Helen of Troy (HELE) Q2 2025 earnings summary

Executive summary

• Q2 FY2025 net sales declined 3.5% to $474.2M, with Home & Outdoor up nearly 1% and International sales growing almost 5%; Beauty & Wellness declined due to softer demand and competition.

• GAAP diluted EPS was $0.74 (down from $1.14); adjusted diluted EPS was $1.21 (down from $1.74); operating margin fell to 7.3% from 9.5%.

• Project Pegasus restructuring continued, incurring $3.4M in pre-tax charges YTD, targeting $75M–$85M annualized profit improvements by FY2027.

• Tennessee distribution facility automation issues were largely remediated with minimal sales impact.

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

Financial highlights

• Q2 net sales revenue was $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 280 bps).

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

• Free cash flow for the quarter was $39.7M, up from $28.0M year-over-year; total debt at quarter-end was $713M, down from $844.9M year-over-year.

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

• Inventory increased to $469.6M from $435.7M; accounts receivable turnover was 69.0 days.

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 outlook: $180M–$200M; net leverage ratio targeted at 1.8x–1.9x by year-end.

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

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