Helen of Troy (HELE) Q2 2025 earnings summary

Executive summary

• Q2 FY2025 results exceeded expectations for net sales, adjusted EPS, and adjusted EBITDA, despite a 3.5% year-over-year sales decline to $474.2M, mainly due to Beauty & Wellness softness and Home & Outdoor growth.

• International sales grew nearly 5%, with all key regions contributing positively.

• Project Pegasus restructuring continued, incurring $3.4M in pre-tax charges YTD, targeting $75M–$85M annualized profit improvements by FY27.

• Automation issues at the Tennessee distribution facility were substantially remediated ahead of plan, with minimal sales impact.

• Board authorized a new $500M share repurchase program in August 2024, replacing the prior authorization.

Financial highlights

• Q2 FY2025 net sales were $474.2M, down 3.5% year-over-year but above expectations; gross profit margin was 45.6%, down 110 bps; adjusted EBITDA margin was 11.8%, down from 14.6%.

• Net income for Q2 was $17.0M ($0.74 per diluted share); adjusted EPS was $1.21, down from $1.74.

• Free cash flow for Q2 was $39.7M, up from $28.0M year-over-year; operating cash flow YTD was $69.9M.

• Total debt reduced to $713.2M from $844.9M year-over-year; net leverage ratio improved to 2.0x–2.34x.

• Interest expense decreased to $13.2M in Q2 due to lower average borrowings.

Outlook and guidance

• FY2025 net sales expected at $1.885B–$1.935B, a decline of 6.0% to 3.5%; adjusted EPS guidance: $7.00–$7.50, down 21.4% to 15.8%.

• Adjusted EBITDA forecast: $287M–$297M, with margin compression of 150–160 bps.

• Free cash flow guidance is $180M–$200M; net leverage ratio targeted at 1.9x–1.8x by year-end.

• Q3 FY2025 net sales expected to decline 4.5% to 1% year-over-year; adjusted EPS to decline 10% to 3%.

• Guidance assumes continued macro headwinds, promotional environment, and retailer inventory caution.