lower trade and promotional spending. Those gains were partially offset by higher tariff costs and less favorable inventory obsolescence compared with the prior-year period.

Adjusted operating income increased to $37.9 million from $26.9 million, lifting adjusted operating margin to 8.6% from 6.2%. Adjusted EBITDA rose to $49.4 million from $36.2 million, while adjusted EBITDA margin widened to 11.2% from 8.4%.

Adjusted diluted earnings per share increased to $0.79 from $0.59. Helen of Troy said the improvement also reflected lower interest expense, partly offset by higher adjusted income tax expense and a larger diluted share count.

On a GAAP basis, the company reported net income of $4.6 million, or $0.19 per diluted share, compared with a net loss of $308.6 million, or $13.44 per share, a year earlier. The prior-year quarter included $326.4 million of asset impairment charges, limiting the usefulness of the year-over-year GAAP comparison.

Home & Outdoor Leads Growth

Home & Outdoor sales increased 9.2%, with growth across each of the segment’s three brands. Adjusted operating income for the segment rose to $28.0 million from $20.1 million, and adjusted operating margin expanded to 12.3% from 9.6%.

Beauty & Wellness sales declined 4.5%, although the company reported growth in Wellness and O&J. Management said more work remains in Beauty. The segment generated adjusted operating income of $10.0 million, up from $6.9 million, with adjusted operating margin improving to 4.7% from 3.1%.

The company attributed base-business adjusted EBITDA growth to new product introductions, assortment and distribution gains, international expansion, higher closeout sales and lower trade and promotional expenses. Investments in the organizational structure tempered those benefits.

Helen of Troy received $26.9 million of gross tariff refunds during the quarter. It reinvested most of that amount in demand creation, content development, consumer insights, organizational capabilities, incentive compensation, packaging-related costs and inflation mitigation. Approximately $4 million benefited second-quarter adjusted EBITDA.

Fiscal 2027 Profit Outlook Increased

Helen of Troy now expects fiscal 2027 adjusted EBITDA of $203 million to $210 million, compared with its previous range of $190 million to $197 million. Adjusted diluted EPS is projected at $3.60 to $4.15, up from the prior forecast of $3.25 to $3.75.

The revised forecasts include an expected pretax net tariff-refund benefit of $10 million to $14 million to adjusted EBITDA and an after-tax benefit of $0.30 to $0.45 per adjusted share. The company plans to reinvest about 85% of approximately $80.5 million in fiscal-year tariff refunds, with about 15% allocated to pretax earnings and debt reduction.

The net-sales outlook was narrowed to $1.768 billion to $1.822 billion, representing a year-over-year change of negative 1% to positive 2%. The previous range was $1.759 billion to $1.831 billion.

Home & Outdoor sales are expected to reach $851 million to $876 million, or growth of 2.2% to 5.2%. Beauty & Wellness sales are forecast at $917 million to $946 million, representing a decline of 3.8% to 0.8%.

Free cash flow is now expected to be $120 million to $140 million, compared with the previous $85 million to $100 million forecast. Helen of Troy also expects its net leverage ratio to be no more than 2.7 times by the end of fiscal 2027, versus its earlier ceiling of 3.2 times.

Year-to-date free cash flow increased to $38.3 million from $23.0 million. Inventory was $49 million lower than a year earlier, while net leverage improved to approximately 3.0 times from about 3.5 times in the first quarter.

Management Focuses on Brand Momentum and Execution

Fiscal 2027 is the first phase of Helen of Troy’s multi-year plan to restore brand momentum, concentrate its portfolio and build a group of leadership brands. The company is implementing a general manager-led operating model with five segment general managers and three regional general managers responsible for brands, channels, innovation and profit-and-loss performance.

Its near-term priorities include consumer-led innovation, pricing and channel discipline, e-commerce execution, demand planning, inventory productivity and continued debt reduction. Management is also directing incremental investment toward content, demand creation, consumer insights and selected international growth initiatives.

The company cautioned that its outlook remains subject to risks including tariffs and other trade restrictions, reliance on third-party manufacturers concentrated in Asia, customer concentration, weakness in retail economies, cybersecurity and systems disruptions, foreign-exchange movements, higher raw-material and transportation costs, regulatory changes and constraints in credit markets. Product demand, sales and earnings projections are also inherently uncertain and could differ materially from current expectations.