Helen of Troy Outperforms Estimates

• By Zacks Equity Research
• On 2:40 pm EDT, Thursday October 8, 2009

Helen of Troy Ltd. (NasdaqGS: HELE - News), a designer and producer of personal care and household consumer products, reported its fiscal second quarter earnings yesterday. The company reported quarterly earnings of 51 cents per share, above the Zacks Consensus Estimate of 39 cents per shares as well as the prior-year EPS of 34 cents.

Second quarter sales increased 5.6% percent to $162.2 million from $153.5 million last year. U.S. sales contributed 5.7 percentage points to growth in total sales, which was partially offset by a 0.1 percentage point negative contribution from international sales due to unfavorable foreign currency exchange rates.

The Housewares segment posted 7.3% increase in sales to $50.6 million, while sales in the Personal Care segment increased 4.9% to $111.6 million compared to prior year quarter.

Sales growth in Housewares was driven by continued growth in the dry food storage category and other line extensions. The Housewares division continued to expand its OXO brand in the first half with the completion of two strategic licensing agreements with Staples Inc. (NasdaqGS: SPLS - News), the world's largest office products company, and UCB, a global biopharmaceutical leader. These partnerships extend OXO's reach into new categories.

The company is focusing on its five core initiatives – maximizing high growth potential branded products (10 key brands represented 83% of FY09 sales volume), accelerating new product pipeline, leveraging innovation, growing through acquisitions and cost controls and productivity improvement.

The company aims to cut down expenses and strengthen operating margins by eliminating unnecessary spending, co-innovating with manufacturers to eliminate costs, leveraging technology, and making productivity drivers a key focus of its business. Through these efforts, HELE managed to cut down its SG&A expenses as a percentage of sales by 310 bps in the second quarter and 350 bps year-to-date.

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