Gemini sees Helen of Troy at $1.45, 15% below Street on inventory clearing

Gemini has issued a bearish forecast on Helen of Troy, projecting the household products company will miss consensus as it clears excess inventory at discounted prices.

Key Findings

The AI model forecasts Q3 EPS of $1.45 versus Street consensus of $1.71, a 15% miss. However, Gemini raised its revenue estimate above consensus ($505M vs $500M) based on beauty channel strength.

Thesis

Gemini's bear case views Q3 as a 'clearing event where Helen of Troy prioritizes cash conversion over margin percentage.' The model points to Q2's $529M inventory pileup as evidence of a 'fundamental reset, not a blip.' The margin math is stark: inventory clearance discounts projected to compress margins by 350 basis points YoY, partially offset by beauty segment mix improvement (+120 bps).

What This Means

This is a classic inventory overhang story. Gemini's 85% confidence level suggests high conviction in the margin compression thesis. The Ulta Beauty read-through for the Dr. Dre brand provides external validation for the revenue resilience view, even as margins suffer. Investors should watch gross margin closely for signs of the clearing event.