Q2 2022 Helen of Troy Ltd Earnings Call
Greetings welcome to.
Helen of Troy L. T D second quarter 2022 earnings call at this time, all participants are in a listen only mode.
And answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
Note. This conference is being recorded I will now turn the conference over to Jack Johnson Senior Vice President of corporate business development. Thank you you may begin.
Thank you operator, good morning, everyone and welcome to Helen of Troy's second quarter fiscal 2022 earnings Conference call.
The agenda for the call. This morning is as follows I'll begin with a brief discussion of forward looking statements.
Mr. Julien Ladenburg, the company's CEO will comment on the financial performance of the quarter and specific progress on our strategic initiatives then Mr. Brian grass, the company's CFO and Matt Osborne, the company's senior Vice President of corporate finance.
We review the financials in more detail and comment on the company's outlook for fiscal 'twenty two.
Following this Mr <unk>, Mr grass and Mr. Osborne will take questions you have for us today.
This conference call may contain certain forward looking statements that are based on management's current expectation with respect to future events or financial performance.
The words anticipates believes expects and other words similar are words dent buying forward looking statements.
Forward looking statements are subject to a number of risks and uncertainties that could cause anticipated results to differ materially from the actual results.
This conference call May also include information that may be considered non-GAAP financial information.
These non-GAAP measures are not an alternative to GAAP financial information and maybe calculated differently than the non-GAAP financial information disclosed by other parties.
<unk> cautions listeners not to place undue reliance on forward looking statements or non-GAAP information.
I turn the call over to Mr. <unk> I would like to inform all interested parties that a copy of today's earnings release has been posted to the Investor Relations section of the company's website at Www Dot Helen of Troy Dot Com. The earnings release contains tables that reconcile non-GAAP financial measures to their corresponding GAAP base.
<unk> measures.
The release can be obtained by selecting the Investor Relations tab on the company's homepage and then the press releases tab I will now turn the conference call over to Mr. Vandenberghe.
Thank you Jack good morning, everyone and thank you for joining us I'm looking forward to reviewing our second quarter results.
Providing perspective on the higher revenue and EPS outlook that we announced earlier today.
Updating you on our ESG progress and to discussing several important organizational topics with you.
Before doing so I want to provide a brief update on the EPA matter discussed in our first quarter call in July and August by our Investor presentation, and 8-K filings.
As a reminder, in July the EPA approve modest changes to the labeling claims on our existing water filtration and packaging, which we implemented and subsequently began shipping in limited quantities.
Im pleased to report that the shipping volume for our pure products has continued to increase and in September we returned to more normalized shipping levels.
In August we communicated that the EPA had approved changes to our air filtration packaging and we began shipping limited quantities of the impacted products at the end of that month.
We expect to return to a more normalized level of shipping activity for our Honeywell air filtration product by the end of our third quarter of fiscal 'twenty two.
Today, our main message on the largely resolved EPA matter is that we have the material and labor currently needed to rework the affected inventory and are accelerating network rapidly.
We are making good progress on the millions of effective packages.
Putting us in a better position to serve our retail customers.
We thank them for their patience and appreciate how closely they have worked with us.
On pure we are turning the tide in the marketplace.
We've made significant progress on reducing out of stocks and earning back market share.
Third party syndicated data shows pure out of stocks have improved by more than 30 points in market share is up by more than 10 points since mid August.
More extensive and complex rework on the ear affected pure Amit.
Error affected purifiers.
Well underway and our primary focus.
I would also like to thank the hundreds of Helen of Troy Associates, who have worked tirelessly to resolve these matters and minimize the impact of consumers to retailers into our business.
It could not be more impressed or prouder of the way they flow to the work without complaint.
They work together seamlessly often around the clock.
This is Helen of Troy at its finest and it's our culture in action.
Now turning to our second quarter results.
Overall, the quarter exceeded our expectations are.
Our diversified portfolio once again delivered a balanced result, with housewares and beauty both growing over major double digit sales increases in the second quarter of last fiscal year, and health and home declining less than we expected during the favorable resolution to the EPA matter.
Our leadership brands outside of health and home had excellent growth led by dry bar Hydro flask and hot tools, all of which faced headwinds in the year ago base from the pandemic.
International had a solid growth.
Sales in the second quarter.
Turning to online sales are 18% decline in the quarter reflects two things first approximately two thirds of this decline was due to the impact of our stop ship action as we address the EPA matter.
Even though COVID-19 remains top of mind, many consumers are returning to inquiries from shopping compared to the previous year when COVID-19 related store closures accelerated the larger trend of brick and mortar sale that we're shifting on long.
Even with more of our sales in brick and mortar this quarter online represented 22% of total sales similar to our pre COVID-19 online penetration in fiscal 'twenty.
We are pleased to report adjusted EPS of $67.0, which was ahead of our expectations.
It reflects an expansion in gross profit margin in some of our highest margin brand sweetened our mix, partially offset by more normalized levels of operating expenses versus the depressed spending levels. During the peak of the pandemic in the year ago base.
The adjusted EPS results also reflect our hard work to address the headwinds from the widespread inflation affecting nearly all input costs, such as material labor and transportation as well as the work done to blunt as much as possible the impact on significant levels of supply chain disruptions seen across nearly every sector of the global economy.
Stepping back to look at the first half of our fiscal year. We are pleased to be growing our core sales and deliver flat core adjusted EPS compared to the especially difficult comparisons in the prior year period.
We achieved this despite the EPA matter and despite the significant supply chain related headwinds.
Our diversified portfolio played a major role in their core beauty and housewares, both grew significantly over their higher basis in the first half of last year.
Taking a look at the supply chain and cost challenges our investments in inventory earlier. This year had been an important component of our mitigation plans.
Higher inventory also positioned us well to meet demand and better manage supply chain disruption.
We believe having more inventory on hand ahead of our busy season in Q3, and Q4 will help us meet consumer demand and meet customer expectations in the back half of this fiscal year.
We've also made good use of our pre negotiated defrayed contracted rates considerably lower than the current elevated spot market is.
Part of our mitigation plan, we began to implement price increases on certain brands most of which became effective at the end of the second quarter.
Pricing on other brands will take place in the third quarter with the benefit being realized in the second half of the year and into fiscal 'twenty three.
We have taken a measured approach on pricing, which is designed to protect our market shares by managing key consumer price points.
I am very proud of our global operations team and of our business units all of whom have worked diligently to contain and reduce call freeing up the oxygen needed to continue to invest in our flywheel.
They along with our associates around the world are highly engaged enthusiastic and dedicated furthering our growth objectives there.
They are currently putting in place additional mitigation plan, including exploration of further price increases.
To address the inflationary pressures in the supply chain disruption that show little sign of abating in the short term we.
We believe that the powerful combination of containment and investments is the exact right formula to drive our growth initiatives for the balance of our phase II transformation and to create incremental shareholder value.
I would now like to touch on the results and our business segments for the second quarter.
Of course led the way posting net sales growth of six 6% on top of 23% growth in the second quarter of last year.
Both oxo and hydro flask experienced solid organic growth, reflecting both domestic and international strength.
OXXO continues to deliver growth a key brick and mortar retailers.
As discussed in prior calls, we believe the new and younger households penetrated during the pandemic and the consumers does it become even more familiar with OXXO exceptional product and promise of better are sticky.
Ocwen continues to be the market leader in many of the U S kitchen gadgets.
Categories It competes in.
Akshay, good grip and steel lines made healthy contribution to quarterly growth along with new products that are gaining traction with consumers.
We saw strength in specialty retailers due in part to a surge in wedding postponed during COVID-19.
Also domestic brick and mortar growth was broad based across all channels, except the club.
So also earned strong growth internationally, especially in EMEA as prior investments and planned long in the works paid off with improved growth and profitability in that region.
Hydro flask also saw broad based strength in domestic brick and mortar driven by retailers increasing orders to replenish from a stronger back to school season and support expected future demand.
Top of the current acceleration in pre holiday ordering we're seeing healthy inventory retailer replenishment inline with a strong sell through for those customers, where we have visibility.
Internationally Hydro flask, losing factor, primarily concentrated in Canada and Asia Pacific.
New product introductions beyond the bottle contributed to growth in the quarter as consumers pursued more outdoor activities close to home in the current COVID-19 environment.
Within our bottom line, the new colors and sizes in the fall collection, Gabe eager consumers another motivation to add just one more and freshen their collection.
Tumor affinity for the hydro flask brand continues to be a strong tailwind.
One high profile example, we were very pleased to see Simone biles, using a popular new hydro flask USA Boblet Tokyo Olympics.
Turning to beauty segment delivered its 11th consecutive quarter of sales growth continuing its remarkable transformation stories. It began in the middle of phase one.
Total sales were up 0.8% in the quarter.
Finding over 34, 6% growth in the second quarter of last year.
On a core basis, which excludes the impact of the personal care business that we divested in June of this year beauty sales grew 13, 9% in the second quarter.
Our leadership brands dry bar and hot tools led the growth in beauty with strong consumer demand buoyed by the improved traffic at brick and mortar stores.
Our focus on consumer centric innovation and strategy of good better best in beauty appliances. These are paying off that means you're paying dividends across brands regions and channels with strong contributions from Y bar Hot tools Revlon bed head.
Why borrowers, having a terrific year, and making a considerable contribution to sales growth and profitability.
Strong product innovation the improvement in the brick and mortar channel expanded distribution and the reopening of Salon brand is on a strong growth trajectory.
Sales in fiscal 'twenty two are expected to be ahead of our pre COVID-19 expectations and its higher margins are contributing to our mix we.
We are delighting consumers with outstanding innovation that deliver consumer noticeable benefits.
Examples include the single shot clients.
A dry ball reserve ultra light dryer, and our liquid glass product line.
New distribution at popular destinations like new oldest shops inside target and new sephora shops inside Kohl's provide the opportunity to introduce the brand to more consumers shopping in the mass channel, while maintaining dry barge prestige positioning and price points.
Our tool is also having a great year and it's on track to reach record sales levels in fiscal 'twenty two.
Our good better best Beauty strategy is also paying off with the expansion of hot tools professional channel to also include retail.
We launched shop to a signature series in 2019 to bring professional quality features and functions to a broader demographic.
Signature series has grown each year since its introduction and is achieving market share gains as it grows its awareness its presence in its product lineup.
Demand for our one step volume misers and waivers remains strong.
Our investments in social media and digital content continues to elevate the profile of our volume monitors with existing users and to attract new ones to the franchise.
One step online reviews are now over 350000 at an average of four six stars on Amazon alone with 80% of those at five star.
The volume is your household penetration well below conventional appliances. We believe the franchise has significant room to grow through new to grow through new product innovation and expansion into new geographies and new Adjacencies.
One recent example is our Revlon plots, which is arriving on shelf now ahead of the upcoming holiday season, Revlon, plus plus features and additional heat setting sleeker Hamblen design upgraded Bristol and improved internal technology that exemplify our consumer centric approach.
Our goal is to keep delivering innovation that maintains our significant market share lead in the volumize or segment that we created.
Beyond volume Misers innovation in other parts of our beauty portfolio such as the waivers on our bed head brand demonstrates that we are continuing to drive demand and share with winning on trend products across product categories.
But he also did well internationally continuing its strong growth in Latin America, and EMEA with international shares and margins expanding we are investing in the bright prospects, we see for further international growth.
Turning to health and home sales declined by 33, 1% in the second quarter, primarily as a result of the voluntary stopped shipments related to the EPA matter and the particularly tough comparison to the second quarter last year in which this segment grew 33% behind health related products due to COVID-19.
Or a bit more perspective, the first six months of fiscal 'twenty two on a two year stack comparison shows that total sales for health and home were up 10% compared to the first half of fiscal 'twenty, even including the EPA matter.
And so we work progresses in the shipments continued to ramp up on the affected items, we are raising our sales outlook for this segment for the remainder of this fiscal year and remain confident in its long term prospects.
During the quarter, we saw strength in several areas of our health and home portfolio, such as Braun nasal aspirator blood pressure monitors and pulse oximeter and also on Honeywell theaters.
Some retailers pull teeth were orders into the second quarter to reduce the impact of seaport congestion and availability constraints, such as containers and trucking.
We are pleased to see our prior investments in developing new health and home products for categories, such as blood pressure sinus and pulse oximeter now producing growth in those categories and further diversifying health and home into adjacent healthcare areas with long term potential.
The monitors while the overall market was lower in the second quarter compared to the high Covid base of last year, our market share rebounded sharply.
Our U S thermometers shares now in line with pre pandemic share level as we saw for the availability of our market leading products that consumers prefer.
This was driven by our investments to improve our supply chain and by higher inventory levels, which address out of stocks with retailers' inventory.
Inventory in the channel is healthy in the U S and we are shipping in line with consumption.
Moving on to international we saw solid growth in the quarter to round out an outstanding first half.
Doubling down on international is an important strategic choice in our phase II strategy now halfway through phase two we remain ahead of the glide path, we outlined in our 2019 investor day to create at least $100 million of incremental organic sales outside of the United States by the end of fiscal 'twenty four.
Second quarter benefited from a desktop investments made in the second half of fiscal 'twenty, one to support new distribution in Continental Europe.
Add further support to our U K businesses and increase awareness of Braun no touch the monitors in Asia.
Beauty and housewares led the way.
We saw strength in both brick and mortar and online.
<unk> put the monitors remained strong anemia.
Revenue and profitability for beauty in EMEA, and Latin America, all continue to grow sharply in EMEA market shares are growing fast.
Progress we have achieved in international markets is supplying the fuel to continue making new investments with attractive rois intended to further accelerate growth outside of the United States.
We step back to look at the full fiscal year 'twenty. Two we are in a position to raise our outlook today.
On a core adjusted basis at the high end of our range our outlook indicates growth on both the top and bottom line.
We are very pleased to be able to do this considering the elevated base laid down last fiscal year, considering the significant incremental inflationary cost when considering the impact of the EPA matter.
The strength of the first half and our improved outlook for the balance of the year allows us to increase our core sales expectations in all three business segments.
Julian Housewares are both expected to deliver healthy growth in revenue and profitability on top of the elevated base they laid down last year.
Just on the favorable resolution of the EPA matter, our health and home outlook has also improved.
While inflation remains an issue we are pleased that this updated outlook includes continued investments in our flywheel.
Looking longer term using our past experience overcoming various headwinds such as tariffs and inflation. Our global team is focused on putting together the best playbook possible to address the external challenges facing virtually all companies.
As mentioned in our last call. We are actively involved in several M&A processes and remain committed to putting our strong balance sheet to work to create additional shareholder value by adding attractive new brands and accretive critical mass to our flywheel.
As you may have seen in our recent press release, we added a $500 million share repurchase authorization at the end of the quarter, putting us in a position to continue to opportunistically repurchase our stock from time to time.
Before I wrap up my remarks, I would like to touch on our continued progress on ESG and on a few important organizational matters.
We see ESG as a strategic priority for our company sustained success and highly consistent with our corporate purpose, which is to elevate lives and sore together.
This is important work and I am pleased with the progress we're making.
June we captured many aspects of that progress in our first published ESG report.
We are pleased to see more external recognition of our ESG efforts from key stakeholders, such as customers and shareholders.
In August as part of Walmart project, Gigaton, which is intended to help eliminate a gigaton appeal to emission. This key customer recognized our health and home division as a Walmart Giga Hulu for the second consecutive year.
Holders of likely seen our improved ESG scores from well known tracking agencies, such as institutional shareholder services.
In the second quarter ISS acknowledged our ESG efforts by now rating Helen of Troy Social score in the top decile of firms they compare us to.
The improvement from our top 20% rating as recently as July and a sharp improvement from the bottom 20% ranking just one year ago.
I S. S. Environmental score has also improved markedly over the past year now in the top 30% of companies they compare us to up from the bottom decile a year ago.
On governance R. I S. S. Four has consistently remained in the top decile for the past several years internally our associates enthusiastically support and applaud this work.
As mentioned in our report our next step is to further refine our overall ESG strategy and embedded key initiatives into the broader phase II strategic transformation plan that drives all of what we do with Helen of Troy.
As discussed in our public remarks at our annual meeting of shareholders on August 25th.
Several months ago, we began actively recruiting to add a new director to our board. This.
This recruitment effort has three specific goals.
Just to add additional outstanding executive experience in the global consumer product industry on top of the 100 plus years already represented on the board.
Second is to add racial and ethnic diversity.
And third is to add even more gender diversity.
These goals will deliver on our broader corporate diversity equity and inclusion initiatives as well as the board's independent goals.
Turning now to our organization I would like to make a few comments.
Those of you who have been following our multi year transformation know that we have been building out our organizational capability and leadership team for many years.
This talented team that we have in place now and the powerful culture. We have built have helped drive revenue growth of more than 40% in the last four years and adjusted EPS growth of more than 60% over that same time period.
As we look at the back half of phase II and our long term trajectory, we are ready to add a chief operating officer to our global leadership team to help drive the significant plans we have for the coming years.
We have begun recruiting for this new position, which will report to me.
We would like to have the new CEO in place for the beginning of our next fiscal year.
Another organizational update I'd like to share is our return to office plan. Thank.
Taking stock of recent developments with the Delta Varian, we have decided to postpone the return to office for our nonessential workers until January.
We intend to implement the same hybrid model, we discussed several quarters ago, which we believe provides the best balance of the proven benefits of work from home two days, a week and the irreplaceable power that in person collaboration provides during the remaining three days each week.
All along we have prioritized the health and safety of our associates, putting our people first sticking to our principles and walking the talk on our culture.
These four elements are proven to be a powerful combination during normal times as well as during the extreme circumstances of COVID-19.
Before turning the call over to Brian I wanted to again acknowledge his significant contributions to the success of our company over the past 15 years.
The transformation with leadership strategic thinking and outstanding stewardship of our finances have made him a key asset.
This business insight and friendship will be missed.
Previously announced Matt Osborne officially stepped into the CFO chair on November one.
Building on all of the strength, Matt has already demonstrated in the business and in the organization over his past five years at Helen of Troy I look forward to the many valuable contributions he will make in the CFO role as we continue through phase II of our transformation and beyond.
That I will now turn the call over to Brian.
Thank you Julien good morning, everyone and thank you for joining us I'll make some high level comments before handing it over to Matt who will review the second quarter results and our revised outlook for the full fiscal year 'twenty two in more detail.
So we're really pleased with our second quarter, which saw a number of positive trends, including strong sales and consumer demand across the housewares and beauty portfolios and continued expansion of our international business.
Investments, we made in product innovation operating efficiencies shared services and elevating and unifying our people are paying off.
We believe there are fueling our flywheel for the remainder of fiscal 'twenty two and beyond.
And home segment sales declined primarily due to disruption from the EPA matter, but we believe we are achieving the best possible outcome under the circumstances.
None of it would be possible without the strength and resilience of our operations team in northern Mississippi, and it's incredible leaders that I've had the honor of working with during my time here.
Going to Miss working with you guys, but I'll come visit soon.
Although we continue to face unprecedented global supply chain disruption and inflationary cost pressures I'm proud of the work we are doing to continue to mitigate these challenges and maintain the momentum toward our long term growth trajectory.
I'm also very pleased that we were able to improve our full fiscal 'twenty two outlook due to the strong results in the second quarter and a more favorable than expected resolution of the EPA matter.
Finally, I'd just like to say a final farewell and express my gratitude to Julien The board and all the talented people I've had the good fortune of working with especially my good friends mentors, Tom Benson Vince Carson.
I spent the majority of my career at Helen of Troy and helping shape. This company's transformation has been an incredible experience that I wouldn't trade for anything.
I'm very proud of what we've accomplished and I believe that the best is yet to come the company is in great hands.
And with that I'm going to hand, it over to Matt to take us through the second quarter in fiscal 'twenty two outlook in more detail.
Thank you, Brian and just a final handoff I want to say thank you for all your hard work financial leadership and mentoring you will be missed and we wish you. The best of luck in your new endeavors.
As we look at our results.
The sale of substantially all of the personal care business impacting us significantly for the quarter on a comparative basis. We believe it is useful to look at our operations on a core basis, which excludes the results of the entire personal care business in all period.
It provides the best comparability between historical and future periods.
Accordingly, I will be referencing core metrics, where appropriate in my remarks today.
Now turning to our second quarter.
Core business net sales declined seven 6%, primarily due to a decrease in sales in the health and home segment as a result of the EPA matter.
This was partially offset by strong consumer demand and point of sale growth at brick and mortar and the beauty and houseware segments as well as the favorable comparative impact of COVID-19 related store closures and reduced store traffic and the prior year period.
Gross profit margin increased <unk> nine percentage points to 44, 3%, primarily due to a more favorable product mix within the beauty segment and a favorable mix of more housewares and beauty sales within consolidated net sales revenue.
This was partially offset by higher inbound freight expense due to rising freight rates and container supply shortages.
Less favorable channel mix within the Houseware segment.
Our SG&A ratio increased five four percentage points to 31% from 24, 7% in the prior year period, we benefited from both significant operating leverage of sales grew 28%.
As well as lower than normal levels of personnel and advertising expenses spend.
Spending in these areas was restricted due to temporary COVID-19 related cost reduction initiatives.
In the current period, we were also unfavorably impacted by higher distribution and freight expenses.
Favorable operating leverage higher share based compensation expense and EPA compliance costs.
GAAP operating income was $70.0 million or 14, 2% of net sales revenue on an adjusted basis operating margin declined three three percentage points to 17, 1% primarily due to the higher SG&A ratio in the current period.
Income tax expense as a percentage of income tax of income before tax was 19, 8% compared to nine 6% for the same period last year.
A higher than usual tax rate was primarily due to shifts in the mix of taxable income in the company's various tax jurisdictions driven by updates in the second quarter to our full year income forecast.
On a year to date basis.
<unk> tax rate is a more normalized 14% roughly in line with our full year effective tax rate outlook.
Net income was $54.0 million or $13.0 per diluted share non-GAAP adjusted diluted EPS decreased 29, 7% to $67.0
Primarily due to lower adjusted operating income and health and home segment and increasingly effective tax rate and higher interest expense, partially offset by higher operating income in the beauty segment and lower weighted average diluted shares outstanding.
Looking at the first half of our fiscal year. We are very pleased with our results on a core basis, we have been able to grow our net sales eight 9%. This is on top of growth of 22% recorded in the first half of fiscal 'twenty one.
<unk> also been able to maintain core adjusted EPS compared to fiscal 'twenty, one which grew 50% over fiscal 'twenty.
We believe this is a healthy outcome given the impact of rising freight and labor costs.
<unk> sales and margin due to the EPA matter and a lower spending days in the first half of last year.
Now moving onto our financial position and liquidity.
Net cash used by operating activities for the first six months of the fiscal year was $61.0 million.
Net cash provided by operating activities of $189.0 million in the prior year.
A portion of the cash used by operating activities was to increase inventory to help mitigate rising supply chain costs and purchase high demand products ahead of the holiday season.
Our global supply chain remains disrupted we are expecting some retailers to pull forward orders into our fiscal third quarter and in order to ensure in stock positions before their busiest selling season.
We expect to reduce our inventory levels throughout the third and fourth quarters to end fiscal 'twenty two more in line with where we ended fiscal 'twenty one.
Cash provided by investing activities for the first six months of the fiscal year was $24 million due to the proceeds received from the sale of the personal care business, partially offset by our capital investments in land and initial construction expenditures associated with our new 2 million square foot distribution.
Center for the Housewares segment.
Total short and long term debt was $474.0 million a.
The sequential decrease from $511 million at the end of the first quarter.
Our leverage ratio as defined in our debt agreements was one four times in line with the ratio at the end of the first quarter.
Compared to <unk> nine times at the same time last year.
Our net leverage ratio, which net of cash and cash equivalents with the outstanding debt was one four times at the end of the second quarter compared to one three times at the end of the first quarter.
Now turning to our full year outlook for fiscal 'twenty two.
We are pleased to be able to increase our outlook for both sales and EPS for the fiscal year <unk>.
The increase to our sales outlook reflects the combination of stronger than expected second quarter sales.
And then improvement in our sales expectations in the back half of the year.
The increase to our EPS outlook largely reflects the higher than expected earnings in the second quarter.
We expect EPS for the back half of the year to be similar to our prior expectations and reflects the favorable profit impact is higher than previously expected sales in the back half of the year offset by continued increases in freight and labor costs as well as incremental marketing investments, we are making to reenergize categories.
That were impacted by the EPA matter.
Our revised outlook includes an estimated unfavorable sales revenue impact of 75 million to $100 million.
And an unfavorable adjusted diluted EPS impact of 45 to 75 tons related to the expected loss sales volume and earnings due to the EPA matter.
This reflects an improvement of $35 million of sales and 25 of adjusted diluted EPS versus our previous outlook.
The adjusted diluted EPS impact is net of the favorable impact of cost reduction actions being taken in the health and home segment, which include reductions in personnel marketing and select new product development costs with the goal of preserving key long term growth initiatives.
We now expect consolidated net sales revenue in the range of $2 <unk> to $2, <unk> 7 billion, which.
Which implies a decline of three 5% to one 5%.
We now expect core net sales revenue in the range of $100.0 to $5.0 billion.
Which implies a decline of one 5% at the low end of our range and growth of 0.5% at the high end of our range and includes four 9% to three 7% of unfavorable impact related to the EPA matter.
Not including the impact of the EPA matter, our core net sales outlook implies year over year growth of three 4% to four 3%.
Our updated net sales outlook for the full year reflects improvement in all three segments with the following expectations.
Housewares net sales growth of 9% to 11%.
Health and home net sales decline of 20% to 18%, including 11, 2% to eight 4% of decline related to the EPA matter.
<unk> net sales growth of seven 5% to nine 5% and beauty core net sales growth of 20% to 22%.
We expect consolidated GAAP diluted EPS of $95.0 to $39.0
And core diluted EPS of $75.0 to $19.0
We expect consolidated non-GAAP adjusted diluted EPS in the range of $37.0 to $67.0
And core adjusted diluted EPS in the range of $521.0 to $46.0
Which excludes any EPA compliance costs asset impairment charges restructuring charges tax reform share based compensation expense and intangible asset amortization expense.
Our core adjusted diluted EPS outlook implies growth of 0.2% to two 9%, which includes six 8% to four 1% of unfavorable impact due to the EPA matter.
Including the EPA matter, our core adjusted diluted EPS outlook implies year over year growth of 7%.
This EPS outlook includes the estimated unfavorable impact of year over year inflationary cost pressures of approximately 60% to $65 million or approximately $47.0 to $67.0
Adjusted diluted EPS, representing an increase of $5 million from our previous outlook due to the continued inflation of freight and labor costs.
We believe we have mitigated much of these costs through a combination of improved product mix price increases forward buying of inventory to delayed cost impacts.
<unk> previously negotiated shipping contracts at rates below current market prices and implementing other cost initiatives.
Due to the strong growth comparison, and COVID-19 related events in fiscal 'twenty, one and the timing of the estimated impacts of the shipping restrictions related to the EPA matter.
We continue to expect core consolidated core net sales growth for fiscal 'twenty two to be concentrated entirely in the first quarter of the fiscal year.
We also expect core adjusted diluted EPS growth for fiscal 'twenty two to be concentrated in the first and fourth quarters of the fiscal year with the second quarter being the most impacted by the EPA matter as well as having the most challenging growth comparison to the prior fiscal year.
We expect a reported core GAAP effective tax rate range of 12, 7% to 13, 8% and a core adjusted effective tax rate range of 10, 4% to 11, 4%.
With prior expectations, we do not expect a meaningful impact from currently proposed tax legislation changes in fiscal 'twenty two.
We continue to expect capital asset expenditures of $225.0 million for fiscal 'twenty, two which includes expected initial expenditures related to our new 2 million square foot distribution facility with state of the art automation for the Houseware segment.
We continue to expect the total cost of the new distribution center and equipment to be in the range of $200 million to $225 million.
Spread over fiscal years, 'twenty, two and 'twenty, three assuming construction and equipment costs remain at current levels.
In summary on a core basis, excluding the impact of the EPA matter, our revised full year outlook implies net sales growth of three 4% to four 3% slightly ahead of our long term growth target.
Additionally, our revised full year outlook for the Houseware segment implies net sales growth of 9% to 11% on top of 13, 5% growth in the prior year.
Our beauty segment core sales outlook implies net sales growth of 20% to 22% on top of 30% growth in the prior year, and although health and the health and home segment is forecasted to have a net sales decline of 20% to 18%, including the impact of the EPA matter. It grew.
29, 9% in the prior year.
On a core basis, excluding the impact of the EPA matter, our revised full year outlook for adjusted diluted EPS implies growth of 7% on top of growth of 26, 5% in fiscal 'twenty one.
This is only slightly below our long term growth target of 8% and includes the adverse impact of inflationary costs of approximately 23 percentage points year over year.
Even including the adverse impact of inflationary costs and EPA matter, we still expect to be able to maintain or slightly expand consolidated adjusted operating margin for the fiscal year.
We believe that this outlook is quite an accomplishment in light of the high base in fiscal 'twenty, one with significantly higher input costs and the impact of EPA matter in fiscal 'twenty two.
In closing I am proud of how the entire organization has rallied in the face of significant challenges to overcome temporary obstacles make further progress on our growth strategies.
Helen of Troy up for continued success in phase two we have a strong foundation of market, leading brands with a global footprint and many opportunities for growth as well as a strong balance sheet that gives us the ability to deploy capital to drive shareholder return.
I believe we are well positioned to deliver continued value for our consumers associates customers communities and shareholders.
And with that I'd like to turn it back to the operator for questions.
Thank you.
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Our first question is from Bob.
C. J S Securities. Please proceed.
Good morning, and once again, just want to offer congratulations to both Brian and to map. We're really excited for both of you in your future endeavors.
Yeah.
Thanks, Bob Thank you Bob I appreciate it absolutely great. So.
Obviously, you gave us tons of detail answer appreciate it trying to get a sense of the Q2 impact from the EPA.
Both revenue and EPS I guess and then therefore, how much is left in your you've got it to the year in the back half.
You said that earlier I apologize, but I.
Don't forget captured the Q2 impact and then I guess just to finish that off.
Do you expect any lingering impacts in fiscal 'twenty three for me from the EPA issues or do you make up the hit that you took this year. So you could actually get a little better growth as a result.
Yes, I can I can take yes, Matt why don't you. Please handle the Q2 Q3 and I can give a little more color on fiscal 'twenty three sure Bobby and you're right. Bob we didn't disclose the exact numbers, we talked that Q2 would be the major impact of EPA matter you think.
About what we had come out with in terms of how the product categories, we're being impacted by the stop ship.
During Q2.
Basically all of the categories. We're in a stark shift and we've been ramping up since then so we didn't give exact numbers if I had to kind of give you an overall I'd say, it's kind of a two thirds of it impacting in Q2, and maybe a one third impact that still linger into Q3, as we get our air.
Lori ramped up to full shipping.
Okay, Great that's helpful.
Yes, congratulate sorry, Bob.
Hi, Bob and on the fiscal 'twenty, three stuff and I think for others on the call. They may all have the same question of so does the EPA thing have a.
Ongoing impact I think our main message or I know our main message is that we're working very hard to make sure that we retained the long term business on pure we're much further along than simply because the EPA resolution came sooner and the changes were simpler and in the case of.
Pure were looking quite good I cant imagine that we would have long term impacts although always have to keep earning our business in the case of air it's a bit soon to tell.
And yet we're highly optimistic the vast majority of customers are continuing to support our key market leader that they have been doing business with for decades, we know them. They trust us our products are exceptional and consumers need them. So I'm highly optimistic and that said it just remains to be seen until we are consistently shipping them.
And that's going to be the most important thing for them to have confidence to maintain the long term distribution.
Got it okay that makes sense. Thank you.
And then you know as it relates to the ability to mitigate inflation, you've obviously done a very good job and you mentioned I think that inflationary pressures are ramping up a little bit versus even last time, you spoke with us.
Give us a sense of how much has been mitigated or how much has flowed through to the P&L and then just talk about you know maybe second half impacts in and then back to the same kind of question without quantifying. It how are you set up.
For fiscal 'twenty, three as it relates to the inflationary pressures.
Yeah, I'll, maybe start on that one Bob and Jillian feel free to jump in.
As we look at this year.
As you know we came into the inventory ended the year with with good levels of inventory.
Talked about that as a way to defer some of the higher costs that we were seeing as rates of freight rates in particular have been increasing during the year. So.
There has been an impact on the first half of the year, but it's going to be more impact us as the second in the second half of the year.
Talked about the fact that we've put in price increases and those price increases are largely in place now and will help offset that as we move through the second half of the year.
But.
High level I mean.
Im expecting that gross profit will will be on favor of down compared to last year in the second half of the year.
We won't be able to offset everything thats coming with with price increases. So we will see a little bit of gross profit erosion I think due to it but as we said we were doing a lot of other things to try and offset the total impact for the year, but it will impact our margins in the second half.
And for fiscal 'twenty three the second part of your question Bob.
A tough world out there every day the front page of pretty much any fitness business newspaper speculates on the long term nature of the inflation and how high and things go how long. They stay so is it going to look like the lumbar curve, where it at a boom, but also as flat or is it going to look like.
Something permanent we're assuming that the inflation is not going to be transitory and we're positioning ourselves accordingly, so like maps talking about the price increases are important.
Working hard on our supply chain and the number of productivity initiatives Derisking delay forward buying working against tariff exclusions I think everyone on the call knows that the U S trade representative announced by the administration is opening another potential round of tariff exclusions rules for that have not been.
Yes, so we don't know whether it will qualify but we will work hard to get as many of our products as possible included especially those essential to human life like thermometers as an example, and not in others frankly and in the case of.
The playbook.
We've been here before and we just put more than two and a half dollars worth of costs behind us.
<unk> raised our guidance. So there's some credibility I think in that statement and it's not just what we've done with inflation. We've worked through the tariffs when they came and we like everybody else we're through Covid.
We're tough we're not gonna be beaten down by this and so that's our plan and we'll see how it plays out for fiscal 'twenty three.
Just to be clear, the two and a half since or sorry, $52.0 for the full fiscal year, it's not totally behind us in the first half year.
We're digesting for the full fiscal year, yeah, Thanks, Brian and the only point of mentioning is not at all of the chest pound, it's brutal out there in that environment, but to simply say that.
If people on this call thought that the company could raise its guidance with two and a half dollars of full year cost inflation coming at us unexpectedly during the fiscal people probably would not have counted on that and yet that's what's in today's press release.
Got it okay. Thank you and then last one I'll get back in queue I promise, obviously housewares had another terrific quarter and you know off of.
Super High comps the guidance is for the topline it's relatively flat for the second half and Theres, obviously lots of puts and takes with that.
And you know and as I said really high comps, maybe you could just talk us through the forces and the underlying growth drivers and expectations, excluding the kind of crazy comps for housewares going forward and where you see that once we get to a kind of a more normalized level.
Yeah happy to do so first of all it's not just housewares. It's also beauty on a core basis, which means excluding the personal care both in the base and the current and the future.
Judy just.
With 14 points of growth on top of its high base from last quarter, a year ago quarter, two and both just lifted their guidance for the full year. So to your point about housewares going forward. It is a high base, what's happening is a couple of things.
We mentioned them in the prepared remarks too.
The basic habits that we've seen in the Covid year.
No people to home baking bread, all the time and kids on Zoom School. These things have abated, but the stickiness of the brand has not and so think of penetrating more households, but rapid effect that we've discussed many times, which is once there is one or two households items OXXO items in our household they tend to multiply because people recognize the X.
<unk> of the products, whether they liked the grips the design the sharpness of the materials the durability.
<unk> of it is exceptional performances too. So this is sticky theres also other truths, which is theres a lot of weddings that were delayed from fiscal or calendar 'twenty into calendar 'twenty, one and that frankly continues.
Also a lot more international push on our side, we mentioned in our prepared remarks that Europe is doing especially well for housewares that is true we're projecting that to continue and we have some meaningful initiatives now that the profitability for housewares and Europe has greatly improved to invest into that growth and turn the flywheel against the higher.
ROI that we're now getting through those investments. So there's a positive circle there and when it comes to new products Housewares is a.
Famously productive machine and it's not just on OXXO, but it's also true on hydro flask, taking a look at hydro flask Hydro flask is the opposite situation Thats actually anniversarying weaker comps and it is doing beautifully it's up strongly we don't disclose brand by brand, but I can say, it's swinging. It is also making significant.
<unk> progress not just year over year, but in our mix from a margin standpoint. So it's our second most profitable brand behind only dry bar. So its good for the mix for housewares and in terms of the international expansion for Hydro flask. That's a big deal as are all the other things that we do on hydro flask, whether it's beyond the bottle where we've.
Were going hard and new collections in our bottles et cetera, and then theres favorable trends go back to school was our friend year over year for housewares, especially because last year, there wasn't any back to school and in the case of.
Other favorable trends the fact that the kids and families are out and about a lot more despite corona virus still being with US. All these things are good for hydro flask.
So we like our plans, we also like where we stand with the major customers and so on we go with Housewares and I know you didn't ask about beauty, but there is a similarly positive story for beauty being able to anniversary a space and grow from there and that's also reflected in our guidance. It's not just a volume measure story, we're doing well in the waivers were doing beautifully in EMEA.
And also in Latin America, and beauty, Canada is also going well and so it gives us a lot to invest into there's a ton of awesome, new products coming out and beauty like the Revlon.
Revlon, plus the new dry bar products that I just mentioned all.
All of these things are positive for beauty too.
Super Okay. Thank you very much.
Sure Bob.
Our next question is from Ritesh, sorry, with Oppenheimer <unk> Company. Please proceed.
Good morning, Thanks for taking my question. So I guess just going back to your commentary.
Just going back to the commentary that you guys had in the last call about delivery not two and a half to three 5% organic sales growth and adjusted EPS growth of at least 8%.
Two fiscal years on average just given now that you have a higher base. Since you raised guidance do you still feel comfortable with those targets.
There's also more cost pressures out there so I'm not sure. If you can provide any updated thoughts there.
Yes.
Yes. This is for you are talking about for the future years right. That's correct. The next two fiscal years yet.
Yeah, It's certainly our goal and we did commit to it in our phase III plans and we're not moving off of those commitments that said the hill to climb to get through the cost inflation that we were just talking about has gotten higher I'm actually not only talking about this fiscal year, but remember as higher costs flow through Cogs they flow in.
To future periods and that causes the inflation to persist even if the prices come down in the short term and so there are challenges out there if the prices persist in the short term. It just makes the hill higher decline that said higher prices. If we raise our prices further are good for our top line. So it helps to do some of the offer.
And yet we're consumer centric. So we are extremely sensitive to the needs of.
Our consumers to price points to competition and the government and while it was not putting as much direct stimulus think of $2000 worth of checks and People's Bank accounts like they were before even though the government is talking about spending quite a lot of money. If it's over a long period of time and in the case of mitigation.
Mitigation the playbook.
Is being worked hard right now in fact, we have our strategic reviews next week that we do every year at this time, so it's not unique to fiscal 'twenty three.
<unk> centre is how to exercise that playbook for fiscal 'twenty, three and make sure that we can find our way to growth.
On top of the organic stuff, which is where those goals come you'll see where our balance sheet is one.
One four times leverage one three depending which matter you used and you get the idea that there's plenty of room for us to work acquisition and we've also signaled pretty hard that we are involved in several acquisition prospects and we'll see how those land that's above and beyond the base case, but it gives us a chance to <unk>.
And ways to grow regardless.
Okay, Great and then I guess now we are moving further past the stimulus or the significant stimulus that you've seen earlier this year and I know one of the one of the retailers out there at bed Bath beyond called out some challenges just really the COVID-19 spikes in certain markets. I was just curious if you guys look at your business like you know as we move past the stimulus have you seen any notable changes in <unk>.
Or behavior.
No not yet people are returning to the workforce in general although slower than everybody expected and even after the government stops with the.
I'm not talking about the checks anymore I'm talking about the extended unemployment benefits. So there's people that are no longer paid more to <unk>.
Stay home, but they are still concerned about corona virus and Theres a lot of Dr. Shifting going on these days. So this creates some.
Churn in the employment base, our belief is that the economy will still continue to generate net jobs and therefore, that's a positive it just won't make those jobs is.
Supplemented by these extra payments wages are also higher and at the moment there the wage inflation is higher than the goods inflation. So people have more money in their pocket and taxes have not been raised yet although the government is talking about this and so it is possible. The government will take some of that money out of the pocket of some people, depending how all of that stuff.
Shakes out so.
We're concerned frankly.
Gonna be enough drain on consumers that it'll it'll slow them down so hopefully the government will strike the right balance. We Meanwhile, we'll keep on working on providing massive value to consumers with exceptional products that are meaningfully meaningfully differentiated from the competition and that's been our playbook for 50 years to drive.
Market share. So that's how we will get through this one and then in terms of attacking the costs.
It's going to keep at it.
With all of the playbook items that we talked about until the inflation has gone.
Julian maybe one thing I'd just add onto that refresh you asked about consumer behavior, and I think you've seen us kind of a macro trend.
<unk> with a lot of the supply chain disruption, that's still persisting in the market I think retailers are making more bets and trying to make sure that theyre not without goods as they head into their holiday season, we talked about this in.
Some and some of our prepared remarks, but now I think retailers are making bigger bets earlier on buying inventory and pulling that a little bit forward in their buying patterns and they would've been a quote unquote normal year to make sure that they are not without product. So I think.
That's something that will we will see.
As the trend as more start to do that and could impact kind of the shift of revenue and our Q3 and Q4 and then it would be once the retailers have it in to your point, what's consumer behavior during the holiday season, and how does this how long ago.
Okay, Great. That's really helpful color and then maybe just one last one and I'm not sure whether you're going to answer. This at this point, but I guess, if you look to next fiscal year I mean, clearly cost what cost items are accelerating and you guys have taken pricing actions more could come in you know you look at this year you guys are on pace to actually expand operating margins with all the headwinds out there.
Yeah. If you look at all these different dynamics right now like is it do you guys think you have enough levers expand operating margins as you look to next year or is it too early at this point too.
Too early is the best way, we're just laying out the guidance increased guidance for fiscal 'twenty, two where we're not yet giving guidance other than the broad long term strokes a phase two for fiscal 'twenty, three and 'twenty four and we're acknowledging that the headwinds are there. We're also hopefully getting across very clearly that we have no intention of being <unk>.
<unk> by them that said, we've got to play it out in the market is changing every single day in terms of the margin expansion I think it's just too soon to say, whether we'll be able to do that our key priority in an environment like the one that everyone is looking at for fiscal 'twenty three is to keep the flywheel, turning so that that flywheel does a lot better than all of the forward year.
And it doesn't reverse gear and so it's much better to be in a position, where we can keep investing in the stuff that we know break brings in.
Ever higher gross margin new revenues and that provides the oxygen to invest in all of the initiatives that keep on improving the transformation. That's the plan. The question is can we make the math work with the higher cost and that's what we're working on right now.
Okay, great. Thank you.
You bet.
Our next question is from Anthony <unk>.
Is he with Sidoti and company. Please proceed.
Good morning, guys. Thank you for taking the questions, Yes, Hi, Julien.
It's been nice working with you Brian Best of luck going forward and look forward to work with you Matt.
So just have a few questions. So you guys talked about price increases can you give us an expectation as to.
Or actually just as if you could just talk about the low.
The level of price increases that you have taken and plan to do so basically just so we can have a better understanding.
As far as the guidance for the back half of the year for sale for sales.
Terms of pricing versus volumes.
Yes in terms of one we've already taken I would feel comfortable speaking about it but for competitive reasons I would not feel comfortable speaking about future price increases.
In terms of the ones, we've already taken it depends a bit brand by brand product by products competitive situations right retail price points as well, but we're generally in the mid to high single digits in some case into the low double digits on those price increases it depends a lot where and in what situations.
As I mentioned.
They have stuck.
Not easy for trade customers, it's super hard to accept a price increase and that said, it's even harder not to have the market leading brands on the shelf and to somehow benign input cost inflation is there because everyone knows that it is and then for consumers.
Classic demand curves are not <unk>.
In elastic and therefore, its classic that the challenge volumes when you raise prices. So there is a tight rope that needs to be walked and those are more or less the numbers that we're working with for future ones, we'll see how it goes right the pressure on the consumer in the future that we just spoke about with real passion, Bob could be real and we don't want to price ourselves out of the market, we don't want to disrespect can.
<unk> or the trade customers. So we'll find the right balance.
Okay. Thanks for that color. So in terms of the EPA impacted products.
What has been the recent sell through at retail.
You gave some comments of a pure so I guess is it safe to say that pure you've seen better sell through than some of the others, but just you could just maybe give us additional color on that that'd be helpful.
Yes. This is a important question if people might think it's sort of an academic exercise of if the trade had less inventory because we had low shipments or even no shipments during the stop ship period, then its just academic to say that they'll replace all the inventory put all the products back on the shelf and the market shares instantly.
Captured at the 100 cents on the dollar the real World is a little stickier than that or messier than that and so what it really takes us to knock back the out of stocks one by one store by store you heard it in my prepared remarks that we've added 30 points of that stock improvement to pure in the last six weeks alone since we made those August announcements.
That's pretty sharp, where we're proud of that and the trade customers have been phenomenal about working on that with us they want their shelves full we want our slots back end consumers prefer our products and for that reason our market shares on pure have increased by 10 points in those same six weeks and this is very positive for us in the case of air it's behind pure insurer.
A time so that story is yet to be written but we're hoping for a relatively similar situations put back the out of stocks quickly and then the market share comes with it but also cost money to restart the engine and as Matt talked about in his prepared remarks, we are putting the right investments in the back half of our forecasts.
It's included in the outlook to be Crystal clear.
To make sure that we are front and center for consumers as they make their buying choices with us a back on the shelf and be with the products that they want but if you're not top of mind that they may buy something else and we don't want that so thats our plan on air Purifiers. It all comes as the as the products get worked through that people on the call may not notice.
I'd like to make sure it gets into the record we're talking about more than 4 million pieces of rework between water and air. This is not a small task our team is doing amazing work.
Made significant progress getting through them on a pure you've heard the story air that is happening now and then the customers have been patient, but we're trying not to try their patients and get those products into their hands as quickly as possible. Then we go through the out of stocks and we go through the market share and the investment to keep our products funds.
Got it Okay, and then in terms of the guidance. So the EPA compliance costs that you have.
For the second half of the year is that going to be all in the third quarter or will any of that spill over into the fourth quarter.
Yes.
Yeah. Thanks, Julien, Yes, Anthony I would say for the EPA compliance costs switch or is the is the add back that were doing versus the cost to kind of rework. This there will be costs in the back half of the year as Julian said, it's over 4 million pieces to rework and we think that that will actually.
In Q3, and probably in Q4 as well as we look at working through those.
Those units.
Got it Okay, and then lastly, as far as the tax rate just wondering if you could give us some sense as to I know you gave us guidance for this fiscal year, but beyond fiscal 'twenty two.
Honestly.
Clothing any potential impacts from from what happens in Washington, but.
Given what we know now I mean, how should we think about the tax rates for fiscal 'twenty three and beyond.
Yes.
If we say look it in the same state that we're operating today with no changes I would think you'd be.
Looking at a similar type of tax rate I think the big drivers what's happens with our tax rate is what will happen in Washington, and what may come out of that and globally or domestically those will be the big drivers of.
Future tax rate, whether that even ends up being in next year I mean, I think it is.
Yes.
Those kind of things getting resolved put in place an effective can take time.
So.
I would say excluding any of that kind of legislative change viewing should similar very consistent tax rate into next year.
Got it alright, well, thank you very much and best of luck going forward.
Thanks Anthony.
Our next question is from Linda Bolton Weiser with D. A Davidson. Please proceed.
Yes, Hi, how are you.
Good Hi, Linda nice to hear from you.
I guess.
What I'm a little bit interested in is in the health <unk> home segment.
You know you Wouldnt I guess, you didn't quantify exactly the impact of the EPA issue, but it looks like if you excluded that it still looks like organic sales were kind of down.
You had a very hard comparison, but the comparison remains really hard in the next quarter too. So I'm just trying to get a sense for kind of whether you're growing or not against these hard comparisons and under certain parameters. I think you said last quarter to monitor sales were flat, but you said they were down this quarter. So I guess I'm wondering what changed in thermometry.
And also on that point on thermometers, Pos data actually shows and I know it doesn't tell the whole story, but it shows that Pos is actually growing really well for you and thermometers. So I'm just wondering what's the disconnect between yourself and maybe your POS is stronger can you explain what's going on with thermometer.
Thank you.
Sure. So we've got the phenomenon and then the broader question about.
Helping home growing or shrinking ex EPA.
To start with a thermometer thing because there may be some confusion in the audience, we tried to get to clear on this in our prepared remarks. The overall category in the last few months has been down I'm talking about Helen of Troy's, the monitors or Helen of Troy's position I'm talking about the category for thermometers and the planet Earth and that is generally a down down.
<unk>, our sales have held up reasonably well they are down in the United States, but not nearly down as much as the category and as a result, our market share is not just rebounding, but as we said in our prepared remarks rebounding sharply I know you've seen the shares and you put out the IRI shares and you can see it in the numbers with regard to the disconnected.
POS I actually don't know in the short term and frankly don't worry about it in the short term I think the easiest way to think about it is just to look at the full year guidance and asked where will health and home B and we've answered that in our outlook. We've also said exactly how much in the EPA will affect the year.
And we gave her an improved number in the guidance that we put out today. So if you just subtract the two you'll you'll see how health and home will perform for the year over year and if the numbers are there in terms of a two year stack. It may be very helpful to look at it that way and what you'll see is that so far this fiscal health and home is up roughly 10%.
Over where it was pre COVID-19. So if you take just all the noise of the ups and downs out. The answer is is this thing doing better or worse. The answer is 10% better. So far this fiscal year on a two year stack basis. If you look at it for the total year. We you could do the same math.
We could we could help you with those numbers, but they're all in the public record on the two year stack just in case anyone is not aware because we don't use that term normally we did put it in our press release and in fact, it's right in the beginning and we talk about where we were this quarter versus year ago versus two years ago. That's the stack.
And we did the same thing on a six month basis, where we were this quarter and where we were.
The first half.
Versus last year and the year before and it's also in the highlight section of our press release on all the key measures. So hopefully will help everyone see whether things are growing or shrinking.
Spoiler alert that theyre growing.
And in the case of the.
Health and home projection for the year ex EPA, Matt do you want to provide a little color. There just to help make sure. The math comes out just right. Yes, so yeah and I just wanted to touch on what Julian mentioned, there's a couple of new things in our earnings release, one as you mentioned, we tried to provide some two year stack tables.
And the executive summary area, we think thats helpful. As Youre looking at the first half of the year in the quarter and especially we talked about core comparisons now that personal care is out of the actual result, starting primarily this quarter those core comparisons will become.
More important year over year and so we wanted to just highlight some of that the other thing we did add within our earnings release is.
A.
Couple of tables that talk about our consolidated core and non core business results.
Excluding the impact of the EPA matter, we know Theres a lot of moving parts. So this is the sales and.
Volume profit related impacts we put those in the in the back vessel farther in the back on page 24, but that's something that's new for the quarter and we just wanted to make sure that it's a lot of numbers out there and we wanted you guys to have all the numbers in terms of your specific question, Linda on health and home and the decline for the year.
What we said in the releases that we expect them to be down 20% to 18%, including an 11, 2% to eight point decline for the EPA matter, so still down double digits excluding.
Excluding the EPA matter, there which reflects the.
The impact from our strong fiscal 'twenty one.
Okay. Thank you and then can I just follow up with them.
On the beauty business.
So certainly very strong.
I'm just curious on the volume either it seems like all the competitors out there have similar products and yet you're still growing really well and seemingly maintaining or even growing market share.
So how are you doing that I mean are you just coming up with more expanded products and they volumize or are there other new things that are out but how are you managing to do so well in beauty with all the competitors following so quickly.
Yeah. They have been following and it's not news the competitors have been nipping at the heels of Volumize. It for about a year now and to your point, there's there's even more in the markets. The way we're doing it is just the classics of consumer product.
Product marketing, which is being first constantly innovating.
Spanning geographically putting out new versions at higher price points with more features and penetrating new channels and then the marketing efforts have been significant and because we've been first and we humbly believe best.
The social media aspect is significant so to put a couple of points on those bonds.
The number of reviews on Amazon alone as we talked about in our prepared remarks is now 350004 hour Volumize your franchises and that's 80% of those are five star the totals by the way for $6. So that's the point about first and best and in the case of the price points, we're keeping them sharp and on new products like the Revlon.
That we just talked about in our prepared remarks.
With some superior features were also in a situation, where we're expanding significantly internationally. We spoke in our prepared remarks about Latin America and Europe I also mentioned, Canada in the Q&A and we're growing in those areas and then new distribution channels. Our people on the call will remember we put some money into the end of last few.
Full year to expand distribution in Conklin, there continental Europe in some key stores plants as an example, and that new distribution is generating sell through in there now we purchase so we have a positive cycle billing and then we're putting out on the new products, there, but looking to Asia next and we like our prospects. So all of this is.
Keeping us going and it's not just the volumize or as I mentioned in the prepared remarks, the waivers on bed head is another example of winning and the hot tools signature series is doing particularly well in the case of dry bar, we have the volumize or type of products and even higher price points with even better features and we have the new liquid so all of this.
It's up to keep it going in beauty and keep growing share.
Great. Thank you very much.
Yeah, our pleasure.
And our final question is from Steve Marotta with C. L King and associates. Please proceed.
Good morning, Australian Brian, Matt and Jack Hi, Julien.
I know that we're bumping up against time, so I'll limit to one question Julien on the last call you intimated, maybe even tangentially that the EPA could be negatively impacting some competitors in the industry as well I know that for reasons, you probably don't want to be completely forthcoming with that but are there.
Market share opportunities based on complications your competitors might be having with the EPA at this time.
Yes in theory, there are but frankly, we don't look at it that way we're a highly.
Principled ethical and proper.
Better than the industry, we are respected for this by consumers by institutions and retailers as well, but we want is for everybody to play by the rules. The EPA has made these rules and frankly, we expect them to enforce them.
It's like they did when they looked at us and while the changes were fairly minor for us with no disrespect to any of our competitors. Some of them makes them pretty strong statements and I'm sure. The EPA will do the right thing.
In the case of what that means to our business if it creates opportunities and we're happy to participate but we're not looking at it that way we're looking at a.
Principled ethical industry that serves consumers, we're expecting the regulators to be even handed and.
Consistent and if it creates situations, where the consumers should prefer our products and it gives us opportunity we will take it.
Super helpful. Thank you I'll take the balance offline. Thanks.
You bet.
Operator are there any more questions. There are no more questions. If you have any final comments.
Well just a quick wrap up I wanted to thank everyone for joining us today and for the continued interest in Helen of Troy, We very much look forward to speaking to many of you either later today or over the coming days and in the coming weeks as well and we'll also be sharing further progress with you. When we report our third quarter results, which will be in early January.
<unk>. So I know, we're running up against time and I just want to say thank you. So a lot going on at Helen of Troy and we like our positive trends and we're very proud to be.
Beat expectations on our side and also some on the wall Street and to be able to raise our guidance and put what we hope will be another growth year. Despite the high base. So that's our plans and we thank you very much for attending today.
Thank you. This does conclude today's conference you may disconnect. Your lines at this time and have a wonderful day.
Thanks, operator.
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Yeah.
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