Helen of Troy (HELE) delivered a challenging QQ2 2026, with consolidated net sales of $431.8 million and a GAAP operating loss of $315.7 million, driven by a $326.4 million non-cash impairment charge and tariff-related headwinds. The quarter reflected a broad margin compression: gross margin at 44.2% and an adjusted operating margin of 6.2%, down notably from the prior year. The impairment and tariff dynamics weighed heavily on profitability, while Olive & June contributed $33.4 million of revenue and is advancing as a meaningful growth vector within the portfolio. Management underscored a deliberate renewal plan, prioritizing consumer-centric innovation, streamlined execution, and capital discipline to restore higher-margin growth and cash generation over time.
Management presented a multi-quarter pathway to stabilization and growth anchored by four pillars: (1) accelerate execution by simplifying the operating model and placing brands closer to the consumer; (2) refocus on core brands with high growth potential and improve design, engineering, and marketing to deliver best-in-class products; (3) strengthen balance sheet and free cash flow to support debt reduction and disciplined capital allocation; and (4) continue tariff mitigation through diversification, pricing actions, and cost reductions. While near-term volatility remains, the company communicates a belief that transitory tariff and mix effects will moderate as pricing actions take hold and supply chains diversify. The full-year guidance contemplates continued headwinds but expects improvement in the second half of fiscal 2026 and into fiscal 2027 as the company cycles out tariff drag and leverages new product momentum. Investors should monitor (i) tariff tailwinds/offsets and price realization, (ii) Olive & June contribution to profitability, (iii) progress on Project Pegasus cost initiatives, and (iv) the pace of debt reduction toward a target leverage around 2x.