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HELE's New $500 Million Buyback Program: A Signal to Hold or Fold?
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Helen of Troy Limited (HELE - Free Report) , a major player in the consumer home, outdoor, beauty, and wellness markets, unveiled a $500-million share repurchase program. This signals the company’s commitment to enhancing shareholders’ value. This strategic initiative underscores the company’s confidence in its long-term growth potential and financial stability.
Effective Aug. 20, 2024, the company approved a $500-million share repurchase plan. This new authorization replaces the prior program, which has about $245.3 million remaining as of this date. The updated program will be implemented over the next three years and is designed to cover approximately 43% of Helen of Troy’s outstanding common stock, based on the closing price on the authorization date.
Strategic Rationale Behind HELE’s Latest Move
HELE’s $500-million repurchase authorization reflects its strong belief in its strategic direction and long-term growth potential. The move aligns with its robust cash flow and commitment to growth investments. In addition, it is focused on reducing its net leverage ratio by the end of the fiscal 2025, demonstrating its disciplined approach to capital management. The company’s proactive capital management strategy reinforces its commitment to creating sustainable value and sustaining a robust market presence.
While these shareholder-friendly moves indicate positive future prospects, near-term challenges should not be overlooked.
Image Source: Zacks Investment Research
Identifying the Roadblocks for HELE: Key Challenges Ahead
Helen of Troy is contending with a challenging macroeconomic environment marked by declining consumer and retailer demand. Financial constraints are pushing consumers to prioritize essential purchases over discretionary items, leading to a slowdown in the global outdoor category and affecting sales of packs and accessories. The specialty and mass beauty channels are under pressure and other discretionary household items like dry food storage are seeing declines. Retailers are managing inventories tightly, which is increasing the company’s exposure to market volatility and reducing clarity on order volumes and timing.
In first-quarter fiscal 2025, Helen of Troy’s performance fell short of expectations, with net sales declining 12.2% to $416.8 million due to lower sales in the Beauty & Wellness unit and challenges in the Home & Outdoor sector. Adjusted earnings per share (EPS) declined 49%. The company is struggling with rising SG&A expenses, which expanded 560 basis points to 40.9%.
Operational issues, particularly at the Tennessee distribution facility and macroeconomic uncertainties have dented the fiscal 2025 forecast. Helen of Troy anticipates consolidated net sales revenues of $1.885-$1.935 billion for the fiscal 2025, indicating a decline of 3.5-6% year over year. This compares with the previous expectation of a 2% decline to 1% growth. Adjusted EPS are now projected to range from $7.00 to $7.50, indicating a decline of 15.8-21.4% for the fiscal 2025. Previously, the metric was anticipated to be between $8.70 and $9.20.
Due to these challenges, HELE’s shares have fallen 47.6% in the past three months compared with the industry’s decline of 22.6%. The stock has underperformed the broader Zacks Consumer Staples sector, which grew by 7%, and the S&P 500, which increased by 2.6% during the same period.
How Should HELE’s Investors Play?
Helen of Troy’s $500-million share repurchase program underscores its confidence in its long-term growth prospects. However, this optimism is tempered by significant near-term challenges, including reduced consumer demand, operational issues at its Tennessee distribution facility and rising SG&A expenses. The revised fiscal 2025 forecast further reflect these difficulties, with lower revenues and EPS projections.
Given the adverse conditions, investors should exercise caution due to the high level of risk associated with this Zacks Rank #5 (Strong Sell) stock.
Top-Ranked Staple Stocks
Here, we have highlighted three better-ranked food stocks, namely, The Chef's Warehouse (CHEF - Free Report) , Pilgrim’s Pride (PPC - Free Report) and Ollie's Bargain Outlet (OLLI - Free Report) .
CHEF has a trailing four-quarter earnings surprise of 33.7%, on average. The Zacks Consensus Estimate for The Chef’s Warehouse’s current fiscal year sales and earnings each indicates growth of 9.7% and 12.6%, respectively, from the year-ago reported numbers.
Ollie's Bargain, the extreme-value retailer of brand-name merchandise, carries a Zacks Rank #2 (Buy). OLLI has a trailing four-quarter earnings surprise of 7.9%, on average. The Zacks Consensus Estimated figure for Ollie's Bargain’s current financial-year sales and earnings each indicates a rise of around 8.7% and 12.7%, respectively, from the year-earlier figures.
Flowers Foods, one of the largest producers of packaged bakery foods in the United States, currently carries a Zacks Rank #2. FLO has a trailing four-quarter earnings surprise of 1.9%, on average. The Zacks Consensus Estimate for Flowers Foods’ current financial-year sales and earnings each implies growth of around 1.1% and 4.2%, respectively, from the year-ago reported numbers.
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HELE's New $500 Million Buyback Program: A Signal to Hold or Fold?
Helen of Troy Limited (HELE - Free Report) , a major player in the consumer home, outdoor, beauty, and wellness markets, unveiled a $500-million share repurchase program. This signals the company’s commitment to enhancing shareholders’ value. This strategic initiative underscores the company’s confidence in its long-term growth potential and financial stability.
Effective Aug. 20, 2024, the company approved a $500-million share repurchase plan. This new authorization replaces the prior program, which has about $245.3 million remaining as of this date. The updated program will be implemented over the next three years and is designed to cover approximately 43% of Helen of Troy’s outstanding common stock, based on the closing price on the authorization date.
Strategic Rationale Behind HELE’s Latest Move
HELE’s $500-million repurchase authorization reflects its strong belief in its strategic direction and long-term growth potential. The move aligns with its robust cash flow and commitment to growth investments. In addition, it is focused on reducing its net leverage ratio by the end of the fiscal 2025, demonstrating its disciplined approach to capital management. The company’s proactive capital management strategy reinforces its commitment to creating sustainable value and sustaining a robust market presence.
While these shareholder-friendly moves indicate positive future prospects, near-term challenges should not be overlooked.
Image Source: Zacks Investment Research
Identifying the Roadblocks for HELE: Key Challenges Ahead
Helen of Troy is contending with a challenging macroeconomic environment marked by declining consumer and retailer demand. Financial constraints are pushing consumers to prioritize essential purchases over discretionary items, leading to a slowdown in the global outdoor category and affecting sales of packs and accessories. The specialty and mass beauty channels are under pressure and other discretionary household items like dry food storage are seeing declines. Retailers are managing inventories tightly, which is increasing the company’s exposure to market volatility and reducing clarity on order volumes and timing.
In first-quarter fiscal 2025, Helen of Troy’s performance fell short of expectations, with net sales declining 12.2% to $416.8 million due to lower sales in the Beauty & Wellness unit and challenges in the Home & Outdoor sector. Adjusted earnings per share (EPS) declined 49%. The company is struggling with rising SG&A expenses, which expanded 560 basis points to 40.9%.
Operational issues, particularly at the Tennessee distribution facility and macroeconomic uncertainties have dented the fiscal 2025 forecast. Helen of Troy anticipates consolidated net sales revenues of $1.885-$1.935 billion for the fiscal 2025, indicating a decline of 3.5-6% year over year. This compares with the previous expectation of a 2% decline to 1% growth. Adjusted EPS are now projected to range from $7.00 to $7.50, indicating a decline of 15.8-21.4% for the fiscal 2025. Previously, the metric was anticipated to be between $8.70 and $9.20.
Due to these challenges, HELE’s shares have fallen 47.6% in the past three months compared with the industry’s decline of 22.6%. The stock has underperformed the broader Zacks Consumer Staples sector, which grew by 7%, and the S&P 500, which increased by 2.6% during the same period.
How Should HELE’s Investors Play?
Helen of Troy’s $500-million share repurchase program underscores its confidence in its long-term growth prospects. However, this optimism is tempered by significant near-term challenges, including reduced consumer demand, operational issues at its Tennessee distribution facility and rising SG&A expenses. The revised fiscal 2025 forecast further reflect these difficulties, with lower revenues and EPS projections.
Given the adverse conditions, investors should exercise caution due to the high level of risk associated with this Zacks Rank #5 (Strong Sell) stock.
Top-Ranked Staple Stocks
Here, we have highlighted three better-ranked food stocks, namely, The Chef's Warehouse (CHEF - Free Report) , Pilgrim’s Pride (PPC - Free Report) and Ollie's Bargain Outlet (OLLI - Free Report) .
The Chef’s Warehouse, which engages in the distribution of specialty food products, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
CHEF has a trailing four-quarter earnings surprise of 33.7%, on average. The Zacks Consensus Estimate for The Chef’s Warehouse’s current fiscal year sales and earnings each indicates growth of 9.7% and 12.6%, respectively, from the year-ago reported numbers.
Ollie's Bargain, the extreme-value retailer of brand-name merchandise, carries a Zacks Rank #2 (Buy). OLLI has a trailing four-quarter earnings surprise of 7.9%, on average. The Zacks Consensus Estimated figure for Ollie's Bargain’s current financial-year sales and earnings each indicates a rise of around 8.7% and 12.7%, respectively, from the year-earlier figures.
Flowers Foods, one of the largest producers of packaged bakery foods in the United States, currently carries a Zacks Rank #2. FLO has a trailing four-quarter earnings surprise of 1.9%, on average. The Zacks Consensus Estimate for Flowers Foods’ current financial-year sales and earnings each implies growth of around 1.1% and 4.2%, respectively, from the year-ago reported numbers.