Hydro Flask continues to make progress in overseas markets, particularly in Northern Europe, while building up its distribution in the Asia-Pacific region. However, its parent company, Helen of Troy, reported a strong deceleration in the growth of the American beverage bottle brand in its domestic U.S. market during the second quarter of its financial year, ended Aug. 31, and predicted that it will moderate in the second half.
Hydro Flask is reacting with the planned introduction early next year of new product categories in the outdoor lifestyle sector such as its Unbound soft coolers, which have earned seven new product awards in the U.S. and Europe.
After a period of strong growth, the demand has slowed down in the water bottle and hydration sector in the U.S., said the management, leading to some price discounting, although market data indicate that Hydro Flask recently gained further market share for insulated bottles in the sport and outdoor channels.
In the second quarter, the group's Housewares segment, which includes Hydro Flask and OXO, recorded an overall sales increase of 8.3 percent to $114.7 million, compared with a sales increase of 16.3 percent in the first quarter. The segment's operating margin declined by 1.6 percentage points to 20.5 percent on an adjusted basis, due primarily to higher expenses for marketing, advertising and the development of new products.
Helen of Troy attributed the lower growth of the segment to a slowdown in the overall outdoor sector, combined with lower traffic and soft consumer spending in traditional physical stores. The negative impact of these factors was offset by higher sales through e-commerce and incremental distribution with existing customers.
Hydro Flask's growth is expected to moderate for the balance of the financial year, due in part to a tough comparison with a period where it was boosted by new product introductions and its presence at new points of sale.
The management is now predicting a sales increase of between 8 and 10 percent in Housewares for the full year, down from a previous forecast of 11 to 13 percent. Lowering its guidance also for the whole group, Helen of Troy is projecting an overall sales increase of 1.5 percent to 3.1 percent.
For its second quarter, Helen of Troy reported an overall sales gain of 2.8 percent to $378.5 million. Net earnings fell by 68.5 percent to $8.93 million due to restructuring charges in the nutritional supplements and beauty segments and a writeoff related to the bankruptcy of Toys'R'Us.