Helen of Troy profits down as costs mount
per cent fall in its first quarter profits as administrative,
selling and general expenses all mount significantly, Simon
Pitman reports.
Sales actually rose 19 per cent to reach $127.4 million, against $107 million in the same quarter last year, on the back of the company's newly acquired OXO International business However, net earnings fell from $14.5 million in the corresponding quarter of 2004, to reach $10.55 million.
The company, which designs, develops and markets personal care and household products, said that expenses also included additional personnel, warehousing, freight, depreciation and advertising expenses for new product launches including Brut and Sea Breeze skin care. Additionally there was also an upgrade of the company's worldwide information system that pushed up expenses.
Gerald Rubin, Helen of Troy CEO, said, "Excluding the sales of the newly acquired OXO International business, personal care sales for the first quarter of fiscal 2006 decreased approximately 6 per cent. While this is an improvement over our fourth quarter fiscal year 2005 decline in personal care sales of 11 per cent, we are disappointed that the improvement in our personal care sales from last year's fourth quarter was not as large as we expected."
Rubin went on to point out that the company's biggest personal care sales had come from the newly acquired OXO business, together with Idelle Labs skin products and Latin American sales of hair care appliances.
In May this year the company announced that it was building a 1.2 million square foot distribution center in Southaven, Mississipi, aimed at expanding the company distributions needs for the OXO business. The facility is expected to be fully operational by the first quarter of 2006, when distribution costs are expected to be significantly reduced.
Despite the less than shining results, the company has managed to maintain a relatively healthy balance sheet, with $7 million in cash and $434 in shareholders equity. The current financial situation suggests that the company may be readying to make another acquisition in the near future.
Based in El Paso, Texas, Helen of Troy sells brand names such as Vidal Sassoon, Revlon, Sea Breaze under licensing agreements. It also owns the OXO, Brut and Vitalis brand names, as well as its own ranges of hair and beauty care products
