Why Helen of Troy Plummeted Nearly 30% Today

The consumer appears to be under pressure.

Shares of Helen of Troy (HELE -27.73%) were plunging in Tuesday trading, down 27.4% as of 12:53 p.m. ET. The consumer products company, which produces brands such as OXO kitchen supplies and Braun shaving products, reported its first fiscal quarter 2025 results today. As you can probably tell from the market’s reaction, it wasn’t good news.

The consumer is pulling back, as are retailers

In the first quarter, Helen of Troy reported revenue was down 12.2% to $416.8 million, with adjusted (non-GAAP) diluted earnings per share (EPS) down 49% to $0.99. This missed the consensus estimates of $446 million in revenue and $1.56 in adjusted EPS. Adding insult to injury, management also lowered guidance for the year to $1.910 billion at the midpoint, down from the $1.995 billion guidance given in the fourth quarter of 2024’s release.

CEO Noel Geoffroy said in the press release:

We are disappointed with the start to our fiscal year. We battled an unusual number of internal and external challenges in the quarter, which resulted in net sales and adjusted EPS below our outlook. Many of these challenges became more pronounced toward the end of the first quarter and some continue to evolve. We now see this fiscal year as a time to take action to reset and revitalize our business. As a result, we are lowering our annual outlook, which delays the delivery of the long-term financial algorithm in our strategic plan.

Across both of Helen of Troy’s segments, home and outdoor revenue was down 8.6%, while beauty and wellness was down 15.2%. The across-the-board declines seemed to signal a broader weakness in home-related spending and not a specific competitive threat.

For both main segments, management cited “softer consumer demand” and “shifts in consumer spending” as root causes of the decline. The home and outdoor segment especially suffered from retailers destocking their inventory, and the health and wellness segment suffered from start-up issues at Helen of Troy’s new Tennessee distribution facility.

Helen of Troy implementing Project Pegasus as it waits for the consumer to improve

After the decline, Helen of Troy looks somewhat cheap, as it now trades at just 8.9 times its revised-down 2025 outlook of $7.25 at the midpoint. Furthermore, the company is in the middle of “Project Pegasus,” a restructuring plan aimed at reducing annual costs by $75 million to $85 million by 2027. The plan’s restructuring of investments will be completed this year.

As such, Helen of Troy may be worth considering if you’re a value investor who anticipates an eventual consumer spending turnaround. This may occur when inflation eases to the Federal Reserve’s 2% target.

Billy Duberstein and/or his clients have no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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