Helen of Troy Limited ( HELE ) saw its shares tumble by over 20% on Thursday after the company reported a disappointing first quarter. The stark miss not only highlights the company’s struggles under the weight of ongoing tariff pressures but also raises serious concerns for investors about its future profitability.

The company reported first quarter adjusted earnings per share of 41 cents, missing the analyst consensus estimate of 90 cents.

Quarterly sales of $371.655 million (down 10.8% year over year), missed the Street view of $398.205 million.

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“The first quarter was challenging, with tariff-related impacts making up approximately 8 percentage points of the 10.8% consolidated revenue decline, said interim CEO Brian L. Grass. 

Home & Outdoor net sales fell 10.3% to $178.0 million, while Beauty & Wellness revenue declined 11.3% to $193.7 million.

Helen of Troy registered an adjusted operating margin of 4.3% compared to 10.3% in the year-ago period. Non-GAAP adjusted EBITDA margin was 6.9% compared to 12.6%.

“We now believe we can reduce our fiscal 2026 net tariff impact on operating income to less than $15 million based on tariffs currently in place,” the CEO adds. 

The company exited the quarter with cash and equivalents totaling $22.7 million and inventory valued at $484.1 million.

Outlook: Due to evolving global tariff policies and related business and macroeconomic uncertainty, the company is only providing an outlook for the second quarter of fiscal 2026 at this time.

To mitigate the company’s risk of ongoing exposure to tariffs, it has initiated significant efforts to diversify its production outside of China into regions where it expects tariffs or overall costs to be lower. Additionally, it sources the same product in more than one region, to the extent possible and not cost-prohibitive.

Helen of Troy said it now expects to reduce its cost of goods sold exposed to China tariffs to less than 25% by the end of fiscal 2026. 

The company expects second-quarter adjusted EPS between 45 cents and 60 cents, significantly below the $1.17 analyst estimate.

Helen of Troy also projects revenue between $408 million and $432 million, missing the Street forecast of $474.97 million.

The company projects a decline in Home & Outdoor net sales of 16.5% to 11.5% year over year, with Beauty & Wellness net sales declining 11.3% to 6.1%.

Price Action: HELE shares are trading lower by 22.5% to $24.00 at last check Thursday.

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