Hydro Flask, the new star in the insulated beverage can market, is performing less well than expected but is still growing, the management indicated in response to investment analysts' concerns while commenting on the results of the brand's parent company, Helen of Troy. The group's chief executive, Julien Mininberg, added that Hydro Flask is enjoying healthy retail orders.
The group's Housewares segment, to which Hydro Flask belongs, booked a sales increase of only 2.6 percent in the third quarter ended Nov. 30, with a positive contribution of 0.2 percentage points from foreign currencies, building up to total revenues of $128.0 million for the period. As they had risen by 11.8 percent in the first six months of the financial year, the growth for the first nine months amounted to 8.2 percent.
For the whole group, sales went up by 1.9 percent to $453.0 million. Adjusted Ebitda moved up by 7.5 percent to $83.3 million, but the company posted a net loss of $30.4 million for the period due to an $82 million restructuring charge for the group's nutritional supplements segment, which is being divested. This compares with profit of $57.6 million in the year-ago period.
The management did not spell out Hydro Flask's turnover or growth for the third quarter. For the same quarter of the previous year, the group had reported that Hydro Flask's sales slowed down to an increase of 7.8 percent to €34.4 million.
Mininberg said that Hydro Flask continues to make progress in key and emerging channels such as e-commerce, collegiate and natural foods as well as in customization. He also mentioned international growth and new product introductions for both Hydro Flask and OXO, the other brand in the Housewares segment. This was partially offset by the impact of lower traffic in traditional stores.
A higher mix of Hydro Flask sales contributed to an increase of 0.5 percentage points in the adjusted operating margin of the Housewares division, which reached a healthy level of 25.0 percent. This and other positive factors were partially offset by higher spending on marketing, advertising and new product development.
The company has decided to delay the launch of some key new Hydro Flask products in an adjacent water hydration space to get them right. They should come out in the early part of the new financial year.
In any case, the management is now expecting a sales increase of only 7 to 9 percent for the Housewares segment in the full financial year, down from a previous projection of between 8 and 10 percent.