Helen of Troy reported robust sales growth for its third quarter, as the designer, developer and marketer of housewares, health and home, and beauty products prepared to close its recent acquisition of Drybar.
In the third quarter ended November 30, consolidated net sales revenue increased 10.1% to $474.7 million compared to $431.1 million, reflecting growth in consolidated online sales, an increase in brick and mortar sales in the housewares segment, higher international sales, and an increase in sales in the appliance category in the beauty segment. These factors were partially offset by a slight core business decline in the health and home segment, and a decline in the personal care category within the beauty segment.
Income from continuing operations was $68.7 million, or $2.71 per diluted share, compared to $54.3 million, or $2.06 per diluted share in the previous third quarter.
By segment, housewares net sales increased by 28.2% to $183 million, primarily due to point of sale growth with existing domestic brick and mortar customers, an increase in online sales, an increase in international sales, higher club sales and new product introductions.
Health and home net sales decreased 1.1% to $185.8 million, primarily driven by a core business decline of $1 million, or 0.5% due to lower domestic sales driven by the unfavorable comparative impact from more wildfire activity in the same period last year, and net distribution changes year-over-year. These factors were partially offset by revenue from new product introductions and growth in international sales.
Beauty net sales increased 5.4% to $105.7 million, primarily due to increased demand and new product introductions in the appliance category, growth in the online channel, and an increase in international sales. These factors were partially offset by a decline in the personal care category and the unfavorable impact of net foreign currency fluctuations.
On December 19, the company entered into a definitive agreement to acquire Drybar Products LLC. As part of the transaction, Helen of Troy will grant a worldwide license to Drybar Holdings, the owner and operator of Drybar blowout salons, to use the Drybar trademark in their continued operation of the salons. The salons will exclusively use, promote, and sell Helen of Troy’s Drybar products globally. The total purchase consideration is $255 million in cash, subject to certain customary closing adjustments. The acquisition is expected to close by January 31, 2020.
Julien Mininberg, Helen of Troy CEO, said, “We are very pleased to report another strong quarter. Our phase two transformation initiatives continue to produce results, with consolidated core business sales growth of 10.7%, increased adjusted operating margin in all three of our business segments, and adjusted diluted EPS growth of 30%. Our leadership brands sales grew 10.6%, online sales grew approximately 30%, and we continue to invest in our brands and across our global shared services. The housewares segment again led our sales growth with healthy consumption ahead of our expectations, from both Oxo and Hydro Flask. Beauty segment sales also grew ahead of our expectations, driven by continued strong performance in appliances. Core business sales in our health and home segment declined slightly in the quarter, as international sales growth and new product introductions were more than offset by net retail distribution changes and the unfavorable comparative impact of more wildfire activity in the same period last year. I am also pleased to be raising our sales and adjusted EPS outlook for this fiscal year. Our revised sales outlook projects a third consecutive year of organic sales growth above 5%. Our increased EPS outlook reflects higher margin expectations for this fiscal year, and significant incremental investments in our leadership brands and key phase two initiatives in the fourth quarter of fiscal 2020 that are expected to drive short and mid-term growth.”