The Wall Street Journal (09/10/2018) - Helen of Troy Ltd. HELE 1.28% reported its profit in the latest period increased by almost five times from a year earlier as the maker of home goods and beauty products reported strong sales of its higher-margins brands.

But executives warned on a conference call with analysts Tuesday the company’s adjusted earnings could fall in the current quarter as Helen spends more money on marketing and expects to pay more for goods produced in China because of tariffs.

Shares of the company initially jumped early Tuesday on the earnings report, but Helen’s stock gave back those gains amid fears over the impact of tariffs. Shares of Helen closed Tuesday at $124.27, up 1.3%.

The company said sales of its “Leadership Brands,” including Braun grooming products, OXO kitchen tools and Hydro Flask stainless-steel water bottles, grew 21% during the quarter ending in August to more than $319 million. Other sales fell 7% to $75 million for the period.

Total sales rose 14% from a year earlier to $394 million, surpassing the $349.2 million in revenue expected by analysts polled by FactSet.

Second-quarter profit rose to $44 million, or $1.66 a share, compared with $8.9 million, or 33 cents a share, a year earlier. Adjusted earnings per share rose to $1.98 from $1.65. Analysts polled by FactSet expected $1.59 a share in adjusted earnings.

During the conference call, Chief Financial Officer Brian Grass said the company’s adjusted earnings per share during its third-quarter period could be flat or fall as much as 8% compared with the comparable period last year.

That could happen because of “the concentration of marketing spending” it plans for the quarter and because tariffs are expected to increase its cost of goods, he said.

Helen disclosed in its latest annual report it sourced 74% of goods from the “Far East,” mostly in China.

“[The] current trade environment is certainly a concern and could provide a meaningful headwind next fiscal year if we ultimately realize the full-year impact of tariff changes in their current form,” Mr. Grass told analysts.

Despite worries over tariffs, Helen raised its sales outlook for the year.

The company raised its outlook for sales during its 2019 fiscal year to a range of $1.535 billion to $1.56 billion, up from the previous range of $1.485 billion to $1.51 billion. It increased its adjusted per-share earnings guidance for the period to $7.65 to $7.90, up from $7.45 to $7.70.

Read more at https://www.wsj.com/articles/helen-of-troy-profit-jumps-on-strong-sales-of-core-brands-1539092287