Helen of Troy posts higher 2Q net income, but warns 3Q profit to drop on higher expenses

Wednesday, October 6, 2010

Helen of Troy’s 3Q outlook disappoints

EL PASO, Texas — Helen of Troy Ltd. posted a 47 percent jump in second-quarter net income on higher revenue, but the consumer products company warned its third-quarter net income will decline on greater advertising spending and lower profit margins.

Shares fell $1.45, or 5.4 percent to $25.44 in morning trading.

The maker of Brut cologne, Pert Plus shampoo, Sure deodorant, and Ogilvie hair care products said Wednesday it earned $23.5 million, or 75 cents per share, in the three-month period ended Aug. 31. That’s well above the $15.9 million, or 51 cents per share, it earned a year ago.

Revenue rose 8 percent to $174.8 million in the quarter. Housewares revenue rose 10 percent to $55.7 million, while personal care sales improved 7 percent to $119.1 million.

Profit topped the 64 cents per share expected by analysts polled by Thomson Reuters, but revenue was shy of their $181.2 million average estimate.

Looking ahead, the company forecast flat to declining gross profit margin in the third quarter compared with last year because of rising costs for freight and commodities. It also plans to spend an additional $4.5 million on advertising to market newly acquired brands. For those reasons, it expects a drop in third-quarter earnings.

But the company said its results will improve in the fourth quarter and net revenue and earnings will show growth. The company also expects earnings per share for the fiscal year ending in February to range from $2.70 to $2.80. That’s above analyst estimates of $2.64 per share.

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