Helen of Troy Limited HELE has announced plans to acquire Olive & June, LLC., an omnichannel nail care brand, for $225 million in cash, with an additional $15 million earnout tied to future performance. This strategic move aims to strengthen Helen of Troy’s presence in the multi-billion-dollar beauty industry and diversify its product offerings. The acquisition is expected to close by the end of 2024.

Founded in 2013, Olive & June is a leading innovator in the DIY nail care industry, revolutionizing the at-home manicure experience. The company offers a wide range of nail care products, including nail polish, artificial nails, tools, treatments and care solutions, designed to deliver salon-quality results at home. With a focus on consumer-centric product innovation and a digital-first approach, Olive & June engages and educates customers, fostering strong brand loyalty and generating social media engagement that exceeds industry averages.

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Strategic Fit With Helen of Troy’s Goals

The acquisition of Olive & June aligns with Helen of Troy’s strategic goal of Continuing Better Together M&A. HELE sees significant potential in enhancing Olive & June's value by leveraging its scalable operating platform. In return, Olive & June will help drive profitable growth and further diversify Helen of Troy’s product portfolio. While HELE remains focused on strengthening the performance of its core brands, Olive & June will operate independently, with support from Helen of Troy.

The envisioned acquisition is expected to immediately contribute to Helen of Troy’s revenue growth, gross profit margin, adjusted EBITDA margin and adjusted earnings per share growth. In addition, it is anticipated to positively impact the company’s free cash flow conversion. The total purchase price reflects a multiple of under 11x the projected calendar year 2025 adjusted EBITDA before synergies, which is favorable compared to recent company transactions. For the calendar year 2024, Olive & June is projected to generate approximately $92 million in net sales revenue.

All said, the acquisition of Olive & June not only enhances Helen of Troy’s portfolio but also underscores its commitment to innovation and long-term growth. Shares of this Zacks Rank #3 (Hold) company have gained 29.4% in the past three months against the industry’s 28.3% decline.

Three Stocks Looking Red Hot

We have highlighted three top-ranked stocks, namely Deckers DECK, Abercrombie & Fitch Co. ANF and Nordstrom Inc. JWN.

Deckers, a footwear and accessories dealer, currently sports a Zacks Rank #1 (Strong Buy). DECK delivered an average earnings surprise of 41.1% in the trailing four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Deckers’ current financial-year sales and earnings indicates growth of 13.6% and 12.6%, respectively, from the year-ago reported figures.

Abercrombie, a leading casual apparel retailer, currently carries a Zacks Rank of 2 (Buy). Abercrombie has a trailing four-quarter earnings surprise of almost 28%, on average.

The Zacks Consensus Estimate for ANF’s current financial-year sales and earnings indicates growth of 13.4% and 64.8%, respectively, from the year-ago reported figures.

Nordstrom is a leading fashion specialty retailer in the United States. The company offers an extensive selection of both branded and private-label merchandise. It currently has a Zacks Rank of 2.

The Zacks Consensus Estimate for Nordstrom’s fiscal 2024 sales indicates growth of 0.9% from the fiscal 2023 reported figure. JWN has a trailing four-quarter average negative earnings surprise of 17.8%.

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Abercrombie & Fitch Company (ANF) : Free Stock Analysis Report

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