Like nearly all businesses during these uncertain times, Helen of Troy is implementing plans to help the company survive the COVID-19 pandemic and related closures.
But executives say Helen of Troy, which makes consumer products on a global scale and is one of only two publicly traded companies headquartered in El Paso, came into this crisis with momentum to get through to the other side.
Julien Mininberg, Helen of Troy CEO, spent some time last week talking to El Paso Inc. about the local impact of company-wide wage reductions and furloughs, the personal care divestiture and the COVID-19 response.
“I think this idea that we’re hiding under the bed and waiting for the sun to come out, we’re not,” Mininberg said. “The sun is out for us, and we’re planning to come roaring ahead when the weather gets clearer.”
Q: Helen of Troy recently presented its fourth-quarter 2020 earnings report that showed a great deal of growth for the company leading into this crisis. What’s driving that growth?
It’s good news for Helen of Troy, for El Paso and for our people, not just here but all around the world. For El Paso, it’s a reaffirmation for what we’ve said for many years: This is our home, and it gives us an enormous amount of momentum coming into the COVID crisis.
Two weeks ago, we reported the best year in our 52-year history. Sales were up 9.2%, on top of the 5.8% growth in each of the past two years. Adjusted earnings were up 15.4%.
In short, the momentum is strong and there’s a flywheel that’s very positive. Our leadership brands are also growing share in their categories.
Online is now 24% of all Helen of Troy sales around the world. Five years ago, it was 6%.
Q: Helen of Troy recently announced salary reductions at all levels of the company in response to the COVID-19 crisis. What does this mean for the company’s employees in El Paso?
We acted very quickly and decisively on that crisis. In a moment of challenge, there’s a shared sacrifice as opposed to mass layoffs or shutdowns or anything you’re seeing in other companies. Our focus has been to preserve what we’ve worked so hard to build in the last six years of transformation.
Those cuts ranged from 30% at the CEO level, down through sliding scale. Everyone is playing their part and doing so willingly. I’m very proud of how they’re keeping Helen of Troy fully operational, and we haven’t missed a beat.
Looking ahead, we’re closely monitoring the path of the virus itself and the opening and performance of brick-and-mortar stores in economies like Texas.
Behavior of consumers is yet unknown as the new normal emerges. That will help us come roaring back, will help us gauge how salaries will go.
Q: Did Helen of Troy receive any funding from the Paycheck Protection Program, which was aimed at supporting small and medium-sized businesses? Some large public companies did and, facing a backlash, some have returned the funding.
We have not applied or taken any government money. It’s generally designed for smaller companies in terms of employees. We have roughly 1,500 around the world.
Q: The personal care part of the business is for sale. What does that mean for El Paso operations and employees?
It’s not strategic for us. We’ve made a choice, and we’ve focused on appliances like curling irons and volumizers. It’s our proud heritage, and we’re very good at it and have been innovating like crazy.
Leadership is based in El Paso and has brought in a lot of talent, and as a result, beauty grew 10% last year. That’s the strongest in a decade and that’s before the Drybar acquisition. It’s over and above the decline in personal care that happened at that time.
For personal care, we think it’s better off in a company focused specifically on mass-market liquids and lotions, that it’s in their core.
People in El Paso will largely not be affected. Those working on it, there are very few that only work on personal care. Their work will be reallocated to other things as opposed to a wave of cuts. That’s not our expectation.
In the case of assets, that cash will be redeployed to other parts of that flywheel, including beauty and including investing in El Paso.
Q: Helen of Troy produces health care products under the Vicks and Braun brands, including thermometers. Is the company doing any new product development in response to what’s in demand for COVID-19?
As we look at COVID-19, while it’s a crisis on many fronts, it’s a significant opportunity. There are wonderful products we’ve come up with over the years and new ones we’ve had in mind that are doing well in this environment.
As we look to the future, we’ve ramped up marketing efforts and supply replenishment because we’re selling more than we expected last year, especially online.
As we look at new product areas, there are new ideas, for example in thermometers. Airlines, hotels, factories, even worksites are talking about taking people’s temperature en masse as they come into work.
We’re also coming up with new ones that can scan larger groups of people and spot outliers, and other new products we’d think would be particularly appealing in the new normal that emerges.
Q: How else is Helen of Troy moving forward while much of the world is figuring out this new normal?
It’s clear that our Phase 2 transformation is working, and is showing up in cash flow, earnings and the caliber of people we have. We’re an employer of choice where people are seeking out Helen of Troy and say they want to work here.
We don’t see 2020, because of COVID, as some sort of lost year. We see it as an opportunity to lean in, and a chance to invest further into Phase 2. We want to drive key transformation initiatives ahead and have significant plans for later in 2020 to make that true, but it depends on the evolution of the disease.
The long-term evolution of the stock, from 2014 to now, compared to big indexes or our own peer group, we’ve meaningfully over-performed. Even lately, since our earnings release, we’ve done well. In the last two or three years, I think there’s been a message that true long-term players and investors agree that there has been acceleration, and it’s very good for El Paso because it creates value and creates jobs, that momentum and energy, and opportunity and acquisition.
Email El Paso Inc. reporter Sara Sanchez at firstname.lastname@example.org or call (915) 534-4422, ext. 105.