Earnings Recap: Helen of Troy (HELE) Pops Despite Economic Trojan War

Earnings: Q1 profits of $0.59 vs. estimates of $0.57 and $0.47 for Q1 last year.

Revenue: Up 11% to $160.2 million vs. estimates of $161.3 million.

“Helen of Troy (NASDAQ: HELE) plans to continue expansion of its Oxo housewares lines as well as continue to reduce costs and pursue additional acquisitions,” noted CEO Gerald J. Rubin.

Comment: Despite the narrow miss on rev, shares of HELE popped nearly 7.5% on Thursday following the company’s AM numbers.  Sales out of its personal-care line, the company’s largest component, rose 11%, aided by recent acquisitions of the Infusium 23, Pert Plus and Sure brands. The company sells licensed products under the Vidal Sassoon and Revlon names as well as its own brands. Houseware sales increased 12% as its OXO brand remained strong.  Gross margins expanded to 45.2% from 40.7%.

Shares rose an additional 2% on Friday to finish the week up 10.5%.  HELE has executed well during tough times for consumer spending and continues to perform despite an outlook that remains uncertain.  Many of HELE’s competitors have looked abroad for growth, but HELE has gone the acquisition route.  It’s worked out well thus far, but getting all of your growth out of M&A is a dangerous game.  Once a couple deals go sour investors are likely to head for the exits en masse.  But until that day comes, HELE could be a solid pickup for those looking for exposure to the US consumer.

Disclosure: No holdings in HELE.

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