Helen Of Troy (HELE) Q4 2026 Earnings Transcript

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Date

Thursday, April 23, 2026 at 9 a.m. ET

Call participants

• Chief Executive Officer — Scott Azel
• Chief Financial Officer — Brian Grass

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Risks

• Brian Grass cautioned, "resin prices, commodity prices, and fuel prices have all reacted pretty significantly" following the Iran conflict, introducing immediate but not yet quantified risk to raw material and freight costs.
• Gross profit margin compressed by 400 basis points and adjusted operating margin fell 710 basis points due to tariffs, channel mix, and higher operating costs, narrowing profitability in the short term.
• Net leverage ratio increased to 3.87x, up from 3.77x sequentially, signalling increased financial risk linked to EBITDA declines and elevated tariff exposure.
• Management's guidance assumes stabilization in consumer demand and category trends, with limited upside built in; sustained inflation, soft discretionary spending, and retailer conservatism may further pressure results if macro conditions deteriorate.

Takeaways

• Consolidated net sales -- Decreased 3.3%, outpacing internal expectations, driven by pricing actions and contributions from Olive & June that partially offset tariff-related revenue disruption and lower core volume.
• Segment sales: Home & Outdoor -- Declined 1.5%, above forecast, with OXO and Hydro Flask ahead of plan and Osprey providing solid year-over-year growth.
• Segment sales: Beauty & Wellness -- Decreased 4.7%, with 2.8 percentage points attributed to tariff-related disruption; Olive & June delivered 18% organic growth and added 4.9 percentage points to segment sales.
• International sales -- Increased 5.4%, surpassing guidance due to expanded distribution, new product innovation, and strong point-of-sale.
• Gross profit margin -- Declined 400 basis points to 44.6% as higher tariffs, less favorable inventory obsolescence, higher promotional spending, and adverse channel mix offset partial gains from Olive & June and lower ex-tariff product costs.
• SG&A ratio -- Rose 270 basis points, reflecting unfavorable operating leverage, higher incentive compensation, EPA compliance costs, and Olive & June acquisition expenses.
• Adjusted operating margin -- Fell by 710 basis points to 8.3% due to tariffs, incentive compensation, suboptimal leverage, and maintenance of trade and brand investments.
• Inventory -- Ended at $456 million, flat year over year despite $34 million of incremental tariff costs, with a net $50 million reduction in the fourth quarter through turn acceleration and elimination of slower-moving items.
• Debt -- Ended at $781 million; net leverage ratio increased to 3.87x from 3.77x sequentially due to reduced EBITDA amid lower revenue and higher tariff costs, partially offset by $112 million quarterly debt repayment via inventory and receivables conversion.
• Full-year free cash flow -- Reached $132 million, absorbing $72 million in extra cash outflows for tariffs and supplier diversification.
• Post-quarter divestiture -- Sale of the Southaven, Mississippi distribution facility yielded $78 million, immediately used for debt reduction.
• Fiscal 2027 net sales outlook -- Projected at $1.751 billion to $1.822 billion; Home & Outdoor $854 million to $882 million; Beauty & Wellness $897 million to $940 million.
• Adjusted EBITDA guidance -- $190 million to $197 million, representing 2.1%-6.3% growth.
• Adjusted EPS guidance -- $3.25 to $3.75, with only 15% of annual target expected in the first half and approximately breakeven in Q1.
• Free cash flow guidance -- $85 million to $100 million foreseen for Fiscal 2027.
• Tariff cost outlook -- Gross unmitigated tariffs in Fiscal 2026 totaled $51 million, with net operating income impact reduced below $30 million. Expect cost of goods sold from China to drop under 20%, and related net operating income impact to stay below $10 million in Fiscal 2027.
• Dual-sourcing capacity -- Currently at 45% of annual product volume and expected to rise to 55% by the next fiscal year to enhance tariff and supply risk mitigation.
• Growth investment -- Anticipate a 40 basis point increase for high-return marketing and innovation in Fiscal 2027, poised for further rises if overperformance is achieved.
• Price increases -- Price mix additions to revenue projected at $50 million in Fiscal 2027, with nearly full realization reported across planned price actions.
• Capital expenditures -- Set at $28 million to $32 million, prioritized for product innovation and supply chain diversification.

Summary

Helen of Troy (NASDAQ:HELE) delivered revenue and adjusted EPS at the favorable end of its outlook, despite a challenging environment marked by tariff costs and muted flu season demand. Management unveiled a three-phase strategic roadmap, beginning with renewed brand investment in Fiscal 2027 and an emphasis on product innovation, digital expansion, and operational rigor to restore top-line momentum. Recent portfolio moves included the divestiture of a non-core distribution asset, enhancing balance sheet flexibility and supporting ongoing debt reduction. International business and new product introductions were cited as growth engines, while exposure to commodity volatility and tariffs remains a key swing factor limiting near-term margin recovery.

• CEO Azel said the 2027 plan accelerates the "consumer-centered offense," with new OXO, Hydro Flask, and Revlon launches highlighted as outperforming expectations and resonating with consumers.
• CFO Grass stated, "we have effectively 100% of our planned pricing increases in place, with a couple minor exceptions," affirming price realization as a lever against cost headwinds.
• Product innovation, particularly via Olive & June and Revlon Versa Styler, drove outperformance by exceeding internal expectations and driving strong consumer engagement.
• Management confirmed 45% product dual-sourcing capacity, targeting 55% in the next year for diversified supply and risk mitigation.
• "free cash flow yield of 20% using Tuesday’s market capitalization." was cited by Grass as a compelling shareholder value metric for Fiscal 2027.

Industry glossary

• Point-of-sale (POS): The location or channel where retail transactions are completed, commonly used as a proxy for true consumer demand in shelf-based businesses.
• Dual sourcing: The practice of procuring goods or materials from two distinct suppliers to reduce risk and improve supply chain resilience, especially relevant amid tariff or geopolitical threats.

Full Conference Call Transcript

Scott Azel, our CEO, will then share his thoughts and areas of focus, and Brian Grass, our CFO, will provide an overview of our financial performance in the fourth quarter and fiscal year, and outline our expectations for the full year Fiscal 2027. Following our prepared remarks, we will open up the call for Q&A. This conference call may contain certain forward-looking statements that are management’s current expectations with respect to future events or financial performance. Generally, the words “anticipates,” “believes,” “expects,” and other similar expressions are words identifying forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from anticipated 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 may be calculated differently than the non-GAAP financial information disclosed by other parties. The company cautions listeners not to place undue reliance on forward-looking statements or non-GAAP information. A copy of today’s earnings release can be found on the Investor Relations section of our website by scrolling to the bottom of the homepage. The earnings release contains tables that reconcile non-GAAP financial measures to their corresponding GAAP-based measures. We have also posted an investor presentation to our website which contains additional information and perspective on our results and outlook.

With that, I will now turn the conference call over to Scott.

Scott Azel: Thank you, Ann. Good morning, everyone. It is great to be with you as we close FY ’26 and begin to outline a look to our future. We finished Q4 with a sharp focus on execution. We are determined to be a better company on the road to being a bigger company. We will do this through ruthless focus and disciplined execution. Focus, discipline, and execution best characterize our exit out of FY 2026 and Q4. Net sales exceeded expectations and adjusted EPS was in line. Margins reflect our strategic investment as we make deliberate choices to invest in our brands and our people to position our organization for the future.

This progress caps a dynamic year—one in which we took action to address both internal and external challenges by implementing organizational changes necessary to move closer to the consumer, prioritize brand health, and win in the marketplace. Internal ownership is driving our reset. We are committed to operating Helen of Troy Limited more effectively by removing complexity, editing our priorities, and amplifying our actions for impact. Operating rigor in supply chain and demand planning resulted in year-over-year inventory levels that were essentially flat, even as we absorbed significantly higher tariffs in our inventory. Tariff mitigation was paramount, utilizing supplier diversification, SKU streamlining, and pricing actions to protect our margins.

Debt reduction continues to be a priority, driven by strong free cash flow and a successful post-quarter divestment of our Southaven, Mississippi distribution facility. We drove operational clarity by moving decisions closer to the consumer, empowering brand-level ownership, and enabling our teams to move with the speed of the consumer. As I have stated, our current situation was not created overnight, and our recovery will not be instantaneous. However, we are taking a measured approach to building our future. Before I discuss our Fiscal 2027 plans, I want to be clear about the market we are navigating. We have made progress, but we are in tune with the macro environment. Overall sales trends reflect a volatile market.

While our Home & Outdoor business held steady, our Beauty & Wellness business felt the pressure. The flu season did not really happen. Respiratory and fever rates stayed well below average, which meant that fewer shoppers needed to restock our wellness products. Retail inventory is finally stabilizing. Most retailers are back to healthy stock levels and are working through any residual pockets of excess. We cannot control the macro challenges, but we will be intentional in our actions in service of brand and consumer. We are winning where it counts.

Consumers are being selective on where they spend, but brands that deliver innovative products that make consumers’ lives better through style, utility, and personalization will continue to win in the marketplace. Our innovation is landing. We see sales trends improving as we launch new products and offer real solutions. And we are taking market share. Even in this environment, brands like Fix Braun, OXO, Osprey, and Olive & June are standing out as leaders. The challenges we navigated in Fiscal 2026 were a catalyst for change, providing the necessary clarity of where we must invest and where we must simplify. To achieve this, we are executing a multiyear roadmap, a three-phase evolution from stabilization to a portfolio of powerhouse brands.

Fiscal 2027 begins with phase one. This is about restoring brand momentum, driving our growing brands faster, and rebuilding top-line momentum for our declining scale brands. We will take the abstract concept of focusing on the consumer to action, making the consumer-centered offense real in FY 2027. We will do that through the following critical actions. One, powering our portfolio—this is about editing and amplifying our brand-building efforts by using a framework to identify the highest return brand investment opportunities. Two, futures capabilities—we have to skate to where the puck will be by investing in capabilities to leverage our consumer insights to inform a trend-forward innovation roadmap.

Three, strategic investment—remains a priority as we put capital behind innovation, brands, and people. Four, operationalize consumer-centered decision making by placing talent and decisions closer to the consumer and marketplace for speed and execution. Five, modernizing operations is a parallel priority—strengthening our digital foundation, building a baseline in AI, elevating our eCommerce presence, and upgrading our advanced planning systems to drive greater supply chain visibility and responsiveness. Six, platform-level improvements to our operating engine will continue as we stabilize the enterprise for long-term growth. Three pillars will fortify our plan. Our first pillar, consumer-first innovation, is centered on accelerating product development and modernizing our global reach through high-impact social and digital storytelling that resonates across our global footprint.

In Home & Outdoor, we are expanding brand reach by entering product lines where our brands are resonating with consumers and have a clear right to win. At Hydro Flask, in response to strong consumer demand for a wider variety of use cases, we extended our successful Micro Hydro franchise with two additional sizes. We also recently launched new carryout soft coolers and totes redesigned for improved comfort, performance, and longevity. Hydro Flask’s legacy continues to be recognized by the industry, with the Wide Mouth awarded Gear Junkies’ overall pick for Best Insulated Water Bottle of 2026.

OXO is expanding into adjacent categories in food storage and feeding in the second half of the year, bringing OXO’s award-winning performance and ease of use to high-growth areas where we see significant opportunity. OXO’s successful Rapid Brewer continues to achieve accolades, winning Best New Product Release in 2025 during its seventeenth annual Sprudgie Awards, which is considered the Oscars of coffee, among other recognition we have received. And Osprey continues to augment its technical pack offerings, providing outdoor enthusiasts with new pack solutions that excel in hiking, backpacking, and travel environments. In Beauty & Wellness, innovation remains a primary driver for brand building and consumer relevance.

Our new Revlon Versa Styler launched exclusively in Walmart in the first quarter with early consumer demand exceeding expectations. Priced below $100, this is an all-in-one tool that delivers meaningful time-saving innovation by taking hair from wet to damp to dry and refreshed without the need for multiple attachments. Curlsmith expanded its portfolio with the new Curl Fit Reviving Mist, a unique alternative to a traditional dry shampoo, while Olive & June introduced new press-ons with hand-painted charms and fresh frame colors. I am proud to share that Beauty brands continue to receive top industry recognition, including multiple Glamour 2026 Best of Beauty awards for Olive & June, Revlon, and Drybar.

Bakes and Pure have several new introductions planned in the coming months, as we continue to leverage these trusted brands to deepen our consumer relevance. In International, strategic global expansion is a critical priority. We are accelerating our global reach as a key investment in our operating model, laying the groundwork for durable and long-term growth. For online engagement, we are sharpening our execution. Social commerce is an increasingly important connection point for our consumer. We will advance our work across platforms like TikTok Shop and Meta Shop to meet our consumers where they are. And digital experience is receiving significantly more rigor to ensure our online presence matches the premium nature of our brands.

Our second pillar, commercial operational excellence, prioritizes critical capabilities to grow with strategic retail partners. We are strengthening digital marketplace capabilities, including catalog and product page management and third-party seller mitigation. Our U.S. club business development efforts are focused on building long-term, multi-brand partnerships. We are modernizing our technology and systems by prioritizing core platform upgrades, data and analytics, automation, and AI-enabled solutions. We are investing in advanced planning capabilities to improve forecast accuracy and optimize inventory performance. And we are continuing to make targeted investments in Southeast Asia to strengthen our dual-sourcing capabilities. Our final pillar, people and culture, is reenergizing our organization and ensuring we have the right capabilities to win.

Culture relaunch is establishing a brand-led model, reengaging our current teams as we transition toward a new era of ownership mindset and impactful execution. Talent infusion is a parallel priority. We are thoughtfully investing in high-potential talent internally and attracting new talent externally to provide fresh ideas and modern brand-building skills to drive our future. AI workflow evolution is augmenting our team’s ingenuity. We are investing in hands-on training to automate routine tasks, allowing our people to focus on creative storytelling and innovation that wins with the consumer. Fiscal 2027 will be a pivotal year of restoration as we align our organizational architecture and pivot back toward growth.

Our outlook reflects our focus on restoring top-line performance while operating with excellence across our enterprise. Our net sales outlook reflects growth in Outdoor, as we work to stabilize Beauty & Wellness. Adjusted EPS and profitability targets are grounded in a disciplined investment framework, allocating capital to high-ROI initiatives that strengthen long-term brand health. Free cash flow generation remains a priority, supported by ongoing work to drive working capital efficiencies and continued debt reduction. Phase two is about concentrating and catalyzing during years two and three. We are prioritizing high-velocity, scale-potential brands, ensuring capital and resources behind the categories and regions where we have the biggest right to win.

Active portfolio management is designed to ensure capital is deployed where it generates the highest return. To that end, portfolio optimization is an ongoing process as we prioritize capital and resources toward high-growth categories where we have the greatest right to be successful. A fortified shared services platform empowers our brand teams to spend 100% of their time on what is visible—product, storytelling, and consumer experience. Phase three is about building and scaling during years four and five. We plan to shift our full weight onto a concentrated portfolio of leadership brands that demonstrate a clear positioning and shared capabilities, expanding on sourcing, governance, and international reach to create a durable growth, sustainable value-creation model.

We plan to pursue strategic portfolio expansion through high-impact acquisitions of both brands and specialized capabilities that leverage our enterprise scale. We plan to prioritize expansion into high-growth adjacencies as we utilize our platform to become a global leader in consumer-first innovation. We plan to support billion-dollar-plan category leadership goals by deeper organizational alignment, with internal engagement sessions scheduled for later this spring. More detailed long-term initiatives in our specific multiyear roadmap will be shared later this calendar year. To bring it all together, we believe Fiscal 2027 marks a turning point for Helen of Troy Limited as we enter our first-year goal of restoring our competitive edge.

We want to be a better company on the road to being a bigger company. We are methodically deploying digital and data-driven capabilities that bring us closer to the consumer and accelerate our speed to market. Grounded in our “do fewer things better” mantra, I am confident our teams are aligned to deliver the high-velocity execution required to restore long-term growth, and we will win. Now I want to pass it over to Brian to walk you through our results and outlook in more detail.

Brian Grass: Thank you, Scott, and good morning, everyone. Our fourth quarter results were a step in the right direction, with net sales, adjusted EPS, and cash flow at the better end of our expectations, demonstrating the focus and resilience of our associates. Their stewardship is rebuilding the necessary momentum as we transition to a growth-first mindset in Fiscal 2027. Looking more broadly at the year, our performance reflects continued progress on a number of commercial and operational initiatives. While these actions did not fully offset external pressures in Fiscal 2026, they have built the foundation for product-driven growth that we are prioritizing in the year ahead. During the year, we made tangible progress on several fronts.

One, portfolio focus—we leaned into innovation-led growth with multiple new launches, as Scott mentioned, and more to come in Fiscal 2027. Two, tariff management and dual sourcing—we have strengthened our supply chain, which is helping to mitigate the impact of continued geopolitical uncertainty. For the full fiscal year, gross unmitigated tariffs had a $51 million impact on gross profit. Through a disciplined combination of SKU prioritization, cost reductions, price increases, and supplier diversification, we successfully reduced the net operating income impact to less than $30 million for the fiscal year and diversified cost of goods sold subject to China tariffs to approximately 30% by year-end. We currently have the capacity to dual-source approximately 45% of our annual product volume.

We expect this figure to reach approximately 55% by Fiscal 2027, further mitigating our supply chain risk. Three, operational fundamentals and go-to-market—beyond supply footprint diversification, we focused on strengthening the fundamentals of our execution. This included improving our go-to-market effectiveness, sharpening our focus on our brands, and putting them at the center of our commercial execution and strategy. By leaning into innovation for more product-driven growth, we are ensuring our supply chain and sales teams are aligned to support our strongest, highest-margin brands. Four, pricing integrity—last quarter, we chose to temporarily stop shipments in Beauty & Wellness to support consistent pricing adoption. I am pleased to report we have resumed shipments in almost all of these instances.

I am grateful for the collaborative partnerships we have with our retail customers. Turning to the financial highlights for the fourth quarter, consolidated sales decreased 3.3%, favorable to our outlook. The impact of our pricing actions and the contribution of Olive & June partially offset the year-over-year decline from tariff-related revenue disruption and lower core business volume. Home & Outdoor segment sales declined 1.5%, ahead of our expectations. OXO and Hydro Flask were ahead of plan, and Osprey contributed solid year-over-year growth. OXO benefited from good point-of-sale at value customers and replenishment at mass. Hydro Flask benefited from the success of recent product launches and also saw strength in the closeout channel as we improved our inventory composition.

Osprey’s growth was primarily driven by the eCommerce channel, their continuing stream of new products and expansion into adjacencies, and the clearance of end-of-season goods through the outdoor channel. Beauty & Wellness sales decreased 4.7%, with approximately 2.8 percentage points driven by tariff-related disruption. Revlon, Olive & June, and Braun were the standouts in the quarter. Revlon outperformed our expectations, driven by continued strong point-of-sale at Walmart and Target and a solid contribution from International. Olive & June saw organic growth in its business of 18% and contributed 4.9 percentage points of growth to total segment sales, driven by effective digital grassroots marketing, new product introductions, and strong brand loyalty and consumer engagement.

Olive & June has been a great addition to the Helen of Troy Limited portfolio, strengthening our profitability and outperforming valuation metrics. Braun saw solid performance in EMEA and APAC, driven by early flu incidence in those regions, order timing shifts, and strong replenishment. International sales grew 5.4%, surpassing our expectations with strong point-of-sale, expanded distribution, and new product innovation. Gross profit margin decreased 400 basis points to 44.6%, primarily due to the impact of higher tariffs, less favorable inventory obsolescence than in the prior year, higher retail trade and promotional expense, and a less favorable channel mix within Home & Outdoor.

These factors were partially offset by the favorable impact of the acquisition of Olive & June and lower commodity and product costs exclusive of tariffs. SG&A ratio increased 270 basis points, primarily due to unfavorable operating leverage, higher annual incentive compensation expense year over year, EPA compliance costs, and the acquisition of Olive & June. Adjusted operating margin decreased 710 basis points to 8.3%, primarily due to the net impact of tariffs, an increase in incentive compensation year over year, unfavorable operating leverage, and the preservation of trade and brand spending to support future revenue growth.

Moving on to balance sheet highlights, we continue to emphasize working capital efficiency and balance sheet productivity as an engine to fund our strategic investments, improve our operating flexibility, and position the company for long-term growth. Regarding our year-end position, inventory ended at $456 million, largely flat to the prior year despite $34 million of incremental tariff costs in inventory at the end of Fiscal 2026. We accelerated the turns of our more productive inventory while also clearing out slower-moving inventory, which resulted in a net reduction of almost $50 million in the fourth quarter alone. Debt closed at $781 million. Our net leverage ratio was 3.87x, compared to 3.77x at the end of the third quarter.

The increase was primarily driven by lower trailing twelve-month EBITDA reflecting lower revenue and higher average tariff costs. This was partially offset by favorable free cash flow driven by the inventory reduction and the conversion of prior-quarter peak season receivables, enabling $112 million of debt paydown in the quarter. Free cash flow for the fiscal year was $132 million despite $72 million of incremental cash outflows specifically for tariff payments and transitory costs associated with diversifying our supplier base to regions outside of China. Subsequent to the end of the fourth quarter, we further improved productivity of our balance sheet with the sale of our distribution facility in Southaven, Mississippi.

The sale generated proceeds of approximately $78 million, which we used to pay down our debt. We expect to continue to consider balance sheet productivity opportunities to further strengthen our financial flexibility and focus our resources on the core business as we pivot to growth. Turning now to our full-year Fiscal 2027 outlook, we expect net sales in the range of $1.751 billion to $1.822 billion, with Home & Outdoor net sales of $854 million to $882 million and Beauty & Wellness net sales of $897 million to $940 million. Adjusted EBITDA of $190 million to $197 million, which implies year-over-year growth of 2.1% to 6.3%.

Adjusted EPS of $3.25 to $3.75, and free cash flow in the range of $85 million to $100 million. We expect our quarterly sales cadence to be uneven, driven by lapping of prior-year revenue dynamics. At the midpoint of our range, we expect first-half year-over-year sales growth to be slightly positive, with the second half of the year slightly negative. Due to the cadence of people and brand investments, and higher average tariff costs cycling out of inventory and into cost of goods sold in Fiscal 2027, we expect roughly 15% of our total annual adjusted EPS outlook in the first half of the year, with roughly breakeven adjusted EPS in the first quarter.

Help with modeling our Fiscal 2027 outlook includes tariffs in place as of April 2026, assumed to remain in effect for the balance of the year, not including the benefit from any potential tariff refunds; no significant fluctuation in commodity costs, freight, or disruption in supply availability; interest expense of $47 million to $49 million, with cash flow prioritized for debt reduction and an expected net leverage ratio of approximately 3.2x or lower by the end of the year; a full-year adjusted effective tax rate of 25% to 27%; continued working capital efficiency during Fiscal 2027 with an emphasis on further inventory reduction; capital expenditures of $28 million to $32 million, with an emphasis on product innovation and supply chain diversification; and April 2026 foreign currency exchange rates assumed to remain constant for the remainder of Fiscal 2027.

In terms of our expectations regarding the operating environment, we continue to expect inflationary pressures, softness in discretionary categories, conservative retailer inventory management, and an increasingly competitive and promotional landscape. Our outlook does not assume a significant or prolonged impact from the conflict in Iran or other similar macro disruption on the supply chain, as it cannot be reasonably estimated. We expect continued diversification of our global manufacturing footprint, reducing the cost of goods sold exposed to China tariffs to less than 20% by the end of Fiscal 2027 and limiting the net operating income impact to less than $10 million for the full fiscal year.

Our outlook reflects a deliberate choice to preserve investments in our brands and people and includes an increase in growth investments of approximately 40 basis points, prioritizing high-return marketing and innovation initiatives. As we transition back to growth mode, we have a clear bias toward revenue improvement over aggressive cost reduction. By focusing on revenue recovery now, we expect to recapture operating leverage and build long-term sustainable momentum. Finally, while we are not yet where we want to be in terms of financial performance, the midpoint of our outlook implies a forward free cash flow yield of 20% using Tuesday’s market capitalization.

We believe this is a compelling value metric that compares favorably with our peer set and the market overall. With that, I will turn it back to the operator for Q&A.

Operator: Thank you. We will now open the call for questions. We will now be conducting a question-and-answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment while we poll for questions. Our first question comes from the line of Peter Grom with UBS.

Peter Grom: Scott, the commentary on the different phases and the path forward was incredibly helpful. But can you frame or help us understand what success looks like on the other side of this? I am not trying to get guidance on 2028 or 2029 today, but for a business that several years ago had significantly greater earnings power versus what is outlined in guidance today, I am curious how you would frame the opportunity and whether you think the business can get back to levels we saw several years ago, particularly as it sounds like you may be setting up investment levels across a greater number of brands moving forward.

Scott Azel: Peter, good morning. Thank you for your question. Let me give you a bit of backdrop on myself and the leadership team, put a pin in Q4, and then get more into your question. When we think about Q4, there were four things we were really focused on. One is to get really sharp on our ambition so that the work we set up for FY 2027 can begin to show markers of progress. Two, how we begin to start that journey in Q4 through trying to build against the top line and put things in place in our organization to set us up for the future.

Three, how we invest in our people and our culture not only for Q4 but to start the journey as we get back to where we want to get to. And four, balance sheet productivity and paying down debt. I would say that we quietly feel like we made progress in all four of those areas. As we look to the future, a healthy Helen of Troy Limited is really about first being a better company before, on our road to being a bigger company, and it is built on many pillars.

First, putting the consumer at the center of everything we do, underpinned by brands that are healthy with the scoreboard around growth and market share, and then investing in critical capabilities—first making sure we get our organization, team, and talent closer to the marketplace and closer to where decisions are made so they can rapidly innovate, tell relevant stories, and commercially execute. Second, invest in commercial and brand-building capabilities that are going to enable our brands to have the right to win on the shelf or on the digital marketplace. Third, invest in make, move, and hold with our supply chain so we can be agile and responsive in a dynamic marketplace.

And lastly, continue to be thoughtful on our global execution, because we know our global business needs to play a bigger role than it plays today. All of that should be underpinned by investing in our culture and people who are going to help us drive it, and continuing to focus on a healthy balance sheet. For FY ’27, it is really showing markers by doing the things I just talked about—becoming a better Helen of Troy Limited on the road to a faster-growing Helen of Troy Limited.

Peter Grom: That is super helpful. And then, Brian, just a question on the guidance and the level of visibility or flexibility that you have today—more in the context of a pretty volatile external backdrop—and the guidance, I think you mentioned, is more than 80% weighted to the back half of the year. Can you walk through the level of confidence you have embedded in that inflection? Have you embedded more conservative underlying assumptions to account for something that might not go your way? Specifically, there was commentary in the release around commodity costs, freight, and supply availability. You mentioned no significant fluctuation.

Is that related to where things stand today, or does guidance assume no major cost impacts related to these factors?

Brian Grass: To cover the last part first, we called out the fact that things have changed as a result of the Iran conflict pretty quickly. It is only a few weeks old, but resin prices, commodity prices, and fuel prices have all reacted pretty significantly, and that does impact our raw material cost. We are calling it out, but I think almost anyone would say it is a little too new and too fresh to get your arms around and embed in an outlook, so we have not attempted to do that. We are proactively working to minimize any impacts. We have forward-bought some raw material to make sure we have what we need in the short term.

There could be scarcity issues that come up, and we have attempted to lock in pricing. We also attempt to lock in our inbound freight pricing and are in the process of securing favorable rates as compared to current spot pricing, which has also spiked. So we have not adjusted our outlook up or down as a result of the conflict. We have taken actions to minimize the impact, and then we will have to see how that plays out. Hopefully, from a modeling perspective, you appreciate us not trying to model something that is really difficult in an early stage to model.

With respect to the cadence, it is not about conservatism; it is about the comparison to the prior year and the lumpiness of the prior year, the cadence of our people and brand investment in the current year, and how tariffs layer into all that. Mixing that together results in lower EPS in the first half of the year and higher EPS in the second half. The biggest part is the higher average tariff costs cycling out of our inventory into our cost of goods sold in the first half of this year, whereas we almost did not have any tariff impact on COGS in the first half of last year.

We did have a tariff revenue impact in the first half of last year, but not a COGS impact. Now we are getting the full brunt of that COGS impact in the first half of this year. Overlay that with the investments we are making in our people and our brands, and that compresses the first half and then releases in the second half of the year, where you get the benefit.

Operator: Our next question comes from the line of Bob Labick with CJS Securities. Please proceed with your question.

Bob Labick: Good morning. Thanks for taking our questions. To start with revenue guidance, how much price is baked into the guidance for next year, and have retailers fully accepted that? Because we had the stop order. Where do you stand on that? How much price is in the revenue guidance, and where are you getting it? Then I have a follow-up.

Brian Grass: If you bake it all together and you are looking for total revenue impact of price increases, it is about $50 million impacting our revenue through price increases. That sounds like a big number, but it does not come close to covering all of our tariff costs, as well as regulatory costs emerging related to packaging and things of that nature. So it makes a bit of a dent in terms of profit, but it does influence revenue. That impact is the year-over-year impact for Fiscal 2027 versus ’26. In ’26, we only got partial realization of that, and in some cases it was delayed.

With respect to where we are, we have effectively 100% of our planned pricing increases in place, with a couple minor exceptions. It did take us a period of time in ’26 to get everything in place. Price was one of the levers that we pulled to try and offset tariffs, along with SKU evaluation and other actions, and that is the impact.

Bob Labick: Great. And in the theme of invest-to-grow, you mentioned a 40 basis point increase in growth investment. What are the steps necessary internally before you increase it more? I imagine to get to where you want to be, it will be more than 40 basis points of investment spending to reignite growth. What are the next steps so you can lean harder into the growth engine?

Brian Grass: You are right. We built the plan this year intentionally to lean into any overperformance with additional growth investment. We have framed up and planned a host of investments that we could not afford to make in the base plan provided today. The idea is that with any overperformance, we will continue to pursue those high-ROI investments and lean in. The hope is that by the end of the year, it is not 40 basis points—it is more—because we have better operating leverage and produce more profit as a result of growth, and then continue to feed the flywheel. We intentionally built a plan that allows us to do that.

We are giving you the base plan, and when we have upside—which we are expecting and think we can drive—that overperformance will go into greater investment.

Operator: Our next question comes from the line of Susan Anderson with Canaccord Genuity. Please proceed with your question.

Susan Anderson: Hi. Good morning. Thanks for taking my question. Brian, maybe just to drill down on the segments in the quarter a little bit. Within Beauty & Wellness, can you talk about brand performance—was Beauty or Wellness the bigger driver of the decline, and how did Drybar and then Curlsmith perform? You mentioned the cold/flu season being weak—was that the biggest driver, or was it pretty equal? And then in Home & Outdoor, you talked about Osprey doing well online. How did it do in stores? Are you still seeing that category decline, and is Osprey still gaining share?

Brian Grass: I might break it down a bit differently within Beauty & Wellness. Olive & June and Revlon had relative strength, and the remainder of Beauty was relatively weaker compared to them. In Wellness, overall performance was a little softer than we would like it to be, both in terms of the cough, cold, flu season and in some of the more competitive categories where Honeywell and some of the other brands play. For Home & Outdoor, we are seeing very positive trends almost across the board. We are excited about what we are beginning to see, with respect to Osprey in particular.

The category is generally trending down, but Osprey is generally trending up, taking share, and performing well in that category, and we continue to expand into adjacent categories. Overall, as a company, while we are not yet where we want to be across all brands and categories with respect to POS, we are trending largely in the right direction across the majority of the brands in their respective categories, which we see as a sign of progress.

Susan Anderson: Great, thanks for the color. Scott, can you talk about the new innovation that resonated with consumers in the quarter across the portfolio, and any color on newness coming out throughout this year? You also mentioned increased focus on eCom investment—will that be brand websites to drive DTC, or more tech investment and social selling?

Scott Azel: We have had a number of innovations across the portfolio, but I will highlight a few. Osprey continues to expand its strength in technical packs into adjacent categories, and we saw continued strength there. Olive & June, not only in their core business, continues to bring new innovation and new reasons to bring consumers to the category. The Revlon Versa Styler is really bringing new news to the category and is off to a very promising start. Hydro Flask also has multiple innovations landing well.

Over the last several months as I have traveled around the company, I have focused on pulling innovation forward—where we have the right consumer insights and business cases, we are putting more investment against it and, where it makes sense, pulling it into Q4/Q1 on a faster track. On digital capabilities, depending on the brand, we are clearly trying to drive some web traffic, but the bulk of my comments are around sensing and understanding where the consumer will be, ensuring we show up on partner sites with advantage versus competition, and driving more agility for our brands to interact with social commerce, whether it be Meta Shop, TikTok Shop, and other emerging ways of connecting with our consumers.

Operator: As a reminder, if you would like to ask a question, press 1 on your telephone keypad. Our next question comes from the line of Olivia Tong with Raymond James. Please proceed with your question.

Olivia Tong: I wanted to get a better sense of your expectation for category growth and your bedding for next year and what it was this year. As we think about your cadence of stabilization, I realize there is a big difference in year-over-year comps, but why do you not expect growth in the second half on sales? As Peter alluded to earlier, there has been a multiyear challenge, so as you think about your optimism around innovation and several other things, why should we not expect a bit more in the second half?

And can you talk about retailer discussions that support your enthusiasm around innovation and then managing the tail of brands or the tail of exits that still need to be managed down?

Scott Azel: Great question. When we talk about stabilization for FY ’27, first I think about what we control within the four walls of Helen of Troy Limited. It is about editing our agenda and amplifying the things with the biggest growth potential, moving with the speed of the marketplace. We have been doing that work, and it is embedded in our plan. Underneath that, we have sharp conviction on the critical capabilities necessary for each of our brands to have the best chance to compete—everything from the right operating model to drive decision making at the speed of the consumer, to making sure organizationally we are set up for success. We are doing that work.

Consumer-led innovation—leveraging consumer insights to develop an innovation roadmap that answers today’s needs and gets ahead of the marketplace—we are doing that work now. Investing in omnichannel capabilities—sensing the consumer, engaging with social commerce, and partnering with our biggest strategic retail partners in the right way against the critical opportunities we have identified. And standing up work in our supply chain that helps us make, move, and hold product so it is the right product, right place, right time, more effectively. The combination of those will drive us toward stabilization. On category assumptions and how it plays out, I will turn it to Brian.

Brian Grass: We have not really changed category assumptions overall. It is hard to boil all our categories into one measure, but broadly, categories are pressured by the same pressures on the consumer—price and related factors—so I would call category a bit of a headwind as we look to next year. On why you are not seeing more revenue growth, we have assumed that current POS trends continue where they are today. We have seen improvement; we have not assumed continued improvement. We have also assumed continued consumer pressure and that price elasticity has an impact—that is a pretty big headwind. We are offsetting that several ways.

We are lapping prior-year tariff-related revenue headwinds, but of the $80 to $90 million we saw in Fiscal 2026, we are recovering about half at this point. Direct imports in China market are still a work in process, and we may recover more, but we have assumed about half. Then you have the other offsets, which are the exciting parts: product innovation and commercial building blocks, international growth, and price increases. When you put all those together, it results in flattish net sales year over year. Any upside would be continued improvement in POS trends, which we have not assumed.

Olivia Tong: Understood. As a follow-up, oil is off its peak but above pre-Iran conflict. You mentioned paying below market—can you talk about the change relative to the prior year in discussions with providers?

Brian Grass: The comment on being below spot price was specific to freight. Spot prices are increasing, but we feel we have contracted at rates below that and feel comfortable, assuming we can stay on contracted rates and there is no significant disruption that would push us outside of that. As it relates to the conflict overall and its potential impact on our suppliers, raw material prices are going up almost instantaneously, driven by fuel. We have had discussions with our suppliers on potential impacts. At this point, I cannot give you where that will end up. Typically, these discussions evolve over time—there is not an instantaneous adjustment.

The same thing played out with tariffs—we absorbed a direct tariff impact, and how we managed that with suppliers evolved over time. It is an ongoing discussion, happening live. We are aware of the potential impact, but it is early days, and we will work with our suppliers to get to a good outcome in terms of ultimate pricing.

Operator: We have no further questions at this time. I would like to turn the floor back over to management for closing comments.

Scott Azel: Thank you for joining us today, and we look forward to speaking to many of you in the coming weeks. Have a wonderful day.

Operator: Ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.

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