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Helen of Troy Adds Drybar Products to Leadership Brands Kitty

Zacks Equity Research

Helen of Troy Limited HELE is focused on enhancing its Beauty business. In this regard, the company completed the previously announced buyout of Drybar Products LLC for roughly $255 million in cash. Notably, Drybar Products will mark Helen of Troy’s eighth Leadership Brand.

Earlier, Helen of Troy had stated that the acquisition includes the Drybar trademark along with other intellectual property assets related to Drybar’s products. As part of the agreement, Helen of Troy will allow Drybar Holdings LLC to continue using the Drybar trademark in the Drybar salons worldwide. Drybar is an innovative and fast-growing hair care and styling brand, which will strengthen Helen of Troy’s Beauty segment. Notably, Drybar products include superior and on-trend hair appliances, accessories and liquids.

We note that apart from its salons, Drybar products has been gaining traction across major retailers like Macy’s M, Nordstrom JWN, Sephora and Ulta Beauty ULTA. Clearly, Drybar Products is likely to be a solid fit for Helen of Troy, which boasts expertise in product launches, beauty, appliances, marketing, international growth and category development.

As stated above, Drybar Products will fortify Helen of Troy’s Leadership Brand portfolio, which includes market-leading brands like OXO, Honeywell, Braun, PUR, Hydro Flask, Vicks and Hot Tools. These brands are well positioned to enhance market share and contribute a significant chunk of the company’s sales. Consistent investments in these brands, which are considered most productive, have been delivering robust results. During third-quarter fiscal 2020, Leadership Brands improved 10.6%.

Encouragingly, the Drybar Products acquisition is expected to be immediately accretive to Helen of Troy’s results. In an earlier press release, management stated that the acquisition is anticipated to augment Helen of Troy’s rate of consolidated sales growth, gross margin, adjusted EBITDA margin, the bottom line and cash flow from operations. Further, the buyout is expected to boost the Beauty segment’s comparable operating metrics in particular. Sales in the Beauty segment improved 5.4% to $105.7 million in the last reported quarter, owing to solid demand and new products in the appliance business as well as strong online and international sales.

All said, Drybar Products is likely to solidify Helen of Troy’s portfolio and add new leaves to its growth story. Markedly, this Zacks Rank #1 (Strong Buy) stock has rallied 22.7% in the past six months compared with the industry’s growth of 10.8%.You can see the complete list of today’s Zacks #1 Rank stocks here.

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Helen of Troy Limited (HELE) : Free Stock Analysis Report
Nordstrom, Inc. (JWN) : Free Stock Analysis Report
Ulta Beauty Inc. (ULTA) : Free Stock Analysis Report
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