Helen of Troy Limited
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Item 1. Business
Our Company
We incorporated as Helen of Troy Corporation in Texas in 1968 and were reorganized as Helen of Troy Limited in Bermuda in 1994. We are a leading global consumer products company offering creative products and solutions for our customers through a diversified portfolio of brands. We have built leading market positions through new product innovation, product quality and competitive pricing. We go to market under a number of brands, some of which are licensed. Our portfolio of brands includes OXO, Hydro Flask, Osprey, Vicks, Braun, Honeywell, PUR, Hot Tools, Drybar, Curlsmith, Revlon and Olive & June, among others.
Segment Information
We currently operate in two reportable business segments:
•Home & Outdoor: Offers a broad range of outstanding world-class brands that help consumers enjoy everyday living inside their homes and outdoors. Our innovative products for home activities include food preparation and storage, cooking, cleaning, organization and beverage service. Our outdoor performance range, on-the-go food storage and beverageware includes lifestyle hydration products, coolers and food storage solutions, backpacks and travel gear. Sales for this global segment are primarily to online and brick & mortar retailers and through our direct-to-consumer channel.
•Beauty & Wellness: Provides consumers with a broad range of outstanding world-class brands for beauty and wellness. In Beauty, we deliver innovation through products such as hair styling appliances, grooming tools, liquid and aerosol personal care products and nail care solutions that help consumers look and feel more beautiful. In Wellness, we are there when you need us most with highly regarded humidifiers, thermometers, water and air purifiers, heaters and fans. Sales for this global segment are primarily to online and brick & mortar retailers, distributors and through our direct-to-consumer channel.
For more segment and geographic information concerning our net sales revenue, long-lived assets and operating income, refer to Note 17 to the accompanying consolidated financial statements.
Our Strategy
During fiscal 2026, we made significant organizational and operational changes designed to stabilize our business. The Board of Directors appointed a new Chief Executive Officer with transformation experience needed to help drive our next phase of value creation. Under this new leadership, we are currently engaged in a comprehensive review of our strategic priorities as we re-position our Company to deliver sustained revenue and profit growth, increase market share and create superior long-term value for all stakeholders.
We are taking steps to modernize our business model designed to move at the speed of the consumer and excel in a rapidly evolving environment with fragmented consumer attention and shifting value perceptions. Our strategy includes the following priorities: reenergize our brands and our people, adapt our organizational structure to put the consumer at the center of everything we do, strengthen our brand portfolio for predictable long-term growth, and improve asset efficiency. As part of our strategy, we plan to sharpen our focus on fewer, more impactful initiatives, which include investing more in product innovation, strengthening brand loyalty, and advancing commercial excellence. We intend to energize our brands through a disciplined investment approach focusing on impactful opportunities that generate competitive advantages and deliver product solutions and world-class innovation to our consumers. In
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addition, we believe our consumer-centric approach will enable us to better understand our consumers, allocate resources more efficiently, and accelerate the time to market for new products and brands with the best opportunities for long-term sustainable growth. We expect this will strengthen our portfolio of brands to provide a pathway for strong cash flow generation to further invest back into our business. We remain focused on improving balance sheet health and productivity, by prioritizing our capital expenditures, optimizing our working capital, and monetizing less productive assets. While we are finalizing this strategy reset, we have already implemented many of the foundational changes intended to drive long-term performance, and we have taken immediate actions we believe will accelerate our product innovation, sharpen our go-to-market execution, strengthen our cash flow, and pay down our debt.
Our Products
The following table summarizes the types of products we sell by business segment:
| Segment | Product Category | Primary Products | ||||||||||
| Home & Outdoor | Home Solutions | Food storage containers, kitchen utensils for cooking and preparing salads, fruits, vegetables and meats, graters, slicers and choppers, baking essentials, kitchen organization, bath, cleaning, infant and toddler products and coffee preparation tools and electronics | ||||||||||
Insulated Beverageware, Coolers and Food Storage Solutions | Insulated beverageware including bottles, travel tumblers, drinkware and mugs, food and lunch containers, insulated totes, soft coolers, outdoor kitchenware and accessories | |||||||||||
Technical, Outdoor, Travel, and Lifestyle Packs and Accessories | Technical and outdoor sports packs, bike packs and bags, hydration and travel packs, duffel bags and luggage, lifestyle and everyday packs, kid carrier packs and accessories | |||||||||||
| Beauty & Wellness | Hair Tools and Accessories | Mass, professional and prestige hair appliances, brushes, grooming tools and accessories | ||||||||||
Hair Liquids | Prestige shampoos, liquid hair styling products, treatments and conditioners | |||||||||||
Nail Consumables and Grooming Tools | Nail polish, press-on nails, manicure and pedicure systems, grooming tools and nail care essentials | |||||||||||
Wellness Devices and Consumables | Thermometers, blood pressure monitors, pulse oximeters, nasal aspirators, humidifiers, faucet mount and pitcher water filtration systems, air purifiers, heaters, fans and humidification, thermometry, water filtration and air purification consumables | |||||||||||
Our Trademarks
We market and sell certain of our products under our own trademarks and trademarks licensed from third parties. We believe our principal trademarks, both owned and licensed, have high levels of brand name recognition among retailers and consumers throughout the world. Through our favorable partnerships with our licensors, we believe we have developed stable, enduring relationships that provide access to unique brands that complement our owned and internally developed trademarks.
The Beauty & Wellness segment relies on the continued use of trademarks licensed under various agreements for a significant portion of its net sales revenue. New product introductions under licensed trademarks require approval from the respective licensors. The licensors must also approve the product packaging. Some of our license agreements require us to pay minimum royalties. Our licensors and licensees also generally have the ability to terminate or non-renew their license agreements with us at their option subject to each parties’ right to continue the license for a period of time following notice of termination or non-renewal.
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The following table lists our key trademarks by business segment:
| Segment | Owned | Licensed | ||||||||||
| Home & Outdoor | OXO, Good Grips, Soft Works, OXO tot, OXO Brew, OXO Strive, OXO Outdoor, Hydro Flask, Osprey | |||||||||||
| Beauty & Wellness | Drybar, Hot Tools, Curlsmith, Olive & June, PUR | Revlon, Honeywell, Braun, Vicks | ||||||||||
Patents and Other Intellectual Property
We maintain utility and design patents in the U.S. and several foreign countries. We also protect certain details about our processes, products and strategies as trade secrets, keeping confidential the information that we believe provides us with a competitive advantage.
Sales and Marketing
We currently market our products in approximately 100 countries throughout the world. Sales within the U.S. comprised approximately 72%, 71% and 74% of total net sales revenue in fiscal 2026, 2025 and 2024, respectively. Our segments primarily sell their products through mass merchandisers, sporting goods retailers, department stores, drugstore chains, home improvement stores, grocery stores, specialty stores, prestige beauty chains, beauty supply retailers, e-commerce retailers, wholesalers, warehouse clubs and various types of distributors, as well as directly to consumers. We take a consumer-centric approach to assortment planning by fostering close collaborations with our retail customers. In many instances, we produce specific versions of our product lines with exclusive designs and packaging for our retail customers, which are appropriately priced for their respective customer bases. During fiscal 2026, we realigned our commercial triangle of product, sales and marketing to enhance our go-to-market effectiveness by having our brand marketing teams and North America sales teams report directly into our business segment Presidents. As a result, we also transitioned our business intelligence, insights and analytics, agency management and digital strategy teams to report to our Chief Strategy Officer. We sell products principally through the use of outside sales representatives and our own internal sales associates, supported by our brand marketing teams, category management, engineering, creative services and customer and consumer service associates. These groups work closely together, leveraging marketing data and analytics, to develop pricing and distribution strategies, to design packaging and to help develop product line extensions and new products.
Research and Development
Our research and development activities focus on new, differentiated and innovative products designed to drive sustained organic growth. We continually invest to strengthen our product design and research and development capabilities, including extensive studies to gain consumer insights. Research and development expenses consist primarily of salaries and employee benefits, contracted development and testing efforts and third-party design agencies associated with the development of products.
Manufacturing and Distribution
We contract with unaffiliated manufacturers, primarily in China, Vietnam and Mexico, to manufacture a significant portion of our finished goods for the Home & Outdoor segment and our Beauty & Wellness segment’s hair tools and accessories and nail consumables and grooming tools, as well as certain wellness product categories. The hair liquids category of the Beauty & Wellness segment sources most of its products from U.S. manufacturers. Finished goods manufactured by vendors in Asia comprised approximately 83% of finished goods purchased in fiscal 2026 and approximately 79% of finished goods purchased in both fiscal 2025 and 2024. Finished goods manufactured by vendors in China comprised approximately 57%, 63% and 62% of finished goods purchased in fiscal 2026, 2025 and 2024, respectively.
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with our condensed consolidated financial statements included under Item 1., “Financial Statements.” The various sections of this MD&A contain a number of forward-looking statements, all of which are based on our current expectations. Actual results may differ materially due to a number of factors, including those discussed in the section entitled “Information Regarding Forward-Looking Statements” following this MD&A, and in Item 3., “Quantitative and Qualitative Disclosures About Market Risk” in this report, as well as in Part I, Item IA., “Risk Factors” in the Company’s most recent annual report on Form 10-K for the fiscal year ended February 28, 2026 (“Form 10-K”) and its other filings with the Securities and Exchange Commission (the “SEC”). When used in this MD&A, unless otherwise indicated or the context suggests otherwise, references to “the Company”, “our Company”, “Helen of Troy”, “we”, “us” or “our” refer to Helen of Troy Limited and its subsidiaries. References to “fiscal” in connection with a numeric year number denotes our fiscal year ending on the last day of February, during the year number listed.
This MD&A, including the tables under the headings “Operating Income (Loss), Operating Margin, Adjusted Operating Income (non-GAAP) and Adjusted Operating Margin (non-GAAP) by Segment” and “Net Income (Loss), Diluted Earnings (Loss) Per Share, Adjusted Income (non-GAAP) and Adjusted Diluted Earnings Per Share (non-GAAP),” reports operating income (loss), operating margin, net income (loss) and diluted earnings (loss) per share without the impact of asset impairment charges, costs incurred in connection with the departure of our former Chief Executive Officer (“CEO”) primarily related to severance and recruitment costs (“CEO succession costs”), gain on the sale of our distribution facility in Southaven, Mississippi during the first quarter of fiscal 2027 (“gain on sale of distribution facility”), income tax expense from the recognition of valuation allowances in fiscal 2026 on deferred tax assets related to our intangible asset reorganization in fiscal 2025 (“intangible asset reorganization”), amortization of intangible assets and non-cash share-based compensation for the periods presented, as applicable. These measures may be considered non-GAAP financial measures as defined by SEC Regulation G, Rule 100. The tables reconcile these measures to their corresponding GAAP-based financial measures presented in our condensed consolidated statements of income (loss). We believe that adjusted operating income, adjusted operating margin, adjusted income and adjusted diluted earnings per share provide useful information to management and investors regarding financial and business trends relating to our financial condition and results of operations. We believe that these non-GAAP financial measures, in combination with our financial results calculated in accordance with GAAP, provide investors with additional perspective regarding the impact of such charges and benefits on applicable income, margin and earnings per share measures. We also believe that these non-GAAP measures reflect the operating performance of our business and facilitate a more direct comparison of our performance to our competitors. The material limitation associated with the use of the non-GAAP financial measures is that the non-GAAP measures do not reflect the full economic impact of our activities. Our adjusted operating income, adjusted operating margin, adjusted income and adjusted diluted earnings per share are not prepared in accordance with GAAP, are not an alternative to GAAP financial measures and may be calculated differently than non-GAAP financial measures disclosed by other companies. Accordingly, undue reliance should not be placed on non-GAAP financial measures. These non-GAAP financial measures are discussed further and reconciled to their applicable GAAP-based financial measures contained in this MD&A beginning on page 33.
There were no material changes to the key financial measures discussed in our Form 10-K.
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Overview
We incorporated as Helen of Troy Corporation in Texas in 1968 and were reorganized as Helen of Troy Limited in Bermuda in 1994. We are a leading global consumer products company offering creative products and solutions for our customers through a diversified portfolio of brands. Our portfolio of brands includes OXO, Hydro Flask, Osprey, Vicks, Braun, Honeywell, PUR, Hot Tools, Drybar, Curlsmith, Revlon and Olive & June, among others. We have built leading market positions through new product innovation, product quality and competitive pricing. As of May 31, 2026, we operated two reportable segments: Home & Outdoor and Beauty & Wellness.
On April 14, 2026, we completed the sale of our distribution facility in Southaven, Mississippi for a total sales price of $82.0 million, less costs to sell of $3.8 million. Accordingly, we recognized a gain on the sale of $54.9 million within “Selling, general and administrative expense” (“SG&A”) during the first quarter of fiscal 2027, which was recognized by our Beauty & Wellness segment. We used the proceeds from the sale to repay amounts outstanding under our credit facility.
We did not record any asset impairment charges during the first quarter of fiscal 2027. During the first quarter of fiscal 2026, we concluded a goodwill impairment triggering event had occurred due to a sustained decline in our stock price, and performed quantitative impairment testing on our goodwill and certain intangible assets. As a result of such testing, we recorded pre-tax asset impairment charges as follows:
| (in thousands) | Three Months Ended May 31, 2025 | ||||||||
Home & Outdoor (1) | $ | 219,095 | |||||||
Beauty & Wellness (2) | 195,290 | ||||||||
Total | $ | 414,385 | |||||||
(1)Asset impairment charges recognized for our Home & Outdoor segment included charges for our Hydro Flask and Osprey businesses of $120.8 million and $98.3 million, respectively.
(2)Asset impairment charges recognized for our Beauty & Wellness segment included charges for our Drybar, Curlsmith, Health & Wellness and Revlon businesses of $103.7 million, $36.2 million, $35.8 million and $19.6 million, respectively.
For additional information regarding the testing and analysis performed, see Note 5 to the accompanying condensed consolidated financial statements.
Significant Trends Impacting the Business
Impact of Tariffs
Since 2019, the Office of the United States Trade Representative (“USTR”) has imposed, and in certain cases subsequently reduced or suspended, additional tariffs on products imported from China and other foreign countries. Additionally, the current United States (“U.S.”) presidential administration has promoted and implemented plans to raise tariffs even further and pursue other trade policies intended to restrict imports. Our purchases of products from unaffiliated manufacturers located in China and other regions exposes us to higher costs of doing business from increases in tariffs.
Under the International Emergency Economic Powers Act (“IEEPA”), the U.S. presidential administration began implementing fentanyl-related IEEPA tariffs (“Fentanyl IEEPA Tariff”) and additional tariffs (“Reciprocal IEEPA Tariff”) during calendar year 2025. As of April 9, 2025, the U.S. had imposed (i) an aggregate additional 145% tariff on imports from China, consisting of a 20% Fentanyl IEEPA Tariff and 125% Reciprocal IEEPA Tariff and (ii) a global 10% Reciprocal IEEPA Tariff on imports from other countries including Mexico, Vietnam and other U.S. trading partners. The Reciprocal IEEPA Tariff on imports from China was subsequently lowered to 10% effective May 12, 2025, resulting in an aggregate additional 30% tariff. On July 31, 2025, the U.S. president signed an executive order imposing new
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IEEPA tariffs on a number of U.S. trading partners which became effective on August 7, 2025, including a 25% Fentanyl IEEPA Tariff on imports from Mexico and a 20% and 19% Reciprocal IEEPA Tariff on imports from Vietnam and Thailand, respectively. Effective November 10, 2025, the 10% Reciprocal IEEPA Tariff on imports from China, which was set to expire, was extended to remain in effect through November 10, 2026, and the Fentanyl IEEPA Tariff was reduced from 20% to 10%, reducing the aggregate additional tariff from 30% to 20%. On February 20, 2026, the U.S. Supreme Court ruled that tariffs imposed by the U.S. president under IEEPA were unconstitutional, and the U.S. president subsequently imposed a temporary global 10% Section 122 tariff under the Trade Act of 1974 (“Section 122 Tariff”) effective February 24, 2026 through July 24, 2026. As a result, the previous aggregate additional tariff on imports from China, Vietnam, Mexico and Thailand of 20%, 20%, 25% and 19%, respectively, were replaced by the 10% Section 122 Tariff. On May 7, 2026, the U.S. Court of International Trade (“CIT”) found the Section 122 Tariff unlawful; however, the Section 122 Tariff will remain in place through July 24, 2026 for the Company and most importers while the case proceeds through the appeals process. Our imports manufactured in Mexico are not impacted since they qualify for duty-free preference under the United States-Mexico-Canada Agreement. Further, we benefit from certain exclusions from tariffs as a result of the COVID-19 pandemic, which were recently extended to November 9, 2026.
On March 4, 2026, the CIT issued an additional ruling that importers that paid tariffs under IEEPA are due refunds and ordered U.S. Customs and Border Protection (“CBP”) to begin the refund process for all importers who were subject to IEEPA duties. During fiscal 2026, we paid IEEPA tariffs totaling $80.5 million. On April 20, 2026, the CBP launched Phase 1 of a process for submitting IEEPA refund claims. We submitted Phase 1 refund claims in May 2026 totaling $6.0 million, a small portion of which were accepted by the CBP prior to May 31, 2026. As of May 31, 2026, we concluded that $1.9 million of tariff refunds were probable of being recovered and recorded a receivable within prepaids and other current assets, along with corresponding reductions to “Cost of goods sold” of $1.8 million and inventory of $0.1 million in our condensed consolidated financial statements. The tariff refunds recognized during the first quarter of fiscal 2027 were all related to our Home & Outdoor segment. Subsequent to the first quarter of fiscal 2027, in June 2026, we submitted additional Phase 1 refund claims totaling $3.2 million related to our Beauty & Wellness segment. On June 29, 2026, CBP launched Phase 2 of the IEEPA refund claims process, which we are in process of preparing. As of July 1, 2026, we received partial payments totaling $1.6 million for our Phase 1 tariff refunds and an immaterial amount of interest. The Company will continue to monitor regulatory guidance regarding the refund process and will recognize additional recoveries when the right to receipt becomes probable.
In March 2025, the U.S. president also implemented changes under Section 232 of the Trade Expansion Act of 1962 (“Section 232 Tariffs”) which resulted in additional sectoral tariffs to aluminum and steel of 25%. On June 4, 2025, the Section 232 Tariffs related to aluminum and steel were increased to 50%, and effective August 1, 2025, expanded to include copper products and components. Section 232 Tariffs were previously imposed based solely on a metal content-based calculation. Effective April 6, 2026, Section 232 Tariffs were expanded to apply to the entire customs value of covered products with tiered rates based on metal content and origin. Currently, our products are not subject to the Section 232 Tariffs on copper products and components. Our products are currently subject to (i) a Section 232 Tariff on aluminum and steel products of 25%, which primarily impacts certain products within our Home and Wellness businesses and/or (ii) the Section 122 Tariff while it remains in place through July 24, 2026 and/or (iii) tariffs under Section 301 of the Trade Act of 1974 (“Section 301 Tariffs”). The U.S. presidential administration is considering additional Section 301 Tariffs as a remedy for unfair trade practices; however, no new Section 301 Tariffs have been published since the review process is ongoing.
U.S. tariff policies continue to evolve, as well as the corresponding impacts on global trade policies. As a result, our risks and mitigation plans, as further described below, will also continue to evolve as further developments arise. Any further alteration of trade agreements and terms between China, Vietnam,
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Mexico and the U.S., including limiting trade with China, Vietnam and Mexico, imposing additional tariffs on imports from China, Vietnam or Mexico and potentially imposing other restrictions on imports from China, Vietnam or Mexico, to the U.S., may result in further or higher tariffs or retaliatory trade measures by China, Vietnam or Mexico, all of which could have a material adverse effect on our business and operating results.
We are continuing to assess our incremental tariff cost exposure in light of continuing changes to global tariff policies and the full extent of our potential mitigation plans, as well as the associated timing to implement such plans and realize the anticipated benefits. To mitigate our risk of ongoing exposure to tariffs, we have initiated significant efforts to diversify our production outside of China into regions where we expect tariffs or overall costs to be lower and to source the same product in more than one region, to the extent it is possible and not cost-prohibitive. In addition to the uncertainty from evolving global tariff policies, we expect unfavorable cascading impacts on inflation, consumer confidence, employment and overall macroeconomic conditions, all of which may adversely impact our sales, results of operations and cash flows.
During fiscal 2026 and the first quarter of fiscal 2027, the impact of the tariffs adversely impacted our cost of goods sold. Our cost of goods sold during the first quarter of fiscal 2027 included $12.2 million of additional pre-tax tariff costs, net of the refunds recognized described above, compared to a de minimis impact in the prior year period when tariffs were first introduced and had not cycled through our cost of goods sold. While we successfully implemented strategic price increases during fiscal 2026 to help mitigate the impact of tariffs, we believe the benefit to net sales revenue is entirely offset by reduced unit sales volumes due to consumer price elasticity. Our net sales revenue during the first quarter of fiscal 2026 was negatively impacted by a combination of factors including the pause or cancellation of direct import orders from China by certain of our key retailers in response to increased tariff rates, a slowdown in retailer orders following pull forward activity in the fourth quarter of fiscal 2025 due to tariff uncertainty and lower consumer confidence and demand. In addition, net sales revenue during the first quarter of fiscal 2026 was negatively impacted by evolving dynamics in the China market, including a shift toward localized fulfillment models and heightened competition from domestic sellers benefiting from government subsidies. In addition to the uncertainty from evolving global tariff policies, we experienced and expect continued unfavorable cascading impacts on inflation, consumer confidence, employment and overall macroeconomic conditions, all of which may continue to adversely impact our sales, results of operations and cash flows.
Impact of Macroeconomic Trends
The Federal Open Market Committee lowered the benchmark interest rate by 50 basis points and 25 basis points during the third and fourth quarters of fiscal 2026, respectively, resulting in lower average interest rates incurred during the first three months of fiscal 2027 compared to the same period last year. As of May 31, 2026 and February 28, 2026, $425 million and $325 million of the outstanding principal balance under the Credit Agreement (as defined below), respectively, was hedged with interest rate swaps to fix the interest rate we pay. The weighted average interest rates on borrowings outstanding under the Credit Agreement inclusive of the impact of our interest rate swaps as of May 31, 2026 and February 28, 2026 were 5.6% and 5.7%, respectively. The weighted average interest rate on borrowings hedged with interest rate swaps was 3.3% as of both May 31, 2026 and February 28, 2026. As of May 31, 2026 and February 28, 2026, the Term SOFR interest rates (as defined in the Credit Agreement) were 3.6% and 3.7%, respectively. While the actual timing and extent of additional future changes in interest rates remains unknown, lower average interest rates would reduce interest expense on our outstanding variable rate debt not subject to the interest rate swaps. The financial markets, the global economy and global supply chain may also be adversely affected by the current or anticipated impact of military conflicts or other geopolitical events, as well as recent U.S. tariff policies, that are continuing to evolve and the corresponding impacts on global trade. Most recently, the outcome of the ongoing Israel-United States and Iran conflict is highly unpredictable and could lead to significant market and other disruptions,
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including significant volatility in the commodity prices and supply of energy resources and supply chain interruptions. High inflation has also negatively impacted consumer disposable income, credit availability and spending, among others, which have adversely impacted our business, financial condition, cash flows and results of operations during fiscal 2026 and the first quarter of fiscal 2027 and may continue to have an adverse impact during the remainder of fiscal 2027. Evolving global tariff policies, military conflicts or geopolitical events (such as the Israel-United States and Iran conflict) could adversely impact inflation and interest rates which could further negatively impact consumer disposable income, credit availability and spending. See further discussion below under “Consumer Spending and Changes in Shopping Preferences.” We expect continued uncertainty in our business and the global economy due to pressure from inflation, tariffs, consumer confidence and the Israel-United States and Iran conflict, any of which may adversely impact our results.
Consumer Spending and Changes in Shopping Preferences
Our business depends upon discretionary consumer demand for most of our products and primarily operates within mature and highly developed consumer markets. The principal driver of our operating performance is the strength of the U.S. retail economy. Approximately 72% and 69% of our consolidated net sales revenue was from U.S. shipments during the three months ended May 31, 2026 and 2025, respectively.
Among other things, high levels of inflation, interest rates, military conflicts or other geopolitical events, and tariffs may negatively impact consumer disposable income, credit availability and spending. Consumer purchases of discretionary items, including some of the products that we offer, generally decline during recessionary periods or periods of economic uncertainty, when disposable income is reduced or when there is a reduction in consumer confidence. Dynamic changes in consumer spending and shopping patterns are also having an impact on retailer inventory levels. Our ability to sell to retailers is predicated on their ability to sell to the end consumer. During fiscal 2026 and the first quarter of fiscal 2027, we experienced continued competition within our Beauty & Wellness segment and in the insulated beverageware category. In addition, during fiscal 2026, we experienced lower replenishment orders in line with softer consumer demand and discretionary spending and continued competition, which adversely impacted our sales, results of operations and cash flows. During the first quarter of fiscal 2027, this trend continued in our Beauty business. If orders from our retail customers continue to be adversely impacted, our sales, results of operations and cash flows may continue to be adversely impacted. We expect continued uncertainty in our business and the global economy due to inflation, evolving global tariff policies, continued competition and changes in consumer spending patterns. Accordingly, our liquidity and financial results could be impacted in ways that we are not able to predict today.
Our concentration of sales reflects the continued evolution of consumer shopping preferences. Our net sales to pure-play online retailers and retail customers fulfilling end-consumer online orders, as well as our own online sales directly to consumers (collectively “online channel net sales”) comprised approximately 28% of our total consolidated net sales revenue for the three months ended May 31, 2026, and grew approximately 29% compared to the same period in the prior year. For the three months ended May 31, 2025, our online channel net sales comprised approximately 23% of our total consolidated net sales revenue, and declined approximately 18% compared to the same period in the prior year.
EPA Compliance Costs
During fiscal 2022 and 2023, we were in discussions with the U.S. Environmental Protection Agency (“the EPA”) regarding the compliance of packaging and labeling claims on certain of our products in the air and water filtration and humidification categories within the Beauty & Wellness segment that are sold in the U.S. The EPA did not raise any product quality, safety or performance issues. As a result of these packaging and labeling compliance discussions, we completed the repackaging and relabeling of impacted products during fiscal 2023. We continue to have ongoing settlement discussions with the EPA related to this matter. As of February 28, 2026, we accrued an estimated liability of $4.4 million, which
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represents our best estimate of probable settlement costs related to this matter. See Note 8 to the accompanying condensed consolidated financial statements for additional information.
Talcum Powder Litigation Related to the Fiscal 2022 Personal Care Divestiture
In fiscal 2022, we completed the sale of our North America personal care business to HRB Brands LLC (“HRB Brands”). After the sale, we were named as a defendant in multiple lawsuits related to the use of personal care products containing talcum powder, primarily Brut deodorant and Ammens powder sold by our wholly-owned subsidiary, Idelle Labs, Ltd. We tendered indemnification of these cases to HRB Brands, which assumed control of the defense of the claims. After many years, during the fourth quarter of fiscal 2026, HRB Brands asserted that it was contesting the indemnification of these cases and tendered the indemnification back to us. Consequently, in order to protect the Company and its rights and defenses, we began to defend these cases. The Company maintains its position that HRB Brands is obligated to defend and indemnify the Company against these claims and plans to vigorously contest HRB Brands’ position. With respect to the talcum powder cases, we believe we have substantial defenses to the claims. The ultimate outcome of enforcing our indemnification claims against HRB Brands and the litigation relating to the talcum cases is inherently uncertain, and we cannot predict its resolution. During the first quarter of fiscal 2027, we paid approximately $1.0 million in settlements of these cases and accrued an additional $1.3 million for potential settlements and legal fees. As of May 31, 2026, we had an estimated liability of approximately $1.8 million. We cannot estimate the amount or range of amounts by which the liability may exceed the accrual established because of (i) the inherent difficulty in projecting the number of claims that have not yet been asserted or the time period in which future claims may be asserted, (ii) the complaints nearly always assert claims against multiple defendants where the damages alleged are typically not attributed to individual defendants so that a defendant’s share of liability may turn on the law of joint and several liability, which can vary by state, and (iii) the many factors, developments and inherent uncertainties involved with litigation that could affect the Company’s estimate of the liability. For additional information, see Note 8 to the accompanying condensed consolidated financial statements.
Securities Class Action Lawsuit
On June 2, 2026, the Company and certain of its officers were named as defendants in a purported federal securities class action lawsuit filed in the United States District Court for the Western District of Texas. The complaint alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b‑5 relating to certain prior disclosures of the Company. The plaintiff seeks to represent a class of shareholders who purchased or otherwise acquired the Company’s common stock between April 24, 2024 and October 8, 2025. The Company believes the allegations asserted in the complaint are without merit and intends to defend them vigorously. At this early stage of the proceedings, the Company is unable to predict the outcome of this matter or reasonably estimate the possible loss or range of loss, if any.
Foreign Currency Exchange Rate Fluctuations
Due to the nature of our operations, we have exposure to the impact of fluctuations in exchange rates from transactions that are denominated in a currency other than our functional currency (the U.S. Dollar). Such transactions include sales and operating expenses. The most significant currencies affecting our operating results are the Euro, British Pound and Canadian Dollar.
For the three months ended May 31, 2026, changes in foreign currency exchange rates had a favorable year-over-year impact on consolidated U.S. Dollar reported net sales revenue of approximately $2.9 million, or 0.8%, compared to an unfavorable year-over-year impact of $1.0 million, or 0.2%, for the same period last year.
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Variability of the Cough/Cold/Flu Season
Sales in several of our Beauty & Wellness categories are highly correlated to the severity of winter weather and cough/cold/flu incidence. In the U.S., the cough/cold/flu season historically runs from November through March, with peak activity normally in January to March. The 2025-2026 and 2024-2025 cough/cold/flu seasons were below historical averages seen prior to the impact of COVID-19.
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RESULTS OF OPERATIONS
The following table provides selected operating data, in U.S. Dollars, as a percentage of net sales revenue, and as a year-over-year percentage change.
| Three Months Ended May 31, | % of Sales Revenue, net | |||||||||||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | $ Change | % Change | 2026 | 2025 | ||||||||||||||||||||||||||
| Sales revenue by segment, net | ||||||||||||||||||||||||||||||||
| Home & Outdoor | $ | 194,923 | $ | 177,983 | $ | 16,940 | 9.5 | % | 48.5 | % | 47.9 | % | ||||||||||||||||||||
| Beauty & Wellness | 207,192 | 193,672 | 13,520 | 7.0 | % | 51.5 | % | 52.1 | % | |||||||||||||||||||||||
| Total sales revenue, net | 402,115 | 371,655 | 30,460 | 8.2 | % | 100.0 | % | 100.0 | % | |||||||||||||||||||||||
| Cost of goods sold | 217,260 | 196,644 | 20,616 | 10.5 | % | 54.0 | % | 52.9 | % | |||||||||||||||||||||||
| Gross profit | 184,855 | 175,011 | 9,844 | 5.6 | % | 46.0 | % | 47.1 | % | |||||||||||||||||||||||
SG&A | 124,506 | 167,664 | (43,158) | (25.7) | % | 31.0 | % | 45.1 | % | |||||||||||||||||||||||
| Asset impairment charges | — | 414,385 | (414,385) | * | — | % | 111.5 | % | ||||||||||||||||||||||||
Operating income (loss) | 60,349 | (407,038) | 467,387 | * | 15.0 | % | (109.5) | % | ||||||||||||||||||||||||
| Non-operating income, net | 218 | 308 | (90) | (29.2) | % | 0.1 | % | 0.1 | % | |||||||||||||||||||||||
| Interest expense | 12,243 | 13,808 | (1,565) | (11.3) | % | 3.0 | % | 3.7 | % | |||||||||||||||||||||||
| Income (loss) before income tax | 48,324 | (420,538) | 468,862 | * | 12.0 | % | (113.2) | % | ||||||||||||||||||||||||
| Income tax expense | 12,562 | 30,180 | (17,618) | (58.4) | % | 3.1 | % | 8.1 | % | |||||||||||||||||||||||
| Net income (loss) | $ | 35,762 | $ | (450,718) | $ | 486,480 | * | 8.9 | % | (121.3) | % | |||||||||||||||||||||
* Calculation is not meaningful.
First Quarter Fiscal 2027 Financial Results
•Consolidated net sales revenue increased 8.2%, or $30.5 million, to $402.1 million for the three months ended May 31, 2026, compared to $371.7 million for the same period last year.
•Consolidated operating income was $60.3 million for the three months ended May 31, 2026, which includes a gain of $54.9 million from the sale of a distribution facility, compared to consolidated operating loss of $407.0 million for the same period last year. Consolidated operating loss for the three months ended May 31, 2025 included pre-tax asset impairment charges of $414.4 million. Consolidated operating margin increased to 15.0% of consolidated net sales revenue for the three months ended May 31, 2026, compared to (109.5)% for the same period last year.
•Consolidated adjusted operating income was $16.1 million for both the three months ended May 31, 2026 and 2025. Consolidated adjusted operating margin decreased 0.3 percentage points to 4.0% of consolidated net sales revenue for the three months ended May 31, 2026, compared to 4.3% for the same period last year.
•Net income was $35.8 million for the three months ended May 31, 2026, compared to net loss of $450.7 million for the same period last year. Diluted earnings per share was $1.51 for the three months ended May 31, 2026, compared to diluted loss per share of $19.65 for the same period last year.
•Adjusted income decreased 58.3%, or $5.5 million, to $4.0 million for the three months ended May 31, 2026, compared to $9.5 million for the same period last year. Adjusted diluted earnings per share decreased 58.5% to $0.17 for the three months ended May 31, 2026, compared to $0.41 for the same period last year.
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Consolidated and Segment Net Sales Revenue
The following table summarizes the impact that Organic business and foreign currency had on our net sales revenue by segment:
| Three Months Ended May 31, | |||||||||||||||||
| (in thousands) | Home & Outdoor | Beauty & Wellness | Total | ||||||||||||||
Fiscal 2026 sales revenue, net | $ | 177,983 | $ | 193,672 | $ | 371,655 | |||||||||||
| Organic business | 15,623 | 11,963 | 27,586 | ||||||||||||||
| Impact of foreign currency | 1,317 | 1,557 | 2,874 | ||||||||||||||
| Change in sales revenue, net | 16,940 | 13,520 | 30,460 | ||||||||||||||
Fiscal 2027 sales revenue, net | $ | 194,923 | $ | 207,192 | $ | 402,115 | |||||||||||
| Total net sales revenue growth | 9.5 | % | 7.0 | % | 8.2 | % | |||||||||||
| Organic business | 8.8 | % | 6.2 | % | 7.4 | % | |||||||||||
| Impact of foreign currency | 0.7 | % | 0.8 | % | 0.8 | % | |||||||||||
In the above table, Organic business refers to our net sales revenue associated with product lines or brands after the first twelve months from the date the product line or brand was acquired, excluding the impact that foreign currency remeasurement had on reported net sales revenue. Net sales revenue from internally developed brands or product lines is considered Organic business activity.
Consolidated Net Sales Revenue
Comparison of First Quarter Fiscal 2027 to First Quarter Fiscal 2026
Consolidated net sales revenue increased $30.5 million, or 8.2%, to $402.1 million, compared to $371.7 million. The increase was primarily driven by:
•an increase in Home & Outdoor due to strong international demand for packs, new product launches and the favorable comparative impact of retailer pull-forward activity in the fourth quarter of fiscal 2025 in response to tariff uncertainty; and
•an increase in Beauty & Wellness driven by sales of nail care, fans and thermometers, which was partially offset by a decline in hair appliances and prestige hair care products.
Consolidated net sales revenue was favorably impacted by net foreign currency fluctuations of approximately $2.9 million, or 0.8%.
Segment Net Sales Revenue
Home & Outdoor
Comparison of First Quarter Fiscal 2027 to First Quarter Fiscal 2026
Net sales revenue increased $16.9 million, or 9.5%, to $194.9 million, compared to $178.0 million. The increase was primarily driven by:
•the favorable comparative impact of lower first quarter fiscal 2026 sales due to retailer pull-forward activity in the fourth quarter of fiscal 2025 in response to tariff uncertainty and potential supply disruption;
•strong international demand for technical, lifestyle and travel packs;
•incremental sales from new product launches; and
•higher sales from expanded distribution in the home and insulated beverageware categories.
These factors were partially offset by lower international sales in the home and insulated beverageware categories.
31
Segment net sales revenue was favorably impacted by net foreign currency fluctuations of approximately $1.3 million, or 0.7%.
Beauty & Wellness
Comparison of First Quarter Fiscal 2027 to First Quarter Fiscal 2026
Net sales revenue increased $13.5 million, or 7.0%, to $207.2 million, compared to $193.7 million. The increase was primarily driven by:
•an increase in nail care due to new and expanded distribution;
•an increase in fan and thermometer sales benefitting from the favorable comparative impact of tariff related cancellations of direct import orders and disruption in the China thermometry market during the same period last year; and
•an increase in Wellness driven by incremental sales from new product launches.
These factors were partially offset by a decline in Beauty hair appliances and prestige hair care products primarily due to softer consumer demand, continued competition and reduced replenishment orders from retail customers.
Segment net sales revenue was favorably impacted by net foreign currency fluctuations of approximately $1.6 million, or 0.8%.
Consolidated Gross Profit Margin
Comparison of First Quarter Fiscal 2027 to First Quarter Fiscal 2026
Consolidated gross profit margin decreased 1.1 percentage points to 46.0%, compared to 47.1%. The decrease in consolidated gross profit margin was primarily due to the net unfavorable impact of tariffs, a less favorable inventory obsolescence impact year-over-year, and an unfavorable customer mix within Home & Outdoor.
Consolidated SG&A
Comparison of First Quarter Fiscal 2027 to First Quarter Fiscal 2026
Consolidated SG&A ratio decreased 14.1 percentage points to 31.0%, compared to 45.1%. The decrease in the consolidated SG&A ratio was primarily due to:
•a gain on the sale of our distribution facility in Southaven, Mississippi of $54.9 million;
•the favorable comparative impact of CEO succession costs of $3.5 million recognized in the prior year period;
•lower outbound freight costs;
•a decrease in depreciation and amortization expense; and
•the impact of favorable operating leverage due to the increase in net sales.
These factors were partially offset by an increase in share-based compensation expense.
Asset Impairment Charges
We did not record any asset impairment charges during the first quarter of fiscal 2027. During the first quarter of fiscal 2026, we recorded asset impairment charges of $414.4 million ($436.2 million after tax) to reduce our goodwill by $317.0 million and our other intangible assets by $97.4 million. For additional information regarding the testing and analysis performed, see Note 5 to the accompanying condensed consolidated financial statements.
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Operating Income (Loss), Operating Margin, Adjusted Operating Income (non-GAAP) and Adjusted Operating Margin (non-GAAP) by Segment
In order to provide a better understanding of the impact of certain items on our operating income (loss), the tables that follow report the comparative pre-tax impact of asset impairment charges, CEO succession costs, gain on sale of distribution facility, amortization of intangible assets and non-cash share-based compensation, as applicable, on operating income (loss) and operating margin for each segment and in total for the periods presented below. Adjusted operating income and adjusted operating margin may be considered non-GAAP financial measures as contemplated by SEC Regulation G, Rule 100. For additional information regarding management’s decision to present this non-GAAP financial information, see the introduction to this Item 2., “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
| Three Months Ended May 31, 2026 | |||||||||||||||||||||||||||||||||||
| (in thousands) | Home & Outdoor | Beauty & Wellness | Total | ||||||||||||||||||||||||||||||||
Operating income, as reported (GAAP) | $ | 8,165 | 4.2 | % | $ | 52,184 | 25.2 | % | $ | 60,349 | 15.0 | % | |||||||||||||||||||||||
| Gain on sale of distribution facility | — | — | % | (54,854) | (26.5) | % | (54,854) | (13.6) | % | ||||||||||||||||||||||||||
| Subtotal | 8,165 | 4.2 | % | (2,670) | (1.3) | % | 5,495 | 1.4 | % | ||||||||||||||||||||||||||
| Amortization of intangible assets | 1,373 | 0.7 | % | 2,782 | 1.3 | % | 4,155 | 1.0 | % | ||||||||||||||||||||||||||
| Non-cash share-based compensation | 2,794 | 1.4 | % | 3,643 | 1.8 | % | 6,437 | 1.6 | % | ||||||||||||||||||||||||||
| Adjusted operating income (non-GAAP) | $ | 12,332 | 6.3 | % | $ | 3,755 | 1.8 | % | $ | 16,087 | 4.0 | % | |||||||||||||||||||||||
| Three Months Ended May 31, 2025 | |||||||||||||||||||||||||||||||||||
| (in thousands) | Home & Outdoor | Beauty & Wellness | Total | ||||||||||||||||||||||||||||||||
Operating loss, as reported (GAAP) | $ | (213,793) | (120.1) | % | $ | (193,245) | (99.8) | % | $ | (407,038) | (109.5) | % | |||||||||||||||||||||||
| Asset impairment charges | 219,095 | 123.1 | % | 195,290 | 100.8 | % | 414,385 | 111.5 | % | ||||||||||||||||||||||||||
| CEO succession costs | 1,742 | 1.0 | % | 1,742 | 0.9 | % | 3,484 | 0.9 | % | ||||||||||||||||||||||||||
| Subtotal | 7,044 | 4.0 | % | 3,787 | 2.0 | % | 10,831 | 2.9 | % | ||||||||||||||||||||||||||
| Amortization of intangible assets | 1,782 | 1.0 | % | 3,207 | 1.7 | % | 4,989 | 1.3 | % | ||||||||||||||||||||||||||
| Non-cash share-based compensation | 34 | — | % | 262 | 0.1 | % | 296 | 0.1 | % | ||||||||||||||||||||||||||
| Adjusted operating income (non-GAAP) | $ | 8,860 | 5.0 | % | $ | 7,256 | |||||||||||||||||||||||||||||
Next expected filings
- ~2026-10-09 10-Q expected by 2026-10-10 (in 92 days)
- ~2027-01-08 10-Q expected by 2027-01-09 (in 183 days)
- ~2027-04-22 10-K expected by 2027-04-22 (in 287 days)
- ~2027-07-08 10-Q expected by 2027-07-09 (in 364 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-07-08 8-K Earnings Release; Financial Statements and Exhibits
- 2026-07-08 10-Q Quarterly Report
- 2026-06-24 DEF 14A Proxy Statement
- 2026-05-19 8-K Officer/Director Change; Financial Statements and Exhibits
- 2026-04-23 8-K Earnings Release; Financial Statements and Exhibits
- 2026-04-23 10-K Annual Report
- 2026-01-08 10-Q Quarterly Report
- 2026-01-08 8-K Earnings Release; Financial Statements and Exhibits
- 2025-11-25 8-K Material Agreement Entered; Regulation FD Disclosure; Financial Statements and Exhibits
- 2025-11-04 8-K Officer/Director Change
- 2025-10-22 8-K Officer/Director Change
- 2025-10-09 10-Q Quarterly Report
- 2025-10-09 8-K Earnings Release; Financial Statements and Exhibits
- 2025-08-21 8-K Officer/Director Change; Shareholder Vote Results; Financial Statements and Exhibits
- 2025-08-14 8-K Officer/Director Change; Regulation FD Disclosure; Financial Statements and Exhibits