Helen of Troy swings to profit, raises full-year outlook on tariff refunds

Helen of Troy Limited, the El Paso, Texas-based consumer products company that owns Hydro Flask, OXO, Osprey and Honeywell-branded home goods, reported second-quarter fiscal 2027 results on Thursday that showed a swing back to profitability after a year-earlier quarter marred by a large non-cash impairment charge. The company also raised its full-year earnings, margin and cash-flow guidance, citing both operational progress and a benefit from tariff refunds.

Net sales for the quarter ended August 31, 2026 rose 2.1 percent to $440.9 million, from $431.8 million a year earlier, though the figure came in slightly below the roughly $443 million Wall Street had expected. Adjusted diluted earnings per share were $0.79, well ahead of the $0.51 analysts had forecast, while GAAP diluted earnings per share were $0.19. That compares with a GAAP loss of $13.44 per share in the same quarter last year.

The numbers

Gross margin expanded sharply, to 52.2 percent from 44.2 percent a year earlier. GAAP operating income was $22.9 million, or 5.2 percent of sales, reversing an operating loss of $315.7 million, equal to negative 73.1 percent of sales, in the year-ago period. Adjusted operating income, which strips out one-time items, rose to $37.9 million from $26.9 million. Adjusted EBITDA climbed to $49.4 million, or 11.2 percent of sales, from $36.2 million, or 8.4 percent, while operating cash flow improved to $57.1 million from negative $10.5 million.

Part of the improvement came from tariff refunds: the company recorded $26.9 million in gross pre-tax refunds, of which it reinvested about $23 million, for a net pre-tax benefit of roughly $4.0 million and an earnings-per-share benefit of about $0.12. Total debt fell to $672.6 million from $893.2 million, and inventory declined to $480.3 million from $528.9 million, reflecting continued deleveraging.

Helen of Troy's two reporting segments moved in different directions. Home & Outdoor, which includes Hydro Flask and Osprey, posted sales of $227.9 million, up 9.2 percent, with operating income of $24.1 million versus a $72.6 million loss a year earlier. Beauty & Wellness, which includes Drybar, Curlsmith and the company's Revlon-licensed and health and wellness lines, posted sales of $213.0 million, down 4.5 percent, and narrowed its operating loss to $1.1 million from $243.1 million.

Why the numbers look so different from last year

The scale of the year-over-year swing reflects accounting as much as operations. In the second quarter of fiscal 2026, Helen of Troy recorded a $326.4 million impairment charge, driven primarily by a sustained decline in its stock price that pushed the company's enterprise value below the book value of its net assets, forcing a write-down of goodwill and intangible assets under accounting rules. That charge followed an even larger $414.4 million impairment in the first quarter of fiscal 2026, as the company also cited downward revisions to its internal forecasts tied to tariff policy and softer consumer spending, according to figures in the company's most recent annual report filed with the SEC. Together, the two quarters wiped out roughly $740 million in goodwill and intangibles across the year, concentrated in the Beauty & Wellness segment's Health & Wellness, Drybar and Curlsmith businesses. This year's quarter had no comparable charge, which is the main reason operating income and earnings per share look so much stronger.

Guidance and who is affected

Management raised several full-year fiscal 2027 targets, according to the 8-K filed with the Securities and Exchange Commission. Adjusted EBITDA guidance moved to a range of $203 million to $210 million, up from $190 million to $197 million previously. Adjusted diluted earnings-per-share guidance rose to $3.60–$4.15, from $3.25–$3.75, and GAAP diluted EPS guidance rose to $3.63–$4.26, from $3.57–$4.18. Free cash flow guidance increased to $120 million–$140 million, from $85 million–$100 million, and the company now expects to end the fiscal year with net leverage of 2.7 times earnings or lower, improved from a prior target of 3.2 times. Consolidated net sales guidance was narrowed slightly, to $1.768 billion–$1.822 billion.

The results matter most immediately to Helen of Troy shareholders and to the retailers and suppliers tied to its roughly dozen consumer brands, spanning kitchenware, hydration and outdoor gear, haircare tools and over-the-counter health products. The company, whose shares trade on the Nasdaq under the ticker HELE, licenses the Honeywell and PUR brand names for some of its home and water-filtration products in addition to the brands it owns outright, a mixed ownership structure that has drawn periodic analyst questions about long-term brand control even as it has not been a factor in this quarter's results. Investors reacted quickly: shares jumped as much as 25 percent in early trading after the release, though the gain narrowed as the session went on, as some analysts flagged that the earnings beat depended heavily on the one-time tariff refund rather than core sales growth, which remained modest.

"Our second quarter results reflect continued progress against our multi-year roadmap," said G. Scott Uzzell, Helen of Troy's chief executive officer, adding that "while there is still meaningful work ahead, we are encouraged by the progress we are making."

What happens next

Uzzell, who became CEO in September 2025, is roughly a year into a turnaround effort aimed at stabilizing the Beauty & Wellness segment while leaning on faster-growing outdoor and hydration brands. The company's third-quarter guidance, reported alongside the results, calls for adjusted earnings per share of $2.05 to $2.40, a range that itself includes a tariff-refund benefit analysts have cautioned is non-recurring. Whether the full-year guidance raise holds will depend largely on holiday-quarter demand for Hydro Flask, Osprey and OXO products, and on whether Beauty & Wellness can extend its narrower losses into sustained profitability without further one-time accounting charges.