Helen of Troy Sinks as Weak Guidance, Impairment Charge Eclipse Earnings Beat
Shares fell after the consumer goods firm posted a significant GAAP loss due to a $65.9M write-down and lowered its full-year outlook, citing soft demand and margin pressures.
Shares of Helen of Troy (NASDAQ: HELE) fell sharply in trading after the company's third-quarter earnings beat was overshadowed by a substantial impairment charge and a lowered forecast for the full fiscal year.
While the owner of popular brands like OXO and Hydro Flask appeared to beat analyst expectations on the surface, investors focused instead on underlying weakness. The company posted adjusted earnings of $1.71 per share, edging out the $1.68 consensus estimate by 2%. Revenue for the quarter also came in 2% ahead of forecasts at $512.8 million, compared to an expected $502.2 million. However, these figures were eclipsed by a GAAP net loss of $3.65 per share.
The significant loss was primarily driven by a non-cash impairment charge of $65.9 million related to a write-down of assets. According to the company's quarterly report, this charge masked what would have otherwise been a profitable quarter on an adjusted basis.
Undermining investor confidence further, Helen of Troy's management updated its outlook for fiscal 2026, citing "significant headwinds." The company pointed to the potential impact of tariffs, persistent margin pressure, and softening consumer demand as key challenges moving forward. The downbeat forecast suggests that the pressures that led to the third-quarter impairment may continue to affect performance.
The market reaction reflects a broader trend of investor anxiety for the stock, which has been trading closer to its 52-week low of $17.01 than its high of $69.05. For a company with a portfolio of well-regarded but largely non-essential consumer brands, signs of waning demand are a critical concern. The El Paso-based company operates in the Health & Home, Beauty, and Housewares segments, categories that can be vulnerable to cutbacks in discretionary spending.
The $65.9 million write-down raises questions about the carrying value of the company’s assets and the long-term profitability of certain brand segments. While impairment charges are non-cash, they can indicate that past acquisitions or investments are not generating the returns that were initially expected, forcing a downward revision of their value on the balance sheet.
Despite the negative market reaction, Wall Street analysts have maintained a largely neutral stance on Helen of Troy, with four analysts rating the stock a 'Hold' and one a 'Strong Buy.' The average analyst price target of $29.33 suggests some believe in the potential for a recovery from the current stock price. However, the company's own cautious guidance presents a significant hurdle and indicates that the path forward is fraught with challenges as it navigates a tough consumer environment.