Helen of Troy (HELE) Q2 2027 earnings review
Helen of Troy cuts debt, while tariff refunds lift profit
Helen of Troy, the company behind OXO kitchen tools and Hydro Flask bottles, grew while its hair-care sales kept shrinking. Sales rose 2%, and its Home & Outdoor brands did all of the growing. Profit per share excluding one-offs rose 34%, helped by tariff refunds. Chief executive G. Scott Uzzell raised the profit outlook, but by our math the plan still has sales falling about 3% in the second half.
| Sales | $440.9M +2.1% from a year ago |
|---|---|
| Profit per share, excluding one-offs | $0.79 $0.59 a year ago; about $0.12 came from tariff refunds |
| Total debt | $672.6M $893.2M a year ago |
| Full-year outlook for profit per share, excluding one-offs | Raised to $3.60–4.15 includes $0.30–0.45 from tariff refunds; middle of the sales range unchanged |
⚖️ Verdict: 🟢 Bullish
The story got better because tariff refunds and debt repayment made the balance sheet safer. Debt fell by a quarter from a year ago. One caution: by our math the whole increase in the profit outlook equals the refund benefit, so the underlying plan did not improve.
The question now is whether demand holds once last year's tariff-hit quarters leave the comparison. Either the cautious sales plan proves too low, or sales fall as it implies. The third quarter, the largest of the year, will tell.
🐂 Bull Case
Tariff Refunds Lift the Cash Outlook
Helen of Troy paid higher import tariffs last year, and it is now getting part of that money back. The consumer-products group booked $26.9 million of refunds this quarter. Its full-year outlook now counts on about $80.5 million of them, across three refund phases.
- Cash from operations, full-year outlook: $163–179 million, up from $119–130 million
- Free cash flow, full-year outlook: $120–140 million, up from $85–100 million
- Cash from operations this quarter: $57.1 million, against a $10.5 million outflow a year ago
This matters because refunds are cash, and the business consumed cash in the same quarter a year ago. Chief executive G. Scott Uzzell plans on "reinvesting the vast majority of tariff refunds, while allowing a portion to support near-term earnings and liquidity". But refunds arrive once. Even after the raise, the middle of the free cash flow range sits just under last year's $131.9 million.
What to watch: free cash flow in the third-quarter results. A second half inside the $82–102 million that the outlook leaves would show that the refunds reached the bank account as planned.
Debt Fell by a Quarter in a Year
Helen of Troy's debt rose after it bought the nail-care brand Olive & June in late 2024. A year ago the balance stood at $893.2 million, and it is now $672.6 million. Proceeds from a warehouse sale in the spring and cash from the business paid for the reduction.
- Net leverage, which is debt less cash divided by a year of operating profit: 3.03 times, down from 3.48 three months earlier
- Year-end ceiling for net leverage: 2.7 times, lowered from 3.2
- Interest expense: $10.9 million, down 23% from a year ago
- Debt repaid in the first half: $109.0 million
What to watch: net leverage at the end of the third quarter. A reading below 3.0 would mean the group can reach its new ceiling without another asset sale.
Home & Outdoor Grew 9% Again
Home & Outdoor is the half of Helen of Troy that sells OXO kitchen tools, Hydro Flask bottles and Osprey backpacks. Its sales rose 9.2%, after 9.5% in the prior quarter, and every brand grew. The company credited "strong demand for technical, travel and lifestyle packs", international sales and new products.
- Segment sales: $227.9 million, up from $208.7 million
- Segment profit margin, excluding one-offs: 12.3%, up from 9.6%
- International sales, all brands: up 3.7%
- Segment sales against two years ago: about 6% lower, by our math
The growth is real but the comparison is easy, because the same quarter fell about 14% last year. Some of the gain also came from "higher closeout channel sales", which means sales to discounters that clear excess stock.
What to watch: Home & Outdoor sales in the third quarter, where last year's decline was smaller. Growth there would show that demand, and not only an easy comparison, drives the segment.
Positives this quarter didn't test
Four standing positives got no new numbers in the press release, so each one waits for a later disclosure before it can count for more.
- Online sales share: not in the release; the quarterly filing will show whether it held near last quarter's 28%.
- International selling model: chief executive G. Scott Uzzell said in July he would share details this autumn; a plan with targets would move it.
- Sourcing outside China: no update on the share of costs exposed to China tariffs; a year-end figure of 15–20% would meet the target.
- Prices: Helen of Troy cited lower promotional spending, but gave no figure for what its price increases added to sales.
🐻 Bear Case
The Profit Raise Equals the Refund Benefit
Helen of Troy raised its full-year outlook for profit per share excluding one-offs. In the same table, the consumer-products group showed how much of the new range comes from tariff refunds. By our math, the two amounts match.
- New range: $3.60–4.15, with the middle about $0.38 higher than before
- Refund benefit inside the new range: $0.30–0.45, or about $0.38 at the middle
- Middle of the range without refunds: $3.50, against $3.55 earned last year
- Cost of making the products: down 8.0 percentage points of sales this quarter, about 5.6 of them from refunds net of higher tariff costs
So the plan for the business itself did not improve, although the first half ran ahead of it. Cost is the reason: the outlook still assumes higher commodity, currency and freight costs, and gives no dollar figure.
The year also leans on the months ahead. By our math, the second half must supply about three-quarters of the year's profit per share, and about 15% more than a year ago.
What to watch: third-quarter profit per share excluding one-offs, with the refund benefit shown separately. A figure below last year's $1.71 without refunds would put the full-year range in doubt.
A New Exclusion Added $0.17 to Profit
"Sales were in line, and Adjusted EBITDA and Adjusted EPS were better than expected, without including the net tariff refund benefit in the quarter," chief executive G. Scott Uzzell said. Adjusted EPS is profit per share excluding one-offs, and each company decides for itself what counts as a one-off.
This quarter the list grew. Helen of Troy began to exclude $4.0 million of legal costs from lawsuits over a personal-care business it sold in 2021. The buyer, HRB Brands, now contests its duty to cover those claims, and the release said the costs are not "normal operating expenses".
- Reported profit per share, excluding one-offs: $0.79, up from $0.59
- Tariff refund benefit: about $0.12
- Newly excluded legal costs: $0.17
- Without both, by our math: $0.50
So Uzzell's claim holds only under the new definition. Under the old one, and without refunds, profit per share fell from a year ago. A higher tax bill explains part of that drop, but the legal costs are real spending, and Helen of Troy plans to exclude them in future quarters too.
What to watch: the size of the excluded legal costs next quarter. A rising figure would mean a growing share of reported profit depends on what the group leaves out.
Beauty Sales Fell 4.5% as Shoppers Pulled Back
Beauty & Wellness is the half of Helen of Troy that sells hair tools, water filters and health devices. Its brands include Drybar, PUR, Vicks and Braun. Sales there fell 4.5%, the opposite of the other segment's growth.
The company blamed hair appliances and premium hair care, where it cited "consumer price sensitivity", competition and fewer reorders from retailers. Water filters also declined on "softer consumer demand and increased competitive marketing activity". Heaters, thermometers and nail care grew, but not by enough.
- Segment sales: $213.0 million, down from $223.1 million
- Segment operating result: a loss of $1.1 million
- Segment profit margin, excluding one-offs: 4.7%, up from 3.1%
- Full-year segment sales outlook: a decline of 0.8% to 3.8%
This matters because Helen of Troy wrote down the value of these brands by hundreds of millions of dollars last year. Weaker sales plans can force more write-downs, so that risk remains while hair sales fall. The margin also looks better than it is, because it leaves out lawsuit costs that sit in this segment.
What to watch: Beauty & Wellness sales in the third quarter, the segment's largest. A fall steeper than 5% would run below what the full-year range leaves for the second half, by our math.
Risks this quarter didn't answer
Five standing risks got no new numbers in the press release, so each one stays where it was three months ago.
- Cost inflation: the outlook assumes higher product, freight and currency costs but gives no dollar amount; any figure would size the risk.
- Tariff policy: the plan assumes September's tariff rates stay for the rest of the year; a new rate would reset costs in either direction.
- Shareholder lawsuit: the release says nothing on the class action filed in June; the quarterly filing's legal note will update it.
- Shoppers: the outlook still plans for "softness in discretionary categories" and heavier promotions from rivals; segment sales next quarter will test it.
- Cost-cutting programme: restructuring charges were $2.5 million, with no savings figure; a disclosed saving would show whether the cost base improved.
👓 Other Themes
Most Refund Money Goes Back Into Spending
Helen of Troy plans to spend 83% to 88% of its tariff refunds. It calls the spending "growth investments to support brand and demand creation, organizational investments and inventory composition". This quarter that meant higher pay and staffing, new packaging and more marketing, so selling and overhead costs rose 5.4 percentage points of sales. No sales figure shows a return on that spending yet.
💲 Other KPIs
Inventory fell 9.2% from a year ago, a second straight decline and a faster one than last quarter's 3.5%. A year earlier it was rising about 12%, partly on tariff costs. The outlook plans working-capital gains "with an emphasis on further inventory reduction", which frees cash.
Income tax took $9.2 million of $13.8 million in pre-tax profit. That rate is far above the 26% of the prior quarter, by our math. Helen of Troy said more of its losses fell in countries where they do not reduce the tax calculation.
The share count rose 5.2% from a year ago, so each share owns a smaller slice of profit. Helen of Troy bought back almost nothing: $1.3 million in the first half. Its outlook assumes 24.5 million shares in the second half.
Retailers paid faster: the average collection time fell from 72.2 days a year ago. Money owed by customers dropped 6.4% while sales grew, which adds to cash from operations.
🔮 Guidance
Narrowed. The middle of the range stays at $1.795 billion, about 0.5% above last year. By our math, that leaves a decline of about 3.1% for the second half, after 4.9% growth in the first. The first half had easy comparisons with tariff-hit quarters a year ago. Helen of Troy has landed at or above the top of its last three sales ranges.
Cut. The middle of the range fell $8 million, to about 3.7% growth for the year. By our math, that leaves a decline of about 1.2% for the second half, after 9.4% growth in the first. The release gives no reason for the lower range.
Raised. The middle of the range is $8 million higher because the company lifted the bottom. The plan still has segment sales falling 0.8% to 3.8% this year. By our math, the second half would decline about 4.7%, close to this quarter's pace.
Raised. Both ends of the range moved up $3 million. The total includes the after-tax gain of $41.3 million from the warehouse sale in the first quarter. By our math, that gain supplies about 43% of the year's net income at the middle of the range.
Raised. The middle of the range rose $13 million. The new range includes $10–14 million of tariff refunds after reinvestment, so the raise is about the size of that benefit. The plan leaves $127.7–135.1 million for the second half. By our math, that is growth of about 5.9% at the middle, after 21% in the first half.
Lowered, which helps profit. The middle of the range fell $2.4 million because debt is lower. It is the second reduction this year: the range started at $47–49 million in April.
Raised. Helen of Troy now plans to pay a higher share of pre-tax profit in tax, after a 66% rate this quarter. More losses sit in countries where they do not reduce the tax calculation, the company said.
Raised at the top. The upper end moved up one percentage point and the lower end stayed. In the outlook table, the higher tax rate pairs with the low end of the profit-per-share range.
Raised. The middle moved up about $0.07, far less than the increase in profit per share excluding one-offs. By our math, lawsuit and restructuring costs of $0.28 per share explain most of the gap, because the other measure leaves them out. The plan leaves $1.94–2.57 for the second half.
Raised. The middle rose about $0.38, to growth of about 9% on last year. The new range includes $0.30–0.45 of tariff refunds after reinvestment. The plan leaves $2.64–3.19 for the second half. By our math, that is about 15% more than a year ago at the middle. The range had not moved since April.
Raised. The plan assumes about 24.5 million shares in the second half. By our math, the higher count spreads the same profit over nearly 2% more shares than the earlier plan did.
Raised. The middle of the range rose $46.5 million, the largest change in the outlook, which now counts on about $80.5 million of tariff refunds. That puts the middle level with last year's $171.1 million. The plan leaves $107–123 million for the second half.
Raised. The middle rose $37.5 million, less than cash from operations because planned investment also went up. At $130 million, the middle sits just under last year's $131.9 million. Free cash flow was $38.3 million in the first half, so the second half must supply $82–102 million.
Lowered, which is the better direction for a debt measure. The ceiling dropped by half a turn after net leverage reached 3.03 this quarter. Net leverage compares debt less cash with a year of operating profit, so refund cash and higher profit both pull it down.
Raised. Planned investment rose $9 million at the middle, the second increase since April's $28–32 million. The money goes to new products, the warehouse network and suppliers in more countries, the company said. First-half spending was $18.1 million, so the pace must pick up.
❓ Key Questions
How many dollars of cost inflation sit in the outlook?
The outlook assumes higher product, freight and currency costs but gives no amount. Without it, nobody outside the company can tell how much of the refund benefit the business itself would have lost.
How large will the excluded lawsuit costs become?
Helen of Troy now leaves legal costs from a business sold in 2021 out of its main profit measure. This quarter's amount was $4.0 million. A range for the year would show how much the measure now omits.
Why did the Home & Outdoor sales outlook fall?
The segment grew 9% in each of the last two quarters, yet the full-year range dropped $8 million. The release gives no reason. The answer shows whether orders moved earlier or demand is cooling.
When does the refund cash arrive, and what remains unclaimed?
The outlook counts on about $80.5 million of refunds but gives no schedule for receipts. Last quarter's filing also described about $71 million of other tariff payments outside that process. Timing decides how fast debt can fall.
Where do online sales and China sourcing stand?
Earlier reports gave online sales as a share of the total and a target for costs exposed to China tariffs. The release mentions neither. Both figures show whether the growth and the cost base can last.