Helen of Troy

Helen of Troy CEO Julien Mininberg revealed the new logo last Wednesday. The company is better known for its brands, which include OXO, Hydro Flask, Revlon, PUR and Vicks.

Founded as a wig shop in 1968 in Downtown El Paso, consumer products giant Helen of Troy is celebrating its 50th anniversary this year.

Now an almost $1.5-billion global enterprise and one of only two publicly traded companies headquartered in El Paso, Helen of Troy recently held an open house to mark the milestone. The day before the event, CEO Julien Mininberg sat down with El Paso Inc. in his El Paso office for an exclusive interview.

The five-year transformation plan Mininberg launched shortly after he became CEO in March 2014 is nearly complete, and for more than an hour, Mininberg talked about turning the company on its head, his wins and losses, and where he sees the greatest growth opportunities.

He made about $6.8 million in fiscal year 2018. That includes a $975,000 salary and performance-based bonuses and stock awards.

Helen of Troy, which is known for its OXO, Hydro Flask, PUR, Honeywell, Vicks and Braun brands, has about 1,500 employees, including 400 in El Paso. It has operations across the U.S., as well as in Canada, Mexico, Switzerland, China and Hong Kong.

Analysts who follow the company (NASDAQ: HELE) say Mininberg, who grew up in New York City and has an MBA from Yale University, has done well since he stepped into the job, and shareholders have responded positively. The company’s stock has doubled since Mininberg took the reins, closing Friday at $130.90 a share. In the quarter that ended May 31, the company’s net sales revenue increased 9 percent, hitting $354.7 million.

Mininberg recently visited with analysts in Canada, including with Linda Bolton Weiser, a senior analyst at New York-based D.A. Davidson, which gave Helen of Troy a buy rating this month.

“We came back with a very favorable feel for the way things are going,” Weiser said, pointing to the growth of the company’s brands, strong digital marketing and expectation that the company will expand its portfolio through merger and acquisition within the next year.

Since 2003, Helen of Troy has acquired eleven brands and divested one, selling Healthy Directions at a loss in December 2017. The company sold the nutritional supplements business for a total of $71 million only three years after buying it for $195 million.

“I would give them kudos for sticking their thumb in mud and pulling it out as quickly as possible,” said Steven Marotta, an equity analyst at C.L. King & Associates who follows Helen of Troy. “It was definitely troubled, but they didn’t sugar coat it and cut their losses quickly.”

The firm has given the company a buy rating, and the outlook is “very positive,” Marotta said.

El Paso businessman Gerald Rubin helmed Helen of Troy for most of its history – more than four decades – taking the company public in 1978. Rubin abruptly stepped down as CEO in 2014 after a falling out with the company’s board of directors and shareholders over his pay and the company’s direction.

At the time, Mininberg headed Helen of Troy’s largest business segment, health care/home environment. Before that, he worked for Procter and Gamble Co. for 15 years, eventually overseeing the company’s business in Central America.

Mininberg was immediately named CEO and launched what he refers to as a five-year transformation plan.

“I want people to understand that the company has made a meaningful evolution,” he said. “That is a key message.”

Q: Why have you kept the Helen of Troy headquarters in El Paso?

El Paso has been spectacular for us. We are very committed to El Paso. I often hear the question, “Are you considering going somewhere else?” It is not on our minds.

Q: What are the advantages for a global company?

The talent here is high quality. They are stable as a workforce, and we really appreciate the bilingual and bicultural skills of the workforce.

We also like our connection to the university. We recruit from UTEP and have a good relationship with UTEP President Dr. Natalicio and with the leaders in the business school. As a result, we hire regularly from the university.

I can also say it makes a big difference for us in the recruiting of outside people. This is a nice town, and you’re talking to a guy that was born and raised in Manhattan. I can tell you, this is a wonderful place. There are 300 days of sunshine a year, and the people are just an absolute joy. The cost of living is also attractive.

Q: I’ve had native Spanish speakers tell me your Spanish is top notch. How did you pick that up?

I’ll tell you my secret. I am very happy to have been married to a wonderful woman for 30 years – we just celebrated this summer. Her native language is Spanish. She grew up mainly in Puerto Rico. She came to the U.S. for university, and we met in college. We now have three great kids – Emily, Lena and Gabriel.

We lived in Latin America for about a decade with Proctor & Gamble. I value the culture and the people. I guess I learned long ago that if you speak to someone in their language, or at least try, you will connect better.

Q: Besides the electric utility, Helen of Troy is the only publicly traded company headquartered in El Paso. Why aren’t there more?

I can’t speak for other companies’ choices. All the other things I talked about are true, but they are somewhat undiscovered. El Paso is an undiscovered gem in that way.

It is a hub and spoke airport system that we work in in this world, and El Paso is clearly a spoke destination. I can see executives saying they would rather be in a hub.

It’s the reason why someone like me is better off based in a hub city. It’s easier to get a lot of places, including here, and I am here about a week a month. I have an apartment here.

Q: Where do you see the largest growth opportunities?

The growth prospects from here involve a couple of factors. Our leadership brands, they now represent just under 80 percent of the company’s revenue, and they are growing fast. Over the past four years, they have grown at an 11.4 percent annual clip. (OXO, Hydro Flask, PUR, Honeywell, Vicks and Braun)

That comes from a combination of investing in them, increasing overseas expansion and a ton of new innovation. The opportunity to double down in those areas is high. That’s probably the No. 1 growth opportunity in the company.

No. 2 is acquisition. Helen of Troy has a significant balance sheet in terms of its ability to borrow and cash flow. It also has a great history of turning acquisitions into profitable businesses that we can add value to.

Q: Can we expect any acquisitions soon?

There are some terrific prospects. We are looking all the time, and in the last couple of years, we have made some significant acquisitions.

Q: Your most recent acquisition, Hydro Flask, was a win for the company. Healthy Directions was a loss, and the company sold it for less than it bought it for.

Not all swings go over the fence, and if you swing and miss, you do have to deal with it. We did not have a successful acquisition and made the tough call to sell the business. We did the right thing.

If you are 100 percent successful on acquisitions, it means you are not swinging hard enough. If you are mostly unsuccessful, you may be swinging too hard. I can say in the last 15 years, the company has made roughly a dozen acquisitions and we’ve divested one of them. That is not a bad track record.

Q: Helen of Troy has poured a lot of its cash into stock buybacks, and is returning another $400 million to shareholders over three years. Has that limited the company’s ability to make acquisitions?

We have been aggressive on that subject. Since I took the helm at Helen of Troy, we’ve bought back more than 20 percent of the stock of the company. And yet our leverage ratio on our balance sheet is at roughly one times our EBITA, so the earnings that are coming into the company are underleveraged. I am not worried about the buybacks maxing out our balance sheet at all.

Q: How much of your business is online now?

It’s just over 15 percent on an annual basis. That’s almost triple where we were when we started this transformation, and it’s growing at about a 30 percent annual clip.

About half of all product searches start on Amazon these days, so we have invested a lot into content on places like Amazon and of course, Google, Ulta.com, Walmart.com, Costco.com and other places.

Q: Will all of the company’s sales be online someday?

No. We will be where consumers want to be, but I don’t believe that consumers want to be online all the time. I say that because the retail industry itself is roughly 85-15, meaning 85 percent brick-and-mortar and 15 percent internet.

Will this be like cameras where digital cameras replaced film cameras? I don’t think so. In the end, people are local and their needs are not only online friendly. If you have a sick baby and need a thermometer or need a vaporizer, you go to the store.

Q: As sales move online, is it a dollar-for-dollar transition from the physical shelf to the digital shelf?

Not quite. From a profit standpoint, the answer is largely yes. When something shifts online, it is an opportunity to grow the category itself because the shelf is unlimited and the store is open 24 hours a day.

Q: What competition do you worry about most?

Our competitors are very good. It depends on the category. For example, in water filters, we compete with Brita, which is owned by Clorox for the United States. We compete against Newell, which makes things like humidifiers and air filters. But we are the market leaders in both and are growing market share. There are plenty of other competitors around the company. Conair is another example.

Online, it is important that we differentiate and innovate to keep our brands highly important to consumers because otherwise it just becomes about price.

Q: What are some of the challenges you see up ahead for the company?

There are plenty of them. The competition we talked about already. The sourcing structure is changing with the tariff environment. You read one thing one day and then the opposite the other.

China and Mexico are the two critical ones because that’s where we source the most, and NAFTA is still not nailed down. We are looking forward to seeing stability and good terms for everybody. And in China just this week, there was escalation, and it’s not clear that there is a rational end in sight.

Like every company, we are looking at what is right for us and where – what should be made in the United States and what should be moved.

I’d rather not go product by product, but I can definitely say we are facing multimillion-dollar impacts from the tariffs as they exist today, and the escalation will add cost to us.

Q: Unemployment is down, and competition among companies for employees has become fiercer. How does that impact costs?

The company has been on a pretty significant transformation strategy. When you look at compensation, it’s an area where the company historically has not been at the market, let alone very competitive. So we have been raising wages for multiple years. This is before the labor market tightened.

In our warehouses in the northern Mississippi area, we significantly raised wages and went above market by a lot, a couple of dollars an hour, two to three years ago. Turnover has gone down, absenteeism has gone down and productivity has gone up.

This year, we enacted a policy that put eight hours of paid service leave into the hands of every employee. We don’t have an opinion about how they spend the eight hours, but we do ask they only take the time in order to provide service.

Q: What is the transformation plan? You’ve moved from a holding company to more of an operating company. What does that mean?

We’ve been in a significant transformation.

Helen of Troy was a beauty-centric company led by its founder and other folks who did a great job on beauty over many, many years. So the company’s structure and management system were built for beauty. The company had also made significant acquisitions, so it was dispersed and siloed.

Since then, the company has been turned on its head from an organizational standpoint.

We took the duplication out of the business units and created global shared services. So imagine you had human resources people embedded in each business and there was no global head deciding what the company-wide policy would be.

We formed a leadership team that has led us to the ability to have a global strategy and massive efficiencies. I’m talking $10 million, $20 million, $30 million pulled out of the cost structure of this company over the last four years and invested back into the marketing, innovation and design.

Q: The beauty segment has been in decline for years. Why has it been so hard to turn around?

Beauty is a very important part of the company and represents about 20 percent of our sales.

Beauty has been declining for a long time – roughly a decade. The reason is the categories we play in are not growth categories. So think of hair appliances for women and stylists. There is a need, but the only way to grow is to grow share or bring innovation so dramatic that the category itself grows.

Q: Is the answer to sell it?

It’s a possibility. Anything that is not one of those seven leadership brands, it’s not our strategic choice to invest in it at the same level. For the non-leadership brands, the question of if it is the right fit for our portfolio is being asked.

Q: What is Project Refuel? It was cited as a reason for recent job cuts.

Beauty has been in decline, and our cost structure has actually gone up. So you want it to decline less, eventually flatten and grow. You can’t do it if you have that much cost in the business.

So we decided to step back and created Project Refuel in October. It intends to take roughly $10 million primarily out of beauty and redeploy it better. That did include some people coming out of the organization.

What have we got? If you look at last year, the beauty business declined 1.8 percent year over year. That is not the kind of big declines we have seen in recent years. That said, we are not yet out of the woods because we are not yet stable and demonstrating consistent growth.

Q: You’re approaching the end of the five-year transformation plan. What’s next?

I would love to check in the middle of next year when we will be able to talk very openly about our plans for the next phase. I’m convinced that the best is yet to come for the company.

8 Quick Qs

Languages you speak?

English and Spanish

Your business travel essentials?

Just one backpack that has travelled around the world with me at least a dozen times in the past five years. Favorite item in that bag? My Hydro Flask!

Countries visited over the past year?

Switzerland, England, Italy, Spain, China, Canada, Bermuda, Sri Lanka, United Arab Emirates

Tool you can’t live without?

Fly rod

Favorite spot in El Paso?

Tom Mays Unit of the Franklin Mountains State Park

Top three news sources?

Digital Wall Street Journal, National Public Radio and The New Yorker

Last show you binge watched?

Marco Polo on Netflix

Favorite activities?

Fishing, biking, cross-country skiing


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