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Helen of Troy saw the economic clouds gathering. Now, the consumer products company that makes Vicks, Osprey and OXO is entering 2023 with a new structure moving into place.
“With the macro environment not indicative of a rapid reacceleration due to higher inflation, higher interest rates, uncertainty about the future financial health of consumers and foreign exchange headwinds, we used this summer to take a hard look at ourselves,” CEO Julien Mininberg told analysts during the company’s quarterly earnings call on Thursday. “We zeroed-in on ways to accelerate efficiency projects already underway and identified a comprehensive set of new savings opportunities.”
Restructuring and layoffs
This will mean the El Paso, Texas-based company is moving forward with a smaller team. Helen of Troy is planning to lay off 10% of its workforce as part of a restructuring. The company plans to complete the workforce reductions by March 1. It comes on a week when Amazon, Salesforce, Everlane and Stitch Fix also announced layoffs.
“The new structure will reduce the size of our global workforce with impact across all business segments, departments and shared services,” said COO Noel Geoffroy. “We did not take this decision lightly.”
As part of the restructuring plan, which it calls Project Pegasus, Helen of Troy announced the following moves:
- Consolidate three business segments to two: Health & Wellness and Beauty will now be Beauty & Wellness, operating alongside the existing Home & Outdoor.
- Create a North American Regional Marketing Organization: Like EMEA or Asia Pacific, this organization will be responsible for go-to-market activities across channels. This is designed to reduce savings, as it will limit duplication of efforts.
- Centralize operations: Operations and finance will be under the chief of global operations, who will create a center of excellence on supply and demand planning.
There are also signs that the company is looking to pare back and focus. Geoffroy said three additional focus areas of its work on Project Pegasus going forward include “sharpening our discretionary spending choices, SKU rationalization, and assessing which brands might be good candidates to exit.”
It comes in a quarter when the company’s results were better than expected. Core net sales were down 10% year-over-year, while gross margin and cashflow improved. Earnings per share, as measured on a core adjusted diluted basis were down 26.1% from the same quarter last year. Adjusted operating margins declined by 0.4% to 16.6%.
Mininberg described how the company is seeing a slowdown in consumer spending:
During the third quarter, consumers continue to tighten their purchasing patterns in some categories in response to high inflation and higher interest rates. As consumption slowed, some retailers continued their conservative repurchase patterns to further reduce their inventory. Our promotions across online and in-store channels were slightly elevated on certain parts of our business, such as Beauty and Health & Wellness, helping to support the consumer trends we are seeing and helping our retail partners better reach their inventory reduction goals. The holiday season started off slower than expected with discretionary categories generally under pressure from these trends. In some categories, performance improved in late December, ending largely in line with our expectations.
Mininberg added that the company is seeing increased cases of cold, flu and COVID sub-variants, which resulted in a sales increase for thermometers, humidifiers and inhalants from Vicks and Braun. More inventory rebalancing by retailers is also leading shipments to tick up to kick off the most recent quarter, Mininberg said.
In ecommerce, the company highlighted that stainless steel water brand Hydro Flask is the category leader on the world’s largest online retailer, which is presumably a reference to Amazon. The OXO brand specifically and direct-to-consumer in particular also performed well during the Black Friday-Cyber Monday period, Mininberg said.
“We went from a third-party manager of our online sales at the biggest online retailer to first-party, and that made a big difference for us,” Mininberg said. “DTC, in general, is a big investment area for us.”
Trending in Brand News
On the Move has the latest from Amazon, Lovesac and more.
This week, leadership is changing at GameStop, Sorel and Beautycounter. Meanwhile, key executives are departing at Amazon, Wayfair and Lovesac.
Here’s a look at the latest shuffles:
GameStop CEO fired
GameStop announced the termination of Matthew Furlong as CEO on Wednesday. A brief statement did not provide a reason for the firing.
With the move, Chewy founder and activist investor Ryan Cohen was named executive chairman of the video game retailer. Cohen will be responsible for capital allocation and overseeing management.
It came as the company reported a 10% year-over-year decline in net sales for the first quarter. Meanwhile, the company’s net loss improved by 62%.
In an SEC filing, GameStop further added this “We believe the combination of these efforts to stabilize and optimize our core business and achieve sustained profitability while also focusing on capital allocation under Mr. Cohen’s leadership will further unlock long-term value creation for our stockholders.”
Cohen was revealed as GameStop's largest shareholder when he disclosed a 10% stake in the retailer in 2020. GameStop went on to become a leading name in the meme stock rise of 2021.
Sorel president steps down
Mark Nenow is stepping down as president of the Sorel brand in order to focus on his health.
After rising to the role in 2015, Nenow spearheaded a transformation of Columbia Sportswear-owned Sorel from a men’s workwear brand to a fashion-focused brand that led with a women’s offering of boots, sandals and sneakers.
“Mark led the brand to sales of $347 million in net sales in 2022,” said Columbia Sportswear CEO Tim Boyle, in a statement. “His leadership has been invaluable to this company, and we wish him the very best.”
Columbia will conduct a search for Nenow’s replacement. Craig Zanon, the company’s SVP of emerging brands, will lead Sorel in the interim.
Beautycounter appoints interim CEO
Beautycounter appointed board member Mindy Mackenzie as interim CEO, succeeding Marc Rey. According to the brand, Rey and the board “mutually decided to transition to a new phase of leadership for Beautycounter.”
McKenzie, a former executive at Carlyle, McKinsey and Jim Beam, will lead the company as it conducts a search for a permanent CEO. Additionally, former Natura & Co CEO Roberto Marques will join Beautycounter’s board as chair.
As part of the transition, Nicole Malozi is also joining the company as chief financial officer. She brings experience from Tatcha, Nike, and DFS Group Limited.
Amazon’s North America fulfillment chief departs
Melissa Nick, a VP of customer fulfillment for North America at Amazon, will leave the company, effective June 16, CNBC reported. Nick joined the company in 2014, and oversaw a region that included nearly 300 fulfillment centers. After doubling its supply chain footprint during the pandemic, Amazon recently reorganized its fulfillment operations to take a regional approach, as opposed to a national model that often resulted in items shipping across the country.
Wayfair’s chief commercial officer to retire
Jon Blotner (Courtesy photo)
Steve Oblak will retire from the role of chief commercial officer at home goods marketplace Wayfair. With the move, Jon Blotner will be promoted to chief commercial officer.
"Steve has served as a critical part of our leadership team and played a pivotal role in Wayfair's growth, helping us grow from a $250 million business when he joined to $12 billion in net revenue today,” said Wayfair CEO Niraj Shah, in a statement. “He oversaw countless milestones, from helping to launch the Wayfair brand as we brought together hundreds of sites into a single platform, to launching new categories, business lines, and geographies while overseeing our North American and European businesses, to leading our debut into physical retail.”
Blotner previously oversaw exclusive and specialty retail brands, as well as digital media at Wayfair. Before joining the company, he served as president of Gemvara.com prior to its 2016 acquisition by Berkshire Hathaway.
Lovesac announces CFO transition
Furniture retailer Lovesac said Donna Dellomo will retire as EVP and CFO, and move to an advisory role, effective June 30. Dellomo was with Lovesac for six years.
Keith Siegner was appointed as the next EVP and CFO. He brings experience as CFO of esports company Vindex, as well as executive roles at Yum! Brands, UBS Securities and Credit Suisse.
Additionally, Jack Krause will retire from the role of chief strategy officer, effective June 30. His responsibilities will be divided between CEO Shawn Nelson and president Mary Fox.
“Since joining Lovesac, Jack has played an instrumental role in transforming the Company into a true omni channel retailer by helping expand our physical touchpoints and digital platform as we continue to disrupt the industry,” said Nelson, in a statement.
NRF adds board members
The National Retail Federation announced the addition of five new board members. They include:
- Marguerite Adzick, founder and CEO, Addison Bay
- Harley Finkelstein, president, Shopify
- Ian Kahn, partner, PwC
- Sharon Leite, CEO, Ideal Image
- Carrie Tharp, VP, strategic industries, Google Cloud