Zacks Investment Research downgraded Helen of Troy Limited (HELE) to a Zacks Rank #5 (Strong Sell) on Sep 13, following a cut in the fiscal outlook.
Why the Downgrade?
Helen of Troy has been witnessing downward estimate revisions since cut its fiscal 2015 outlook earlier this month. It also reported sluggish first quarter fiscal 2015 earnings due to soft sales and weak margins.
On Sep 3, 2014, Helen of Troy slashed its fiscal 2015 outlook. A weak retail environment and sluggish growth in the Personal Care segment prompted Helen of Troy to lower its outlook. The company now expects fiscal 2015 sales in the range of $1.275 to $1.30 billion, down from $1.325 to $1.375 billion expected previously during the first-quarter fiscal 2015 conference call reported in July 2014. Earnings per share are now expected in the range of $4.55 to $4.65 lower than $5.15 to $5.25 as expected earlier. (Read: Helen of Troy Lowers FY View on Weak Retail Conditions.)
Helen of Troy also issued a bleak outlook for second-quarter fiscal 2015. The company expects net sales in the range of $291 to $294 million compared with $319.4 million reported a year ago. The company expects earnings per share in the range of 79 to 82 cents compared with 72 cents in second-quarter 2013.
The company has been witnessing weak earnings and sales trends for the past few quarters due to tough retail conditions, slower store traffic and mass market retail sales at large retail outlets. The Personal Care segment has experienced soft results and its decline has accelerated recently.
In the first-quarter of fiscal 2015, the company posted disappointing revenues due to soft sales in the Personal Care segment. Earnings of 83 cents also lagged the Zacks Consensus Estimate by 12.6% due to lower-than-expected revenues. (Read: Helen of Troy Misses Q1 Earnings & Revs Ests.)
Management has taken several strategic initiatives to improve sales in the Personal Care segment. However, the initiatives are expected to take some time to yield results.
Almost all the estimates for fiscal 2015 were revised downward following cut in fiscal 2015 outlook. The Zacks Consensus Estimate for second-quarter 2015 slipped 21.7% to 65 cents per share from 85 cents over the last 30 days. IFor fiscal 2015, the Zacks Consensus Estimate slipped 10.4% to $3.94 per share over the same time frame.
Other Stocks to Consider
Better ranked stocks in the consumer staple sector include The Hain Celestial Group In. (HAIN), Pinnacle Foods Inc. (PF) and ConAgra Foods Inc. (CAG).All these stocks have a Zacks Rank #2 (Buy).
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