Helen of Troy, the parent company of Hydro Flask, raised its outlook for the current financial year after a strong first quarter ended on May 31. It now expects sales in the range of $1,590 to $1,620 million, which would represent growth of 1.7 percent to 3.6 percent, up from a prior expectation of 1 percent to 3 percent.
During the first quarter, revenues rose by 6.1 percent to $376.3 million, primarily driven by a 6.8 percent increase in its core business, reflecting higher wholesale revenues in the housewares segment and strong online sales, which went up by 28 percent during the period.
Revenues in the houseware segment, which includes Hydro Flask and OXO, are expected to increase by between 6 and 8 percent for the full year, beating previous estimates. They surged by 23.6 percent in the first quarter to $144.9 million, primarily due to new product introductions in the U.S. and other factors that drove higher sales at individual points of sale growth, incremental distribution with new and existing U.S. retail clients and an increase in overall online sales.
These factors were partially offset by lower sales outside the U.S. and to clubs. One reason for the decline in international sales was that the brand made two shipments to clients abroad in the first quarter of last year. This year, it made only one release, delivering the products on time in February rather than March. The financial problems of a major British retailer were another reason.
The housewares segment's operating margin expanded by 2.6 percentage points to 21.5 percent, helped by a more favorable product and channel mix, but operating costs went up due to the development of new products and higher spending on advertising, among other factors.
Helen of Troy said that Hydro Flask had an outstanding quarter, continuing to expand its number-one market share position in the U.S., thanks to its new high-performance insulated hydration vessels. The brand made great strides with retailers and consumers on the East Coast, especially in the Northeast, where the group further expanded Hydro Flask's offerings in brick-and-mortar stores, broadening placement on the shelf, and expanded the selection of on-trend and trendsetting items.
The management highlighted the introduction of a new spring collection of bold colors across the hydration, coffee, beer and food lines. Hydro Flask also advanced its “beyond the bottle” strategy, with the release of a number of new products and a growing line of softgoods, including a 14-liter downshift hydration pack designed to provide a lower center of gravity and increased stability. A second new high performance hydration pack is a 16-liter model for women, tailored through the back panel shoulder straps and hip belt to fit more comfortably on a woman's body. These are especially suited for mountain bikers and hikers, as their cold-flow system enables more than four hours of hands-free cold hydration.
The new line of packs, which follows on the company's introduction of its first “soft coolers” two years ago, will initially be available only in the U.S. Only the men's line will come out in Europe next February, concentrating on key retailers because of its premium price positioning at €170 to €230 at retail.
The management noted that Hydro Flask is targeting key markets outside the U.S. It believes that Hydro Flask can be a leading authentic and sustainable global brand. As previously reported, it has just signed up distributors in Hong Kong and various Latin American countries.
Meanwhile, sales in the health & home segment decreased by 5.2 percent, due in part to currency headwinds, and went up by 3.4 percent in the beauty segment, growing especially online and in international markets.
Overall, the group's gross margin decreased by 0.5 percentage points to 40.8 percent, primarily due to the impact of higher import duties in the U.S., unfavorable foreign currency fluctuations and higher freight expenses. Adjusted Ebitda increased by 6.6 percent to $63.3 million.