Sales went up by 11.4 percent in Helen of Troy's Housewares segment, led by Hydro Flask and OXO, in the third quarter ended on Nov. 30. The operating margin of the segment fell by 2.3 percentage points to 23.2 percent due to several factors including higher advertising expenses, higher incentive compensation and higher freight expenses. These factors were partially offset by a more favorable product and channel mix.
Helen of Troy's total consolidated revenues increased by 2.4 percent to $420.8 million in the quarter. Revenues from its so-called Leadership Brands, which include Hydro Flask, rose by 4.9 percent to $343.4 million. Foreign currency exchange rates had a negative impact of about 0.4 percentage points.
Online sales went up by about 6.0 percent, representing 18.0 percent of the group's total turnover, but the growth of its e-commerce operations in China decelerated.
The group's gross margin contracted by 0.1 percentage points to 42.2 percent, due in part to increased import duties. Adjusted Ebitda fell by 8.3 percent to $74.5 million. The adjusted operating margin declined to 16.4 percent from 18.4 percent in the year-ago period, due to incremental digital marketing expenditures and new product introductions by its Leadership Brands. On an adjusted basis, net income from continuing operations declined by 7.1 percent to $63.2 million.
The group expects its total revenues to rise by between 3.8 and 4.8 percent for the full financial year. The outlook for the group as a whole is less positive than previously expected, due in part to the impact of trade tensions on U.S. and Chinese consumers. However, the Housewares segment is expected to perform better than expected, rising by between 11 and 13 percent in contrast with a previous forecast of 9 to 11 percent.
Helen of Troy said that the next financial year, which begins in March, will mark the start of a second phase of its transformation, involving an expansion of the geographical footprint and possible acquisitions to add to its Leadership Brand portfolio.