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Helen of Troy Limited Message Board

  • sestercius sestercius Aug 19, 2004 8:55 AM Flag

    Accounting policies ant the WJ article.

    Accounting wise, inventories are recorded at cost. The cost of goods are supposed to include all the costs required to bring the goods to the location point of those inventories, as far as they can be directly associated with the underlying processes.

    The Hong Kong dependency is an external organ that is instrumental in the procurement of purchased goods. Including its costs in the COG makes logical sense and is obviously allowed under GAAP accounting rules. In my view, including those costs in the COG category gives a more accurate idea of the true costs of goods than dumping them in the SG&A category.

    Hele�s balance sheets shows that its annual inventory turn is about 4 on average. That means, compared to the alternative SG&A accounting, the costs of the Hong Kong office are shifted by an average of one quarter.

    To repeat the obvious: The amounts involved in those shifts are not accumulating! Yearly number, Y/Y comparisons, annual or quarterly, are not meaningfully distorted as Hele is using that method since many years.

    The suggested cumulated annual �earning overstatements� by unnamed �analysts� in the WJ article, resulting from those shifts, are mathematically impossible. They reflect either a frightening poor understanding of accounting logic or are intentionally misleading. At least Mimi Sokolowski (Sidoti & Company) has understood this and is saving the honour of her profession here. Apparently, she wasn�t part of the �analysts� quoted in the WJ article, although she is known for following Hele and the number of Hele's analysts is small. Strange, isn�t it?

    I am not really surprised to see Doug Lane associated with the nonsense published in the WJ article, but I am disappointed to see how uncritically the Journal is helping to spread it. The WJ should either name the authors of the quotes or seriously check the facts. Editors that have enough professional background and character to evaluate those quotes and facts are required too.

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    • sestercius, you are a clear voice of reason. Thanks for putting your thoughts into words.

      I'm not one to suspect a conspiracy behind every tree, but my years are teaching me that naivety is unwise if not dangerous. Dark forces may well be at work. Best regards.

      Mawchek

      • 1 Reply to mawchek
      • Long time posters will remember my dad who was a prolific writer on this board--his cheerleading for Hele-his love of this company and the people running it. He told me that this company is run by decent people---you know that it has been public for over 30 years. Now with Hele going into liguid products and now with OXO, this company will boom even faster, with more sales and larger profits. Sestercius, I hope you continue to post you thoughts, as I believe some of these analysts, who have watched Hele grow from year to year have not even upgraded their ratings, are jealous of Hele's success. This stock, I believe is way underpriced, and the stock price will go way up again. Can't wait for earnings to come out this year and next, for I believe Hele expansion will take it's sales to over a billion dollars and with profits equivalent to it...Good luck trading Hele.

    • You hit it right on the head. Excellent post.

      JHH, CPA (bet you are too!)

    • Stay with hele....it is doing great, expecting around $3.00 a share next year. Still having a great time down here in the El Paso border area. P.S. Hele's acquistion of OXO was a stroke of genius. Seems like all my friends have OXO products in their kitchen! OXO could be bigger than Hele, with all those kitchen items, and Hele's capability to expand the line, it is a true winner...come on down and relax.

 
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