Accounting

Helen of Troy Limited is headquartered in Texas with global operations overseen from the executive offices located at El Paso, Texas. It was founded in 1968 and primarily deals in development, import, design and distribution of consumer goods. Personal Care is its primary division which incorporates popular brand name hair dryers, shavers, deodorants, curling irons and hair accessories, among others. In contrast, the houseware division is actively engaged in kitchen related items as well as home and gardening tools. The company has long portrayed a successful model for conventional brick and mortar organizations by selling its products through traditional sales channels accompanied by advertisement through catalogs, warehouse clubs or brochures (Business Week)

History
Foundations of this successful business were laid in the late 60s by its Founder Louis Robin who along with his son Gerald Rubin, acting CEO, started selling the in-fashion Wigs. By late 70s, the company held nearly a quarter of the market share in professional quality styling tools. As soon as Louis Robin sold the company to his son Gerald, it didnt take much for the visionary son to realize that acquiring a license to Vidal Sassoon brand is most likely the key to success in an otherwise fledgling cosmetic industry. Gerald Rubin competed with Gillette and General Electric to convince the owners of Vidal Sassoon with nearly a 25 million guaranteed sales, in addition to other lucrative bonuses, to grant him exclusive licensing rights to distribution. This was merely a start to a future corporate giant that will produce more profitable ventures by partnering with other successful companies like Proctor  Gamble.

Operations  Market Share
By mid-80s, Helen of Troy dominated personal care market with 35 percent market share in hatchet style hair dryers, 29 percent share in curling irons, 23 percent share in brush irons and almost 30 percent market share in curling brushiron combination (Helen). Most of the companys customers are located in United Stated, Canada and Europe while significant distribution also takes place across Latin America and Far East. In order to keep the manufacturing costs low, Helen of Troy Ltd. has initiated agreements with numerous unaffiliated manufactures in Far East countries. Most of its products are manufactured in Peoples Republic of China, Taiwan, South Korea and Thailand which are then distributed to its major client bases, mostly in Americas and Europe (Registration Statement). The manufacturing operations also utilize molds and tools developed by the companys wholly owned subsidiary in Barbados. To prevent relocation of assets, this subsidiary also owns manufacturing resources in Far East

Financials
Grant Thornton LLP is the registered auditor of the company who overtook the duties from KMPG in 2007. According to its consent, the company maintained effective internal control over financial reporting that is within the constraints of the criteria established by Internal Control-Integrated Framework (Report). This latest annual filing was reported on 14 May, 2009 which stated a net loss of 56.79 million dollars in comparison to the net earnings of 61.51 million dollars during 2008 (Summary). As of December 4, 2008 the stock price was 21.71 per share which has increased nearly 250 since March of 2008. There are 29.3 million shares outstanding with a float of approximately 26 million of which insiders own a limited 6.6 stake. It should also be noted that the company does not pay any dividends

Industry Overview
Helen of Troy competes in consumer good appliance and houseware markets. Like many other industries, recent global recession has impacted the industry. Despite such adverse impact the consumer goods industry has mostly survived intact. According to the reports by Data Monitor the global apparel, accessories and luxury good market has represented a compound annual growth rate of 2 for 2004-2008 years. Statistics for industry in which Helen of Troy operates indicates progress which is represented by a compound annual growth rate of 8.8 in consumer electronics market during 2003-2007. The result of this growth has sustained niche operators in global household appliance that had a growth rate of 3.1 in 2007 where global houseware and specialties market generated nearly 17.2 billion in annual sales last year. Although this segment represented a -3.5 compound growth rate for the last four years but these figures should not deter companies to expect a turn of fortunes. The consumer good appliances industry has in fact rebounded to provide more than 60 returns during the last year

Directly competing with Helen of Troy Limited are such well known companies as Whirlpool Corporation, Lennox International Inc, I robot Corp and Deer Consumer Products (Appliances). Among these top five market players in USA, only Helen of Troy has boasted stock returns of more than 200 percent. Despite negative return in revenue, the 4th quarter results exceeded expectations of many experts. The second quarter sales increased 5.6 to 162.2 million from 153.5 million last year. US sales remained strong as it contributed 5.7 increase which was partially upset from a 0.1 decrease in international sales due to unfavorable foreign currency exchange rates. Similarly houseware sales posted a 7.3 increase from the last year with 50.6 million along with 4.9 increase in personal care amounting to 111.6 million (Consumer Goods). The 10 key brands for the company held nearly 83 percent of the total sales for this quarter (Zacks).

Industry Risks
However the company is aware of numerous setbacks in the industry that have caused Helen of Troy to revise its diversification strategies. As the company continues to make inroads in household furniture appliance market, it is actively monitoring the 20 percent plummeted sales for publicly traded furniture retails and wholesalers. Increased competition from new entrants like Wal-Mart, Target and Kohl is putting pressures on some well established names that are buyers of Helen of Troy products (Industry Focus). A grave example is Linens  Things that went bankrupt in 2008. There were talks of Helen of Troy losing some market share but in the most recent earning calls, its founder Gerald Rubin confirmed that market share is indeed intact. He further explained, Had Linens N Things stayed in business and bought what they bought the year before, our sales in the Housewares segment would have been up 6.....On the appliance end, Linens N Things was not a big customer of ours in appliances, so we werent affected there. (Seeking Alpha). These factors are compounded by results from New McKinsey, released earlier this month, stating that the ongoing recession is changing the buying behavior of US consumers. Some consumers are switching to cheaper products and 46 percent of those customers are satisfied by it. Since Helen of Troy market brands at a higher end of the price spectrum, it is a prime candidate for such behavioral patterns (Bohlen).

Future Plans
To remain competitive, the company has devised five core competencies which include maximizing high growth potential products, accelerate new product pipeline, leverage innovation, broaden growth opportunities and reduce cost of productivity. The companys growth policies are highlighted by each of these elements that have led to the acquisition of worldwide rights to Ogilvie brand and cash buying of Infusium brand. It is logical to assume that the company can take such liberties with a cash increase that doubled over last year accompanied by a decrease in payable and current liabilities. Nevertheless, Helen of Troy seems determined to fill the void that has impeded its growth in comparison to its peer group index.