Bearish stock to watch: Helen of Troy Limited (NASDAQ: HELE)

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Helen of Troy Limited (NASDAQ: HELE) stock continued its bearish momentum and fell over 1.2% (as of  11:37 am GMT-4; Source: Google finance) after the company in the second quarter of FY 20 has reported the 5.2% growth in the Consolidated net sales revenue on the back of an rise in Leadership Brand net sales of 3.8%, the rise in online channel net sales of approximately 25% and core business growth of 5.7%. Online sales formed approximately 24% of the total sales in the third quarter. The overall strong results for the company showed 3.8% growth in Leadership Brands, due to substantial growth and Housewares, which more than offset the difficult comparison for the Health & Home Leadership Brands that grew 22.3% in the same period last year.

Housewares posted growth in brick and mortar, online and internationally as the company gained distribution, launched new products and benefited from very strong point of sale and store traffic at key retailers. Dinnerware and food storage were standout categories across the business segment during the second quarter. In Beauty, consumer centric appliance innovation has led to the segment growth, driving Beauty core business sales growth of 9.3% during the second quarter. Beauty grew both domestically and internationally. Health & Home core business net sales declined 9.1%.

Moreover, consolidated gross profit margin expanded to 43% compared to 39.4%, primarily due to a higher mix of Housewares’ revenue at a higher overall gross profit margin and the benefit of tariff exclusion refunds. Consolidated adjusted operating income rose 10.4% to $65.8 million, or 15.9% of net sales, compared to $59.6 million or 15.1% of net sales in the same period last year.

Housewares’ adjusted operating margin was flat at 22.4% for the quarter, which benefited from a more favorable product and channel mix and greater operating leverage. These factors were offset by higher incentive compensation expense, higher new product development expense and higher freight and distribution center expense to support integration activity, and higher retail and direct to consumer demand. Health & home adjusted operating margin expanded 11.2% compared to 10.5% mainly due to tariff exclusion refunds and the impact of favorable currency hedges. Beauty adjusted operating margin fell 11.9% compared to 12.8% primarily due to the impact of higher freight expense to meet strong demand in the appliance category, higher incentive compensation expense, the margin impact of a less favorable product and channel mix, and the impact of unfavorable currency on net sales and operating margin.

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