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Helen of Troy Looks Alluring on Strong Brands & Online Growth

Zacks Equity Research

Helen of Troy Limited HELE, a popular cosmetics and other consumer products company, is steadily gaining from its leadership brands portfolio as well as advancements in the digital realm. Further, the company’s housewares unit has been yielding. These upsides have boosted investors’ optimism, evident from the stock’s rally of 30.1% in the past six months compared with the industry’s rise of 11.9%. Let’s delve deeper.

Factors Aiding the Stock

Consistent growth of leadership brands has been a key catalyst to Helen of Troy’s business growth. The portfolio includes popular brands like OXO, Honeywell, Braun, Hydro Flask and Vicks among others. These brands contribute significantly to the company’s sales. Markedly, Leadership Brands’ sales improved nearly 8.9% year over year in fiscal 2019. Also, during the first quarter of fiscal 2020, leadership brands improved 7.4%. Notably, management is on track with investments in product launches, marketing efforts and e-commerce strategies for Leadership Brands.

Speaking of e-commerce, continued rise in online business is an upside to the company. Online sales rallied 28% year over year in the first quarter of fiscal 2020 and contributed nearly 23% to the company’s top line. Management plans to make further investments in this arena to keep pace with the evolving consumer environment. In fact, the company is persistently augmenting its digital presence through sophisticated marketing plans and improved content.



Additionally, Helen of Troy’s Houseware unit is experiencing sturdy growth. The category is gaining from growth in point of sale, higher distribution with brick and mortar customers, increased online sales as well as innovations. Going ahead, for fiscal 2020, management expects this unit to grow in the range of 6-8%.

Apart from these, the company is progressing well with its multi-year transformation plan. It is currently on track with Phase II of this plan. Long-term goals of Helen of Troy’s transformation plan include better organic sales growth, continued margin expansion and efficient capital allocation. Also, the company aims to enhance operating efficiency and shared service facilities.

Wrapping up, we expect that yielding brands and prudent growth strategies are likely to continue boosting this Zacks Rank #1 (Strong Buy) company’s performance in the forthcoming periods. Moreover, management has provided a favorable view for fiscal 2020, which looks encouraging.

You can see the complete list of today’s Zacks #1 Rank stocks here.

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Estee Lauder EL, with a Zacks Rank #2 (Buy), has long-term earnings growth rate of 13%.

McCormick & Company MKC, with a Zacks Rank #2, has long-term earnings growth rate of 8%.

Kimberly-Clark KMB, with an expected long-term earnings growth rate of 5.5%, also carries a Zacks Rank #2.

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