Helen of Troy revenues slip as Project Pegasus continues

Helen of Troy (NASDAQ: HELE) stock price nosedived by more than 5% in the pre-market session after the company published relatively weak financial results. The shares dropped by more than 3.3% on Tuesday and by 5% in the pre-market session. 

In a statement, the company said that its net revenue plunged by 5.7% in the second quarter to $521.4 million. It attributed the crash to lower sales of products like heaters, fans, and humidification products in the beauty and wellness segment.

Helen of Troy’s gross profit margin improved by 420 basis points while operating profit margin came in at 9.5%,. It also repurchased shares worth $50 million during the quarter. The company also reiterated its fiscal 2024 outlook, with its sales expected to be between $1.96 billion and $2.01 billion. 

Helen of Troy has been going through a challenging period as its sales plummet and its acquisitions backfire. Its CFO has tendered his resignation and the firm is now implementing a turnaround strategy known as Project Pegasus. This restructuring is expected to deliver $20 million in savings in 2024.

As part of Project Pegasus, the company changed its reportable segments into Hoe & Outdoor and Beauty & Wellness. It is also streamlining its operations and improving the supply chain. 

The next important catalyst for Helen of Troy’s stock price will be the company’s investor day on October 17th. In it, the management will discuss the actions it is taking to return to growth and profitability.

HELE stock has underperformed the market in the past few years. After soaring to a record high of $265 in 2020, the shares have retreated by more than 60% to the current $11. Recently, analysts at Canaccord Genuity and DA Davidson maintained their buy rating on the stock.

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