Helen of Troy's personal care sales slump

By Guy Montague-Jones

- Last updated on GMT

Helen of Troy has reported an unexpected drop in turnover as sales
of personal care products slumped in a highly competitive and
challenging sales environment.

The maker of Revlon and Vidal Sassoon hair care products had warned in October that macroeconomic factors could put a break on future growth but analysts had not anticipated a net loss.

Net sales for the third quarter ending November 30 fell 1.4 percent to $210.3m while personal care sales dropped 6.2 percent to $162.9m

The results were below expectations as on average analysts surveyed by the financial experts Bloomberg had been anticipating sales of $218.6m. "Our personal care segment is facing a challenging sales environment, which we anticipate will continue through at least the first half of this calendar year," said Helen of Troy CEO Gerald Rubin.

While sales were disappointing operating income remained stable increasing to $29.3m from $29.1m in the same period last year as the company succeeded in cutting selling, general and administrative expenses by $2.9m. Following the disappointing sales figures for the quarter Helen of Troy has revised its sales forecast for the fiscal year ending February, 29.

The company now expects sales for the fiscal year to be in the range of $645m to $655m as opposed to its previous estimate of $660m to $680m.

Its net earnings guidance has also been reduced to $1.85 to $1.95 per fully diluted share from $1.90 to $2.10.

With regards to the future, Rubin said: "Our efforts going forward will be to continue our focus on expense reductions while increasing sales and gross margins for the coming year."

In particular, the company is planning to re-evaluate its current product mix in its personal care segment and work to improve the gross margins of Belson products by shifting its sourcing to lower cost providers.

Helen of Troy bought Belson in May last year to widen its share of the salon market but the integration of the business seems to have had a detrimental effect on total sales during 2007.

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