Amidst fears of a pandemic-induced recession and a punishing market sell-off, El Paso-based Helen of Troy has seen its stock price plunge.
The company’s shares have fallen 57% over the past 30 days, erasing the last year’s worth of gains.
Founded as a wig shop in 1968 in Downtown El Paso, Helen of Troy is now a global consumer products giant and one of only two publicly traded companies headquartered in El Paso, where it employs about 400 people.
What accounts for the drop in the company’s share price?
“It’s the fear of recession,” says Linda Bolton Weiser, a senior analyst at New York-based D.A. Davidson, which has maintained its buy rating.
Helen of Troy’s brands include OXO, Hydro Flask, Vicks, Braun, Honeywell, Pur and Hot Tools.
While panic buying has cleared store shelves of toilet paper and cleansers, consumers are putting off purchases of durable goods – like OXO kitchen gadgets, Hydro Flask water bottles and Braun electric shavers. So analysts expect sales of some of the company’s biggest moneymakers to take a hit.
The response to the pandemic could also boost sales of some of Helen of Troy’s products in the short term, especially sales of its Vicks products, Bolton Weiser said.
“Certainly, the thermometer sales are going through the roof,” she said, adding that the company sells them online in China.
The pandemic has caused a surge in online shopping – Amazon announced last week it is adding 100,000 positions across the U.S. – and Helen of Troy is positioned to benefit from that surge. Amazon is its No. 2 customer globally, Helen of Troy CEO Julien Mininberg told El Paso Inc. last year.
“The good thing about Helen of Troy is that they are very well developed in their e-commerce business,” Bolton Weiser said.
The company does manufacture many of its products in China where the virus originated, so it is exposed to supply chain disruptions. But as factories come back online, the supply impact is waning, said Bolton Weiser, who doesn’t expect supply problems to weigh too heavily on Helen of Troy’s bottom line.
The company doesn’t report its earnings until early April when it is expected to release its fourth-quarter financial results and face questions from analysts.
A spokesperson for Helen of Troy declined to comment on the pandemic impact, saying that the company is in the pre-earnings-report period when it doesn’t make public disclosures.
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