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Helen of Troy profit up as costs fall and sales jump

By Simon Pitman , 11-Jul-2007

Cosmetics and household goods player Helen of Troy has reported a 51.5 per cent increase in its net profits, ending a prolonged period of results that have been impacted by increasing costs.

The Texas-based company said that first quarter net earnings rose to $10.11m, compared to $6.67m in the same quarter a year earlier. The results were born from strong sales gains in both the personal and household divisions, which were overall up 7.5 percent to $140.17m, combined with a significant increase in operating profit thanks to a drop in overall costs. Operating income for the quarter was up from $10.91m to reach $14.30m, an increase of 31 per cent, helped considerably by the fact that selling and general administrative expenses declined from 36.1 percent, to 32.6 per cent. Stating that he was 'extremely pleased' with the results after a prolonged period in which costs have impacted the bottom line significantly, CEO Gerald Rubin said: "The improvement is mostly due to an improved distribution cost structure, outbound freight cost improvements and lower information technology outsourcing costs." The company added that in the next ten months it believes that the recent acquisition of Belson Products, which produces a number of personal and household products, will help to add at least $20m - $30m in total sales. However, as a note of caution, Rubin also added that sales margins on these newly-purchased brands are expected to be lower, because of their current market position, a factor that may impact the bottom line in the coming quarters and ultimately making it only slightly accretive to earnings. The company added that in the next quarter it also expects to see dividends from its Bed Head by Tigi hair care range. This follows the start of distribution backin May, which is expected to see further consumer sell-through as advertising campaigns kick in. For the full financial year, ending February 2008, the company said that it was expecting to see sales come in at around $680m, compared to sales of $635m for the fiscal year 2007.


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