EL PASO, Texas-In spite of a healthy gain in net sales, Helen of Troy reported a 4.6 percent drop in first-quarter net income, to $23.5 million.
The decline was due to a 59 percent increase in income tax expense in the quarter, which ended on May 31. In its statement on the quarterly results, Helen of Troy explained that the income-tax rise occurred because of an increase in the proportion of taxable income in higher tax-rate jurisdictions, which in itself came about because of its acquisitions of Kaz, the health-care and home-environment products manufacturer, and of the PUR water-purification business from Procter & Gamble.
First-quarter net sales picked up 10.6 percent to $300.2 million, a new record for the quarter. The gain was fueled by a 27.8 percent gain in sales from the health-care/home environment segment and an increase of 13.8 percent in sales from the housewares sector. Sales in the personal-care segment dropped 4.2 percent.
Helen of Troy’s gross margin in the first quarter was down 10 basis points to 40.4 percent, due to the effects of foreign-currency exchange rates on sales, higher air-freight costs in the personal-care segment, higher closeout sales in the housewares segment and cost increases in all of the company’s product categories. Selling, general and administrative expenses were up 13.6 percent in dollars and 80 basis points as a percentage of sales, to 30 percent.
Gerald Rubin, chairman, president and CEO, said Helen of Troy was able to set a new quarterly record in net sales in spite of continuing challenges across the global economy. Rubin said the company expects net sales to finish the current fiscal year at between $1.3 billion to $1.325 billion.