Helen of Troy Limited (NASDAQ:HELE) Q2 2024 Earnings Call Transcript

Noel Geoffroy: Yes, Susan. Good to hear from you. So I would say in Prestige, what we continue to see is — we see a lot of positive momentum in our liquids business, and I mentioned a couple of the innovations there that are doing particularly well. I would say our tool business is. We’ve got some innovation out there. It’s not as strong right now as the liquid business. I would say the consumer is looking to make some choices on where to spend money, the liquids is where we’re seeing more action. We’ve got a thickening spray that’s doing quite well, [first] (ph) control spray, these sorts of things are the things that are performing. I see a lot more innovation on tools coming in the future as we look forward. But those liquids are what are performing best for us right now.

Susan Anderson: Okay. Great. And then maybe just a follow-up on just kind of the cadence of the sales and inventory levels. I’m curious how comfortable you’re feeling about inventory levels at retail. I think last year, obviously, we had a lot of consolidation. I guess how are you feeling going into the holiday season just in the channel in general?

Noel Geoffroy: Just a general holiday outlook. Is that what you’re asking?

Susan Anderson: Yes. Just in terms of inventory levels out there. I mean, with the sales getting shifted into fourth quarter, I mean, do you feel like there’s still kind of pockets of higher inventory. Do you guys feel comfortable with where you’re at and then just also the industry in general?

Noel Geoffroy: Yes. I would say inventory levels, as Brian mentioned, aren’t at very high levels in retail right now. They’re relatively low and somewhat in line with consumer consumption. We’ve seen in a couple of places, I would say, more in the seasonal businesses like cough, cold where retail — a couple of retailers have done less of a quarter two load in and want to do more of a quarter three, quarter four replenishment model on some of those items like Vicks humidifiers and our consumables with Vicks. The good news is, we’ve got ample supply this year, more supply this year than we had in the prior year. So we’re ready for that when those orders come. I think in holiday, we continue to see good interest in — coming to your prior question, we see good interest in Drybar and Curlsmith kits.

Kits always do very well during the holiday season. So the combination of tool and some of these new liquids that are doing well, those sorts of things are what we’re preparing and getting strong traction on from retailers on the parts of our business that are more gift holiday in nature.

Susan Anderson: Okay. Great. That’s helpful. And then I guess just last, just on kind of the M&A environment. And as you guys get closer to that 2 time leverage target, how are you feeling about potentially being able to buy something again? And just curious if you’re seeing any attractive opportunities out there?

Brian Grass: I think that our leverage is coming down in line or maybe even slightly ahead of our expectations. So that’s positive and puts us in a good position. I think as we end the year and get below 2 times, we’re definitely in a position to be able to make an acquisition. But the other part of your question is, what are we seeing out there? I would say there is a flow of assets being available, but not a lot that meet our criteria. I would say the market is not strong in that regard currently in terms of quality assets that we would seriously consider that meet our criteria. I don’t know Jack is here as well. Maybe you want to add something, Jack?

Jack Jancin: I think Brian’s got it just right. There is more flow is starting to come in versus what it’s been in the last six months. But items or assets that fit the criteria are things that we are looking for. We’re not seeing those yet, but we’re going to continue to look, and when we find it, we would certainly lean into one when the time is right and inventory is ready.