Helen of Troy Ltd (HELE) 2006 Q3 法說會逐字稿

Good morning and welcome, ladies and gentlemen, to the Helen of Troy third-quarter earnings conference call for fiscal 2006.

At this time, I would like to inform you that all participants are in a listen-only mode.

At the request of the Company, we will open up the conference for questions and answers after the presentation.

Our speakers for this morning's conference call are Gerald Rubin, Chairman, Chief Executive Officer and President;

Christopher Carameros, Executive Vice President;

Thomas Benson, Senior Vice President and Chief Financial Officer; and Robert Spear, Senior Vice President and Chief Information Officer.

I will now turn the call over to Robert Spear.

Please go ahead, sir.

Good morning, everyone, and welcome to Helen of Troy's third-quarter earnings conference call for fiscal 2006.

The agenda for this morning's conference call is as follows.

We will have a brief forward-looking statement review, followed by Mr. Rubin, who will discuss our third-quarter earnings release and related results of operations for Helen of Troy, followed by a financial review of our income statement and balance sheet for the quarter by Tom Benson, our Chief Financial Officer.

And finally, we will open it up for questions and answers in a session for those of you with any further questions.

Safe Harbor statement.

This conference call may contain certain forward-looking statements that are based on management's current expectation with respect to future events or financial performance.

A number of risks or uncertainties could cause actual results to differ materially from historical or anticipated results.

Generally, the words “anticipates,” “believes” and “expects,” and other similar words, identify forward-looking statements.

The Company cautions listeners to not place undue reliance on forward-looking statements.

Forward-looking statements are subject to risks that could cause such statements to differ materially from actual results.

The factors that could cause actual results to differ from those anticipated are described in the Company's Form 10-Q filed with the Securities and Exchange Commission for the third-quarter of fiscal year 2006 ended November 31, 2005.

Before I turn the conference call over to our Chairman, Mr. Rubin, I would like to inform all of the interested parties that a copy of today's earnings release has been posted to our Website at www.hotus.com.

The release can be accessed by selecting the Investor Relations tab on the home page and then the News tab.

I will now turn the conference over to Mr. Gerald Rubin, Chairman, CEO and President of Helen of Troy.

Good morning, everyone, and welcome to our third-quarter conference call.

Helen of Troy today reported results for the third quarter and the nine months ending November 30th, 2005.

Sales in the third quarter were $197 million versus sales of 205 million for the third quarter of the prior year, a decrease of 4%.

Third-quarter net earnings were 22,666,000, or $0.72 per diluted share, from 31,135,000, or $0.97 per diluted share for the third quarter a year ago.

The Tactica bankruptcy negatively impacted net earnings for the third quarter by approximately $0.03 per diluted share.

Without this charge, earnings for the quarter would have been $0.75 per diluted share.

Nine months sales increased .3% to 455 million from sales of 454 million in the previous year.

Fiscal year to date net earnings were 42,666,000 or $1.34 per diluted share versus 64,466,000, $1.98 per diluted share, for the comparable period last fiscal year.

While we have seen some improvement in Personal Care sales over the last quarter, it is still less of an improvement that we had hoped to see.

Net sales in our Housewares Segment have increased 20.7% and 25% over the same quarter in comparable year-to-date periods in the prior year, while net sales for our Personal Care Segment decreased 8.3% and 9.6% over the same quarter and year-to-date periods of the prior year.

It's interesting to note that in the second quarter, Personal Care was down 14.8%, but the third quarter it only decreased 8.3%.

These sales results, combined with a decline in our gross margin percentage and an increase in Selling, General and Administrative expenses for the quarter and year-to-date, reduced our operating results compared to the previous year.

A number of the same economic factors we experienced last quarter continue to impact our business today.

We currently believe that these factors may continue to impact fourth-quarter results as well.

As of November 30th, 2005, we had stockholders' equity of $469 million, and the stockholder equity increased $61.6 million, or 15%, for the comparable period last year.

For the fourth quarter ending February 28, 2006, we currently expect overall sales to be in the range of 120 to $130 million compared to last year's fourth-quarter sales of $127.6 million.

Earnings per share for the fourth quarter are currently expected to be in the range of $0.15 to $0.25 per diluted share versus the prior year's fourth-quarter earnings from continuing operations of $0.37 per diluted share.

Sales for the fiscal year ending February 28, 2006 are currently expected to be in the range of $575 to $585 million, with earnings per share from continuing operations for the current fiscal year anticipated to be in the range of $1.49 to $1.59 versus our previous guidance of $1.80 to $1.90 per diluted share.

Next fiscal year, beginning March 1st, 2006, we are anticipating an 8 to $10 million reduction in SG&A expenses, primarily in warehouse distribution and freight expenses, and an increase in product placements with retailers, and to therefore see a more positive year-over-year comparison of operating results.

I now what would like to turn this conference call over to Tom Benson, our CFO, who will go through the financials with us.

Thank you, Jerry, and good morning, everyone.

We are disappointed with our performance for the third quarter.

Third-quarter net sales decreased 4% year-over-year.

Net sales in the third quarter of fiscal 2006 were 197.5 million compared to 205.7 million in the prior-year quarter.

This represents a decrease of $8.2 million or 4%.

I will discuss the reasons for the sales decrease under our segment net sales information.

Our third-quarter operating income decreased by 33.1% year-over-year.

Operating income in the third quarter of fiscal 2006 was 28.6 million, which is 14.5% of sales, compared to 42.8 million, or 20.8% of sales in the prior-year quarter.

This represents a decrease of $14.2 million, or a 33.1% decrease.

It's also a 6.3 percentage point decrease year-over-year.

Third-quarter net income decreased 27.2% in dollar terms year-over-year.

Net income for the third quarter in fiscal 2006 was 22.7 million, 11.5% of sales compared to 31.1 million, 15.1% of sales in the prior-year quarter.

This is a decrease of $8.5 million, 27.2%.

The major reasons for the net income reduction of 8.5 million were there was a sales decrease of $8.2 million that had an impact of 3.9 million.

There was an increase of cost of goods sold of 4.4% and a reduction in net selling prices, which had a negative impact of 8.7 million.

SG&A expenses increased, which had an impact of 1.6 million.

We had an increase in interest expense, which had an impact of 1.2 million; we had a reduction in other expenses, which was a benefit of 1.7 million; and we had a decrease in taxes and tax rates, a 5.2 million benefit.

In total, those are 8.5 million.

Third-quarter diluted earnings per share was $0.72 in the current fiscal quarter compared to $0.97 a year ago.

This represents a decrease of $0.25.

Now I will provide a more detailed review of the various components of our financial performance.

On June 1st, 2004, we acquired certain assets and liabilities of OXO International for 273 million.

OXO is a leader in providing innovative consumer product tools in a variety of areas, including kitchen, cleaning, barbecue, barware, garden, automotive, hardware, storage and organization.

Brands that we sell include OXO Good Grips, OXO Steel and OXO SoftWorks.

This business will be referred to as our Housewares Segment.

Our other segment is our Personal Care Segment, includes the following product lines.

Appliances -- products in this group include curling irons, thermal brushes, hair straighteners, hair dryers, massagers, spa products, foot baths and electric clippers and trimmers.

Key brands in Appliance include Revlon, Sunbeam, Health-O-Meter, Vidal Sassoon, Hot Tools, Wigo and Dr. Scholl's.

Grooming, skincare and hair products are included in the Personal Care Segment and consist of the following brands -- Brut, Sea Breeze, Skin Milk, Vitalis, Ammens, Condition 3-in-1, Final Net and Vitapointe.

Brushes, combs and accessories are also included in the Personal Care Segment.

Key brands in the product category include Revlon, Vidal Sassoon and Karina.

The Personal Care Segment net sales were 161 million for the third fiscal quarter in 2006 compared to 175.5 million in the prior-year quarter.

This is a decrease of 14.5 million, or 8.3%.

Net sales decreases are a result of pressures to lower prices, additional costs associated with trade programs, selected loss of product placement and a weaker market, especially in our European operations.

While we are disappointed in an 8.3% decrease in net sales, this represents an improvement in the 14.8% decrease we experienced in the second fiscal quarter.

The Houseware net sales were 36.5 million for the third quarter of fiscal 2006 compared to 30.2 million in the prior-year quarter.

This represents an increase of 6.3 million, or 20.7%.

Sales increases have been primarily driven by continued new product introductions with existing customers and the addition of a new handtool line, which had significant initial shipments in the quarter.

Gross profit for the third quarter was 86 million, which is 43.6% of net sales compared to 98.6 million in the prior-year quarter, which represented 48% of net sales.

This is a decrease of $12.6 million, or 12.8%.

The decrease in gross profit percent of 4.4 percentage points is primarily due to a combination of higher cost of customer promotional programs and a reduction in selling prices on certain items.

We have also experienced some product price increases.

For the third quarter, Selling, General and Administrative expense increased as a percentage of sales.

The SG&A was $57.4 million for the third quarter out fiscal 2006, which is 29.1% of net sales, compared to 55.8 million, or 27.1% of net sales in the prior-year quarter.

This represents an increase of 1.6 million or 2 percentage points.

The increase in SG&A is primarily due to the following.

Outbound freight increased 400,000; warehouse storage and handling costs increased 2.2 million; depreciation increased 200,000; advertising increased 1.2 million; the impact of exchange rate was 1.7 million; personnel costs increased $1 million; and we had a decreased incentive compensation of 5.1 million.

That is what makes up the $1.6 million increase in SG&A.

Outbound freight costs have increased due to fuel cost increases.

Warehouse storage and handling costs are up due to more utilization of outside warehouses, higher inventory levels and higher transition fees for the Housewares business.

Depreciation is up due to capital expenditures during the year.

The exchange rate is mostly due to falling British pound and Euro exchange rate versus the U.S. dollar this year and the opposite last year.

Personnel costs are up due to additional personnel to handle the Housewares business.

Incentive compensation is down due to lower net earnings.

Interest expense is up 1.2 million for the quarter due to higher interest rates on our floating-rate debt and higher revolving debt due to 39.1 million of capital expenditures during the quarter, mostly due to the purchase and equipment for our new 1.2 million square foot warehouse in Southaven, Mississippi.

Tax expense for quarter three fiscal 2006 was 1.1 million, 4.6% of income before taxes, compared to 6.3 million, or 16.7% of income before taxes in the prior-year quarter.

The effective tax rate is down 12.1 percentage points compared to the prior year due to the movement of Hong Kong activities to Macau, which is a jurisdiction in which we are tax-exempt, lower taxable income in the United States and tax losses in European countries, both of which are high tax rate jurisdictions.

I will now discuss our financial position.

Our cash balance was 20 million at November 30th, 2005.

We have a 75 million revolving line of credit in place, of which we borrowed 60 million, leaving us with 15 million of available borrowings under this credit facility at November 30th, 2005.

We anticipate our revolver balance to be paid down significantly by the fiscal year end as a result of the normal seasonal reduction in accounts receivable and inventory during the current quarter and the anticipated sale of our old 619,000 square foot warehouse in Mississippi.

Accounts receivable decreased 18.8 million year-over-year.

On a trailing 12-month basis, accounts receivable days outstanding increased to 85.7 days at November 30th, 2005 compared to 73.6 days at November 30th, 2004.

On a current sales basis, accounts receivable days outstanding are 74 days compared to 77 days a year ago, an improvement of 3 days.

Inventories at November 30th, 2005, increased 45.5 million from November 30th, 2004, down from a year over increase of 60.4 million at August 31st, 2005.

Inventories are up due to new product introductions and to buffer against disruptions that could occur during the fourth fiscal quarter as we relocate certain inventories in connection with the consolidation of our warehouse operations into our new Southaven, Mississippi distribution facility.

We also increased inventory purchases to delay the impact of possible future price increases.

Shareholders' equity increased 61.6 million to 468.9 million on November 30th, 2005 compared to November 30th, 2004.

I will now update you on our financing activities.

To take advantage of local tax incentives and to finance the acquisition and installation of equipment in our Southaven, Mississippi distribution facility, in August, 2005 we entered into a loan agreement with the Mississippi Business Finance Corporation for up to 15 million of bonds.

We borrowed 5 million of these funds over the last quarter and anticipate additional draws over the next six months.

I will now turn it over to Jerry for some additional comments and questions.

I'd now like to turn the floor over for questions, operator.

(OPERATOR INSTRUCTIONS) Kathy Reed with Stanford Financial.

Good morning.

First of all, can you break out the components of the gross margin decline?

I think you mentioned it was negative pricing and increased promotion.

Can you give us a split between the two of those, even if it is just a rough magnitude?

Kathy, this is Tom Benson.

We don't go into those specific details.

Okay.

But is the majority of it pricing pressure on your products, because it seems that since you outsource the majority of your manufacturing from overseas that you're not going to have as much of a raw material cost impact, even though I think you mentioned that that was slight.

So I'm just trying to gauge a sense on your top line and if the pricing pressures are more on the Personal Care appliances or if they are on your, like, Brut and Sea Breeze, your Idelle Labs brands.

The decrease in the gross profit percent is more driven by top-line impact on the net sales.

And that is made up of a combination of -- you know, it could be pricing pressures, where the customers are asking for lower prices.

But there is also a whole array of different trade programs that go into net sales that have the same overall impact in the financials as price decreases.

So it could be increases in trade allowances they want; it could be direct price decreases.

We have had some increase in the cost of our materials.

There hasn't been significant increases or very much increases on the products that we are bringing out of Asia.

We do manufacture through a third party some of our products in the United States, and there has been price pressures on the price of plastics and alcohol in that business.

This is Chris Carameros.

Just in the case of the Idelle pieces, we have had increases in our (technical difficulty), but we are also having some price -- actually raising some prices on some [successive] SKUs going into February of this next year.

So --.

You are raising prices on some of your Idelle, then, brands?

Yes, to make up for our cost increases in alcohol, as Tom mentioned to you.

Great.

Can you give us the magnitude of those price increases?

Not right now.

Okay.

Second of all, I think you mentioned that on your Personal Care, helping or, I guess, relating to the 8% decline in sales, that there was some lost distribution.

Can you elaborate a little bit further on that?

And if it was on the professional side or if it was on, I guess, just the base hair care appliance business?

This is Chris Carameros.

To comment on that, on the appliance side, as we have said before, we have some decreases in some overall sales.

But on the professional side, we did have some decreases in some distribution pieces, as we've commented before.

But introducing new lines and new products to take up some of that decrease were some higher price point items and SKUs, so that kind of displaced some of our other items we had within the professional appliance line.

Okay.

And just with that, that was, I think, something you mentioned on your last call, that you had a new line of Vidal Sassoon Studio Tools, which I believe is not professional;

I think that is just regular consumer.

Did that ship out on time?

I think that was supposed to ship at the end of your third quarter and help your fourth-quarter results?

Yes, it did ship out.

It's in distribution now.

And then you also have a new product line for your professional business?

Yes, but that won't be until approximately the second quarter of next year, when we get full distribution.

Okay.

And lastly, can you just let us know what your new interest rate on your floating-rate debt?

I think it reset at the end of December.

Yes, that information is in the Q that's going to be filed today.

Okay.

Thanks very much.

Rommel Dionisio.

Good morning, gentlemen.

With regards to the new handtools business, I think it's been on Lowe's store shelves for a little over a month now.

Could you just share with us what you think the retail [offtick] has been of that and consumer acceptance?

We've had great some great consumer acceptance of the new tools and Lowe's is pleased with it and we are pleased with it also.

Is that just in Lowe's, Chris, or is it --?

At this point in time, it is.

But it's not an exclusive, so you can take it elsewhere?

At this point in time, it's just in Lowe's.

Okay.

And also just a sort of bigger picture question.

Jerry, I think you attributed some economic indicators that you continue to see adversely impacting you, but we've seen, actually, consumer confidence pick up and oil prices come down a little.

Can you maybe just share with us what specifically you are referring to for economic indicators?

Many of our retailers are resetting in our first quarter fiscal year next year, and that is when we believe that comparisons will be positive as we get more SKUs on the shelf.

So it's not really necessarily a macroeconomic view, but just specific retailers are just being a little more conservative?

Well, at the present time, but we will have more placement come our first quarter of next year.

I think you can take a look at --also, look at the European market.

At least in the appliances, the European market has been down overall.

There's a little bit more macro effect at that particular piece of the business.

But in the U.S., as Jerry said, we should have some better business if we have better SKU placement.

Okay.

Fair enough.

Thanks very much.

Gary Giblen, Brean Murray, Carret.

I'm wondering what tax rate is built into the guidance that was in the earnings release today.

Basically, that 12% tax guidance going forward, we still maintain that.

It depends on where it is on a quarter-to-quarter when you try to true that up towards the year end.

But we're still forecasting a 12% tax rate.

So the first of the three tax factors that you mentioned was from Hong Kong to Macau -- that's reflected in the 12% -- and the rest would have to do with the mix of sales in different jurisdictions?

It is more complicated than that, but to answer your question, yes.

But as you make money in different jurisdictions around the world, it depends on where you make it and how you do it and where you are accruing for it.

So it would drive the tax rates up or down where you are making it.

But at this point in time, we believe 12% should be an adequate amount.

Okay, great.

And just the other question is in Housewares, which it's nice to see your good results there.

I mean you had good sales but you had some gross margin compression.

So could you give a little more color on that?

I heard what you said in the description, but in other words, if sales are strong, then normally that wouldn't cause gross margin compression.

But it looks like you had some promotional activity and so forth.

So could you just tell us what -- should gross margins be up in the coming quarters in Housewares or --?

This is Tom Benson.

We do not disclose our gross profit between the Personal Care and Housewares Segment specifically.

When you look at the Q, you can see operating income by segment, and we also in the Q explain that currently we are not allocating some of our overhead costs to the Housewares Segment until we fully integrate it into our business.

So when you look at the operating income, you need to make sure you keep that in mind.

Okay, so it's not a perfect number.

But operationally, are gross margin trends a good deal more solid in the OXO area, let's say, than in the --?

Yes, in the OXO area we have good sales and good margins and we have a good trend.

So I think we are very pleased with the way the sales are going and where our costs are lining up.

Yes, I just wanted to clarify that.

Okay.

Thank you very much.

Jim Larkins with Wasatch Advisors.

Could you give some comments on competition and market share in some of your core appliance areas?

And also, you mentioned competing for some additional shelf space or increasing your shelf space.

If you could you give some color on where that is.

As far as market share, it's hard to measure because we have the same SKUs on the shelves that we had the first and second quarter.

But we believe that talking to the retailers, that we have not lost any market share; that there is a slight decrease in the amount of appliances -- it's actually not the amount of appliances sold;

I think it's just the prices that they are sold at.

We are very hopeful with the new planograms that are coming up that will start in the first quarter of our fiscal year, we're going to have more placement and it will be higher price points; so we believe that there will be increases there.

Plus in the professional business, by the second quarter we will have our new line of high-end professional Personal Care products that will compete against others of a high price.

It just seems that the market in professional has gone the reverse of retail, that the price points that we need to be in are higher price points, much higher price points than we currently are.

And that is what this new line is going to be.

And we have approximately 23 new products that we're introducing that should be a success for us.

And then you'd mentioned in your press release about increasing shelf space.

Is there any additional color we should get on that?

Well, as I mentioned, we will have additional SKUs at major retailers starting with our second quarter -- our first quarter coming up -- fiscal year.

And is that in just your core products?

Yes.

Okay.

Thank you.

Mike (indiscernible).

-- comment on the sales of your hair and beauty care products within the professional beauty salon channel?

And I know you were talking about some lost distribution, but is there anything else you're seeing in that channel at all?

In the professional business, as I mentioned, we're coming out with our new line of professional tools at very high price points that we're all excited about.

We've shown it to our customers and we believe that we will have increases in that division starting with our first quarter of fiscal 2007.

So it isn't any sort of fundamental weakness you're seeing in the channel that could be impacting your sales?

No.

(OPERATOR INSTRUCTIONS) Stephen O'Brien with Wellington Management.

Yes, could you give us some idea of the sales comparisons in the appliance and the grooming and the accessory areas?

This is Chris Carameros.

Just take a look at the Q this afternoon when we file it and it will be all in there.

Okay.

You mentioned we will get 8 to $10 million of savings next fiscal year.

Is that going to come through kind of evenly throughout the quarters or (multiple speakers)?

We anticipate it should come throughout a year, but obviously we are starting to fully ship out of that distribution facility in March, the first of next year.

So we will have some additional cost in the first two or three months, the first quarter.

And as we begin to get more efficient, the costs should come down.

Okay.

And inventory turns, can we see those go back to where they had been, we'll say, in the previous fiscal year?

We are focused on inventory levels and inventory turns and, where appropriate, we will bring inventories down in a variety of different areas.

Again, we focus on that; as we transition our warehouse, we have a little bit excess inventories in both warehouses at this point in time.

But it should transition and be appropriate amounts at that point in time.

Same thing for Accounts Receivable?

Yes.

And I think, as Tom mentioned if you heard his last comment, the last 30 days, you show a positive trend on days and receivables.

Thank you.

Kathy Reed with Stanford Financial.

I just had a follow-up question.

Actually, just in your press release when you talk about the Tactica bankruptcy, it appears that it's going to finally get settled.

And I wondered when I read what you put in the press release, I think at the time, from some of the papers that you filed over the summer, that you were actually looking to receive 3 -- you had a $3.5 million claim yourselves.

And I guess if you -- my understanding, reading your press release, you are booking a $1.8 million liability.

Does that mean now that what you're going to receive is zero?

No.

We're going to receive less out of our claim.

So, you say we're booking a liability; we had recorded some of that claim in our net difference in the OXO -- excuse me, in the Tactica transaction.

We are just receiving less of our claim.

So the 1.8, is that the difference or is that what you have to pay out?

We're not having to pay out.

All the refund is in escrow right now.

So it's going to be we're going to receive less than we originally anticipated.

Those are the net numbers we disclosed.

It will be 1.5 -- $150,000 -- less as we reported; less than we thought we were going to receive back.

This is Tom Benson.

All of the claim that we filed we did not have had some reserves set up against that on our books originally.

So it was not all set up as a receivable.

We're actually not going to pay any cash out; we're going to receive less cash out of this than we anticipated if everything gets approved.

Okay.

So you you're not paying any cash out; you are just going to receive less than what you had previously thought?

We're going to receive less than what we thought.

Finally, is there a large industry trade show that goes on sometime soon that you premiere some of your new products at?

Well, there are several.

There is the International Housewares Show, which is in Chicago in March.

For retail, there is a European show, Cosmoprof, in Bologna, Italy that we also show in.

And there is the Professional Cosmoprof show in the United States in July in Las Vegas.

Okay.

Thank you.

Justin Boisseau from Gates Capital Management.

I apologize if I missed it.

Could you give me the total debt at the end of the quarter?

It's on the balance sheet in the press release.

Do you have a copy of the press release?

No.

The long-term debt is 265 million.

We have $70 million of short-term debt.

Okay, great.

And then you all had historically given some guidance on CapEx and cash flow from ops and EBITDA for fiscal '06.

Could you update that?

This is Tom Benson.

We're not giving out that information.

It's consistent with what we told you before; it hasn't unchanged.

Last time we gave out that information, we had to file some filings after the conference call.

So we are trying to be careful not to give out information you can't really find in our public filings already.

Okay, thanks.

[John Harlow] with (indiscernible) Hanley.

Could you go through the income statement?

I assume you've stated that there is a $0.03 hit from this Tactica bankruptcy.

Go through the cost of goods and SG&A and tell us what numbers are in what so we can try to get to a pure number?

And then I know Chris is a lot smarter than me, but I'm looking at a million 8 of the liability payable, but it seems to me sooner or later we pay somebody something, don't we?

It's real easy, All you have to do is take a look of the net difference and tax gets $0.03.

And I can walk you through the details later if you want me to do that.

But basically, it's a net hit of $0.03 on tax after you do the effects.

This is Tom Benson.

The legal fees that we disclosed in the press release are in SG&A; the other things are down in the other income, and those will be fully explained in the Q when it comes out.

Thank you.

(OPERATOR INSTRUCTIONS) [Ivan Sacks] with Institutional Equities.

Good morning.

Tough quarter, but respect your answers.

I'd like to please get a historical perspective just in terms of valuation on the Company right now?

And if you are still doing a stock purchase buyback?

If you could please speak to those points.

Thanks.

Stock purchase is something that the Board considers at every Board meeting.

As you know, we have authorization to buy up to 3 million shares.

I think we've purchased already 1.6; so we have 1.4 million.

When that is going to happen, I can't tell you, but we do have authority to buy 1.4 million more shares.

And your other question was about the valuation of what -- I was going to ask you?

If you can just give like a historical perspective.

I mean, obviously, you've got a long range of how long the Company has been going for, relatives to the way it's been before.

If you could just speak to that, Jerry.

One of the things that you see, that we have shareholder equity of $469 million.

And with profits next year, we should be certainly well over $500 million in shareholder equity, which we believe if you look at the valuation, I think that the shareholder equity is probably equal or better than what the price of the shares are today.

Just based on the shareholder equity.

Good.

In terms of when you look at the comparative nature of -- I mean, you have 27 products or 24 products -- I think the last quarter you had 27 products coming up on the professional side.

I mean, obviously, compared to [full year], do you see yourself getting ahead again or just -- I mean, how are you guys feeling about business just going forward?

Well, we are very positive.

I mean, we all believe in almost all of our divisions that every division should show increases next year, is what we're looking forward to, based on the new products that we have, increased distribution, more SKUs.

It's the way we are looking at the business, that every division should be positive next year.

Very good.

Thank you.

Jim Larkins with Wasatch Advisors.

I just wanted to get a clarification on the new distribution center.

Are you currently shipping from both centers and when are you going to throw the switch and when do you think the transition is complete?

This is Tom Benson.

The answer is it's really -- there is kind of a three-phased approach to the transition.

The first phase we have completed and just started shipping out of it last week.

The second phase is going -- we're anticipating completing in mid-February, and the third phase we're anticipating completing in mid-March.

So it will not be fully operational until around the end of March.

Okay.

But after that, we will be clear of the dual expenses, after March?

That is correct.

We have to dispose of our old facility that we anticipate disposing of shortly.

We will probably lease it for a period of time.

So I don't want to say at the end of March all expenses are going to be totally completed.

It might take a short period of time after that.

Like we said in the press release, we should be there in May and we should have the elimination of the dual warehouse by May.

Okay.

You have January, you have Idelle SKUs;

February, you have OXO; and March, you have Appliance.

Okay, great.

Can you give any color on the acquisition environment right now for products?

It seems like there is a lot of talk in the market about some fairly well-known brands that are coming up, and just any color on that, if you could.

This is Chris Carameros.

We always take a look at a lot of the, I guess, opportunities out there.

Some of them are fairly well priced, but there may be select opportunities.

Just like when we bought the Brut brand, it was it offered in a whole portfolio of assets that Unilever had for sale.

We really focused on that one asset, which was the Brut brand, and just purchased that one asset, even though there was seven or eight other assets being sold.

During this current review, we will focus on that same kind of opportunity.

If we see some assets being up for sale, which there are right now, that we can take a look at, we're going to look at them and look and see if we can acquire those assets.

Do you see the competition being primarily other public companies, private equity money, any color there?

I think it is both.

Because it seems like it used to be private equity money had some kind of limitation on overall multiple of EBITDA, but they almost seem to be paying more because lots of money out there.

And I think sometimes industry people -- if you take a look at guys like Chatham -- they've said that lots of brands are out there that are overvalued.

But industry guys may know a little bit better than maybe the equity funds.

I don't know; time will tell.

A big picture question on that is that if you look at -- if we kind of assume, maybe, that over the past 15 years or more that writing Wal-Mart has been a great benefit to guys like Helen of Troy that have been able to execute and supply the fast-growing retailers like Wal-Mart or Target and so forth, it seems like there is a slowdown now in that trend.

And is there increased competition and just rivalry among competitors, given that maybe the overall growth rate of kind of the Wal-Mart train is slowing down.

Can you comment on that?

You know, my opinion is there's always lots of competition out there among a variety of retailers that we sell around the world.

It seems that over the last six months there has been lots of issues about this and that about Wal-Mart, but it's a great customer and we enjoy our relationship with the customer and look forward to growing with Wal-Mart.

As we've reported in the past, our sales with Wal-Mart, our percentage, probably will be no different this year.

Wal-Mart is about 20% of our corporate business.

And that has been pretty steady over the last few years.

The question is overall retail, is it slowing down?

And I really can't comment on that.

But we sell to a variety of customers around the world, like I said, and look to increase our sales for next year.

Okay.

Thank you, guys.

Mimi Sokolowski from Sidoti & Company.

I'm sorry.

I tried to withdraw my question.

It's already been answered, but thank you.

[Jeff Kaufman] with George Weiss Associates.

Thank you very much.

I just wanted to get back to the share repurchase question that was asked a little while ago.

Correct me if I'm wrong, but originally when that 3 million share authorization was established, I recall a deadline of May 31 '06 as the timeframe for repurchasing the shares.

I'm under the impression you haven't really purchased any shares since you filed your last K in the middle of '05.

So I'm just kind of curious.

Was the original intent to repurchase all these shares by May 31 '06?

If that was, when did that change?

And I'm just kind of curious -- I realize there's a lot of need for cash elsewhere right now and inventory with the warehouse move, but if you were buying these 1.7 million shares in the last two years at much higher prices, given your comments about shareholders' equity and stock price, why wouldn't you be buying the stock more aggressively here?

These are certainly Board decisions.

Let me clarify it.

When we first put the program in, it was for three years, and yes, it does expire May 31st, 2006.

But that is not to say that -- it can certainly be extended by the Board or a new program could come up.

And as far as the repurchase, I know everybody says, why wouldn't you?

But we look at the opportunities.

Are the opportunities better in an acquisition or are they better to use the money for buyback of stock?

And that is an ongoing discussion.

And there are times when it's better to buy the stock back and there are times when it's better to do acquisitions.

The Company doesn't have a set formula that -- only to buy stock back and not acquisitions or just buy acquisitions and not stock back.

So it just depends on the time and what's going on in the marketplace.

Plus, we are working down our debt; we would like to work our debt down, although we do have bank availability.

But as we've talked in the previous question about new acquisitions, and there are opportunities out there that we are looking at.

So either we will do one or the other.

This is Chris Carameros.

Our priority has been we did an acquisition, as we said, of OXO.

We spent $217 million on that.

Our priority has been to make that acquisition successful, which I think we've done so far; to get our costs down by doing the new DC; we made an investment in that.

And as we digest those particular two pieces, the new DC and the acquisition, we will look at other acquisitions and the opportunity to buy our stock back at that point in time.

And we do it judiciously, and once a quarter, we look at those opportunities.

So to answer your question, why?

We're going to look at those opportunities and see if it makes sense for us as a Board and as a Company.

Your point is capital is just better deployed elsewhere right now, despite the fact the stock is as cheap as it is?

Let's put it this way.

The last year and a half, we've deployed capital, as I said, for an acquisition.

We've done some new warehouse and distribution facilities to get our costs down.

And we will generate some cash flows next year and we will analyze whether what we do with our cash -- pay our dead down, buy our stock back or do some acquisitions.

We always analyze that at every Board meeting.

Thank you.

If there are no further questions, I will turn the conference back to Gerald Rubin to conclude.

Okay.

Thank you, everybody, for being part of our third-quarter conference call, and we look forward to our year-end results that will be in early May.

Thank you all again.

Thank you, ladies and gentlemen.

If you do wish to access a replay for this call, you may do so by dialing 888-203-1112.

Again, the number is 888-203-1112, with a replay pass code of 8142082.

This does conclude our conference call for today.

Thank you all for participating and have a nice day.

All parties may disconnect now.