Helen of Troy profits rise, despite sales slip

By Simon Pitman

- Last updated on GMT

Related tags Personal care division Generally accepted accounting principles Revenue

Helen of Troy has reported a significant rise in its first quarter earnings, despite the fact that the economic downturn led to lower sales in its personal care division.

In the absence of charges of $10m in the corresponding quarter last year, profits rose by 11.2 percent to reach $14.5m, whereas sales for the period declined by 0.8 percent to reach $143.87m.

Sales in the company’s mainstay personal care division decreased by 5 percent during the period, to reach $101.18m, whereas sales for the household division rose by 11 percent to $42.69m.

Retail environment and currency hit sales

The company said that the less dynamic performance from its personal care division reflected the difficult global retail environment, alongside the negative impact of foreign currency fluctuations.

The big rise in net income meant that the company’s results beat analysts’ expectations, despite the fact that overall sales slowed slightly.

CEO Gerald Rubin pointed to the fact that, on top of incurring less charges, the company had also managed to cut back on costs, stressing the fact that selling, administrative and general expenses had declined to 27.3 percent of sales at $39.32m, compared to the corresponding quarter when those costs had represented 31.4 percent of sales.

As a result operating income before impairment charges rose 10.1 percent to $19.18m.

Challenging market conditions

Referring to market conditions as ‘challenging’, Rubin added his belief that the company was ‘poised to effectively react to changes in the marketplace as they occur’.

The first quarter results are a major improvement on the last quarter, when the company announced that it had suffered an $88m loss after incurring a $99.5m impairment charge related to loss of goodwill and intangible assets.

Helen of Troy will be hoping to turn around its personal care performance with the help of Infusion 23, a therapeutic hair care brand the company bought from Procter & Gamble (P&G) in March.

With a line-up of 23 hair care products and annual net sales of $40m, Infusion 23 was expected to have an impact on sales as early as the first quarter of 2009.

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