Helen of Troy Limited HELE benefits from the strength of its Leading Brands. The major consumer products player’s focus on strategic growth efforts is paying off. That being said, Helen of Troy is reeling from global supply chain disruptions and high cost inflation.
Let’s take a closer look.
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What works for Helen of Troy?
Helen of Troy is focused on making strong investments in its leading brands, which constitute a portfolio of market-leading brands. Portfolio brands including OXO, Hydro Flask, Vicks, Braun, Honeywell, PUR, Hot Tools and Drybar are well positioned to grow market share. These brands represent a significant portion of the company’s sales, which generate strong margins and volumes. The company’s consistent investment in these productive brands has yielded strong results. In December 2021, Helen of Troy completed the takeover of Osprey Packs, Inc worth $414.7 million. The takeover marks the company’s ninth leading brand and will fuel future growth. During its last quarter earnings call, management emphasized that it expects Osprey to be already accretive for almost every key consolidated financial indicator.
During the third quarter of fiscal 2022, the Drybar and Hot Tools product lines performed well. OXO and Hydro Flask experienced robust organic growth in domestic and international regions. Strong demand for Drybar and Hot Tools contributed significantly to growth in the Beauty category. As part of its strategy to focus on leading brands, the company spun off its consumer personal care business (excluding Latin America and Caribbean regions) to HRB Brands LLC on June 8, 2021.
Helen of Troy is making major investments in key areas to continue to drive growth. To this end, the company is focusing on investing in consumer-centric innovation, digital marketing and media, new packaging, improving production and distribution capacity, and direct channels to consumers. consumers, among others. Management continues to invest in key growth areas as part of its Phase II transformation efforts. In an attempt to stay focused on the plan, Helen of Troy finalized the purchase of land in Gallaway, TN to build a state-of-the-art distribution center. The 2 million square foot highly automated facility under construction will enhance the company’s housewares portfolio. Growing the company’s international business is also an integral part of its Phase II transformation plan.
Obstacles in the way
In the third quarter of fiscal 2022, Helen of Troy’s consolidated gross profit margin decreased by 1.3 percentage points to 43.8%, primarily due to the negative effects of increased freight and an associated spike in consumer prices, U.S. Environmental Protection Agency (“EPA”) compliance costs and a slightly unfavorable channel mix in the Housewares segment. adjusted consolidated consolidated company contracted by 60 basis points to 17%, mainly due to higher inbound freight expenses and associated price increases, high distribution costs, higher personnel expenses, leverage adverse operating and EPA compliance costs, among other reasons.Management expects year-over-year cost inflationary pressure of $55 million to $60 million in fiscal 2022.
Focusing on the aforementioned advantages is likely to help this Zacks #3 (Hold) ranking company stay afloat amid such hurdles. Shares of Helen of Troy have fallen 15.2% in the past three months from the industrydown 22.9%.
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Zacks consensus estimate for Sanderson Farms sales and earnings per share (EPS) for the current fiscal year suggests growth of 18% and 56.1%, respectively, from the figure reported a year ago. year.
Inter Parfums, which manufactures, markets and distributes a range of fragrances and fragrance-related products, is ranked Zacks Rank #2 (Buy). Shares of Inter Parfums are down 11.8% over the past three months.
Zacks’ consensus estimate for Inter Parfums’ current year sales and EPS suggests growth of 10.9% and 9.8%, respectively, from the figure reported a year ago. IPAR has a surprise on earnings for the last four quarters of 46.7% on average.
Pilgrim’s Pride, which produces, processes, markets and distributes fresh, frozen and value-added chicken and pork products, carries a No. 2 Zacks rank. Pilgrim’s Pride shares are down 15.3% over the past three last months.
The Zacks consensus estimate for current year EPS from Pilgrim’s Pride suggests growth of 19.7% from the number reported a year ago. PPC has an earnings surprise for the last four quarters of 24.9% on average.
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