Insiders ranked by realized 90-day signed return on their open-market trades at Helen of Troy Ltd. Minimum 3 scored trades. Returns are signed - a sale followed by a rally counts against the insider.
Real-time Form 4 intelligence. Smarter insider tracking.
YoY shift: Lean -
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is -0.28pp more bearish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
-0.20pp
Flat
Net-tone change vs last year's 10-K.
MD&A
-0.36pp
Lean -
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
adversely+5
loss+3
litigation+3
conflicts+3
adverse+2
Positive rising
benefiting+2
best+1
exemplary+1
strengthened+1
Risk Factors (Item 1A)
12,749 words
Item 1A. Risk Factors
Carefully consider the risks described below and all of the other information included in our Annual Report when deciding whether to invest in our securities or otherwise evaluating our business. If any of the risks or other events or circumstances described elsewhere in this Annual Report materialize, our business, operating results or financial condition may suffer. As a result, the trading price of our common stock and the value of your investment might significantly decline. The risks listed below are not the only risks that we face. Additional risks unknown to us or that we currently believe are insignificant may also affect our business.
You should also refer to the explanation of the qualifications and limitations on forward-looking statements under “Information Regarding Forward-Looking Statements,” at the end of Item 7., “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” All forward-looking statements made by us are qualified by the risk factors described below.
The following is a summary of some of the principal risk factors which are more fully described below.
Business, Operational and Strategic Risks
• The geographic concentration of certain of our U.S. distribution facilities increases our risk to disruptions that could affect our ability to deliver products in a timely manner.
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
loss+41
impairment+20
claims+8
cancellation+5
negatively+3
Positive rising
favorable+5
opportunities+3
strengthen+3
benefit+2
favorably+2
MD&A (Item 7)
18,658 words
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the other sections of this Annual Report, including Item 1., “Business” and Item 8., “Financial Statements and Supplementary Data.” The various sections of this MD&A contain a number of forward-looking statements, all of which are based on our current expectations. Actual results may differ materially due to a number of factors, including those discussed in Item 1A.,“Risk Factors,” and in the section entitled “Information Regarding Forward-Looking Statements” following this MD&A, and in Item 7A., “Quantitative and Qualitative Disclosures About Market Risk.”
Management uses the following key financial measures, some of which are non-GAAP, as further described below: net sales revenue, organic business sales revenue, adjusted operating margin and adjusted diluted earnings per share (“EPS”) . Management uses these measures to evaluate historical performance on a comparable basis, predict future performance and benchmark our performance against our competitors. We believe these measures provide management and investors with important information that is useful in understanding our business results and trends.
This MD&A, including the tables under the headings “Operating (Loss) Income, Operating Margin, Adjusted Operating Income (non-GAAP) and Adjusted Operating Margin (non-GAAP) by Segment” and “Net () Income, Diluted () Earnings Per Share, Adjusted Income (non-GAAP) and Adjusted Diluted Earnings Per Share (non-GAAP),” reports operating () income, operating margin, net () income and diluted () earnings per share without the impact of acquisition-related expenses, asset charges, a discrete tax charge to revalue existing deferred tax liabilities due to Barbados enacting domestic corporate income tax legislation (“Barbados tax reform”), costs incurred in connection with the departure of our former Chief Executive Officer (“CEO”) primarily related to severance and recruitment costs (“CEO succession costs”), settlement costs related to EPA packaging and labeling compliance for certain products in the air filtration, water filtration and humidification categories (“EPA compliance costs”), a transitional income tax resulting from the recognition of deferred tax assets in connection with the reorganization of our intangible assets in fiscal 2025 and income tax expense from the recognition of valuation allowances in fiscal 2026 on the related deferred tax assets (“intangible asset reorganization”), charges, amortization of intangible assets and non-cash share-based compensation for the periods presented, as applicable. These measures may be considered non-GAAP financial measures as defined by SEC Regulation G, Rule 100. The tables reconcile these measures to their corresponding GAAP-based financial measures presented in our consolidated statements of () income. We believe that adjusted operating income, adjusted operating margin, adjusted income and adjusted diluted earnings per share provide useful information to management and investors regarding financial and business trends relating to our financial condition and results of operations. We believe that these non-GAAP financial measures, in combination with our financial results calculated in accordance with GAAP, provide investors with additional perspective regarding the impact of such charges and benefits on applicable income, margin and earnings per share measures. We also believe that these non-GAAP measures reflect the operating performance of our business and facilitate a more direct comparison of our performance to our competitors. The material associated with the use of the non-GAAP financial measures is that the non-GAAP measures do not reflect the full economic impact of our activities. Our adjusted operating income, adjusted operating margin, adjusted income and adjusted diluted earnings per share are not prepared in accordance with GAAP, are not an alternative to GAAP financial measures and may be calculated differently than non-GAAP financial measures by other companies. Accordingly, reliance should not be placed on non-GAAP financial measures. These non-GAAP financial measures are discussed further and reconciled to their applicable GAAP-based financial measures contained in this MD&A beginning on page 49.
• The occurrence of cyber incidents, or failure by us or our third-party service providers to maintain cybersecurity and the integrity of confidential internal or customer data, could have a material adverse effect on our operations and profitability.
• A cybersecurity breach, obsolescence or interruptions in the operation of our central global Enterprise Resource Planning systems and other peripheral information systems could have a material adverse effect on our operations and profitability.
• We are subject to risks associated with the use of licensed trademarks from or to third parties.
• To compete successfully, we must develop and introduce a continuing stream of innovative new products to meet changing consumer preferences.
• Our operating results are dependent on sales to several large customers; furthermore, our large customers may take actions that adversely affect our gross profit and operating results.
• We are dependent on third-party manufacturers, most of which are located in Asia, and any inability to obtain products from such manufacturers could have a material adverse effect on our business, operating results and financial condition.
• Our ability to deliver products to our customers in a timely manner and to satisfy our customers’ fulfillment standards are subject to several factors, some of which are beyond our control.
• Our operating results may be adversely affected by trade barriers, exchange controls, expropriations, and other risks associated with domestic and foreign operations including uncertainty and business interruptions resulting from political changes and events in the U.S. and abroad, and volatility in the global credit and financial markets and economy.
• We are subject to risks related to our dependence on the strength of retail economies and may be vulnerable in the event of a prolonged economic downturn, including a downturn from the effects of macroeconomic conditions, geopolitical conditions including global conflicts or wars, any public health crises or similar conditions.
• Our business is subject to weather conditions, the duration and severity of the cold and flu season and other related factors.
• We rely on our CEO and a limited number of other key senior officers to operate our business.
• We may be unsuccessful in executing and realizing expected synergies from strategic business initiatives such as acquisitions, divestitures and global restructuring plans, including Project Pegasus.
Table of Contents
Legal, Regulatory and Tax Risks
• All of our products are manufactured by unaffiliated manufacturers, most of which are located in China, Vietnam and Mexico; therefore, we face risks of significant tariffs or other restrictions continuing to be placed on imports from China, Vietnam or Mexico and any retaliatory measures taken by these countries against the U.S adversely impacting our business.
• Changes in laws and regulations, including environmental, employment and health and safety and tax laws, and the costs and complexities of compliance with such laws could have a material adverse impact on our business.
• We face risks associated with the increased focus and expectations on climate change and other sustainability matters.
• Significant changes in or our compliance with regulations, interpretations or product certification requirements could adversely impact our operations.
• We face risks associated with global legal developments regarding privacy and data security that could result in changes to our business practices, penalties, increased cost of operations, or otherwise harm our business.
• We face risks associated with product recalls, product liability and other claimsagainst us.
• Under current U.S. federal income tax law, tax treatment of our non-U.S. income is dependent on whether we are classified as a “controlled foreign corporation” for U.S. federal income tax purposes.
• Regulatory changes in Bermuda, including economic substance and tax governance requirements, could adversely affect our operations.
• Our judgments regarding the accounting for tax positions and the resolution of tax disputes may impact our net earnings and cash flow.
Financial Risks
• Our business, liquidity or cost of capital may be materially adversely affected by constraints or changes in the capital and credit markets, interest rates and limitations under and compliance with our credit facility, including our debt covenants.
• Our goodwill, indefinite-lived and definite-lived intangible assets, and other long-lived assets have recently been impaired, and we could be required to record additional impairment charges, which may be significant.
• Our projections of product demand, sales and net income are highly subjective in nature and our future sales and net income could vary by a material amount from our projections.
• Increased costs of raw materials, energy and transportation may adversely affect our operating results and cash flow.
• We face risks associated with foreign currency exchange rate fluctuations.
You should carefully consider this summary with the more detailed descriptions of risks described below and all of the other information included in our Annual Report when deciding whether to invest in our securities or otherwise evaluating our business.
Business, Operational and Strategic Risks
Certain of our U.S. distribution facilities are geographically concentrated. This factor increases our risk that disruptions could occur and significantly affect our ability to deliver products to our customers in a timely manner. Such disruptions could have a material adverse effect on our business.
During fiscal 2026, most of our U.S. distribution, receiving and storage functions were concentrated in two distribution facilities in northern Mississippi and our distribution facility in Gallaway, Tennessee, which are in close proximity to each other. Approximately 60% of our consolidated gross sales volume shipped
Table of Contents
from facilities in this region in fiscal 2026. Due to this geographical concentration, a disruption at any of these facilities, including severe weather events, or government mandated or suggested isolation protocols relating to a pandemic or other public health crisis, even for a few days, could limit or disrupt our distribution process, or potentially lead to the temporary closure of a facility. Any resulting delays in the delivery of our products could have a material and adverse effect on our business, operating results and financial condition.
The occurrence of cyber incidents, or failure by us or our third-party service providers to maintain cybersecurity and the integrity of confidential internal or customer data, could have a material adverse effect on our operations and profitability. Such incidents may also result in faulty business decisions, operational inefficiencies, damage to our reputation or our associate and business relationships, and/or subject us to costs, fines, or lawsuits.
Information systems require constant updates to their security policies, networks, software, and hardware systems to reduce the risk of unauthorized access, maliciousdestruction of data or information theft. In addition, attacks upon information technology systems are increasing in their frequency, level of sophistication, persistence and intensity and are being conducted by sophisticated and organized groups and individuals with a wide range of motives and expertise. We rely on commercially available systems, software, tools, third-party service providers and monitoring to provide security for processing, transmission and storage of confidential information and data. While we have security measures in place, our systems, networks, and third-party service providers have been and will continue to be subject to ongoing threats. We and our third-party service providers have experienced, and expect to continue to experience, actual or attempted cyber-attacks of our information systems or networks. We do not believe we have experienced any material system security breach that to date has had a material impact on our operations or financial condition. However, if any such event, whether actual or perceived, were to occur, it could have a material adverse effect on our business, operating results and financial condition. Our security measures may also be breached in the future as a result of associate error, failure to implement appropriate processes and procedures, advances in computer and software capabilities and encryption technology, new tools and discoveries, malfeasance, third-party action, including cyber-attacks, hacking, phishing attacks, malware (e.g., ransomware) or other misconduct by computer hackers or otherwise. Additionally, we may have heightened cybersecurity, information security and operational risks as a result of work-from-home arrangements. Our workforce operates with a combination of remote work and flexible work schedules opening us up for cybersecurity threats and potential breaches as a result of increased associate usage of networks other than company-managed networks. Furthermore, due to geopolitical tensions around the world, the risk of cyber-attacks may be elevated. This could result in one or more third-parties obtaining unauthorized access to our customer or supplier data or our internal data, including personally identifiable information, intellectual property and other confidential business information. Third-parties may also attempt through phishing attacks or other forms of social engineering schemes or deceptive practices to fraudulently induce associates into disclosing sensitive information such as usernames, passwords or other information in order to gain access to customer or supplier data or our internal data, including intellectual property, financial, and other confidential business information.
Furthermore, although we govern the use of generative artificial intelligence (including machine learning) (AI) technologies by our associates, our third-party manufacturers, vendors and service providers may use generative AI technologies or systems. The development, adoption and use of AI technologies are still in their early stages and are complex. The algorithms and models utilized in generative AI technologies and systems may have limitations, including biases, errors, or inability to handle certain data types or scenarios. There are also risks of system failures, disruptions or vulnerabilities that could compromise the integrity, security or privacy of the AI generated content, including the use of cyberattacksagainst such emerging technologies. The ineffective or inadequate AI development or deployment practices by any of our third-party manufacturers, vendors or service providers could result in unintended consequences and may intensify our cybersecurity risks.
Table of Contents
We believe our mitigation measures reduce but cannot eliminate the risk of a cyber incident; however, there can be no assurance that our existing and planned precautions of backup systems, regular data backups, security protocols and other procedures will be adequate to prevent significant damage, system failure or data loss and the same is true for our partners, vendors and other third parties on which we rely. Because techniques used to obtain unauthorized access or sabotage systems change frequently and generally are not identified until they are launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative or mitigating measures. Though it is difficult to determine what harm may directly result from any specific interruption or breach, any failure to maintain performance, reliability, security and availability of our network infrastructure or otherwise maintain the confidentiality, security, and integrity of data that we store or otherwise maintain on behalf of third-parties may harm our reputation and our associate, customer and consumer relationships.
If such unauthorized disclosure or access does occur, we may be required to notify our customers, consumers, associates or those persons whose information was improperly used, disclosed or accessed. We may also be subject to claims of breach of contract for such use or disclosure, investigation and penalties by regulatory authorities and potential claims by persons whose information was improperly used or disclosed. We could also become the subject of regulatory action or litigation from our consumers, customers, associates, suppliers, service providers, and shareholders, which could damage our reputation, require significant expenditures of capital and other resources, and cause us to lose business and revenue. Additionally, an unauthorized disclosure or use of information could cause interruptions in our operations and might require us to spend significant management time and other resources investigating the event and coordinating with local and federal law enforcement. Regardless of the merits and ultimate outcome of these matters, we may be required to devote time and expense to their resolution.
In addition, the increase in the number and the scope of data security incidents has increased regulatory and industry focus on security requirements and heightened data security industry practices. The rapid evolution and increased adoption of complex AI technologies has amplified this focus and continues to influence and impact data security industry requirements and practices. New regulation, evolving industry standards, and the interpretation of both, may cause us to incur additional expense in complying with any new data security requirements. As a result, the failure to maintain the integrity of and protect customer or supplier data or our confidential internal data could result in unintended consequences such as reputational damage, legal liabilities or loss of business, which could have a material adverse effect on our business, operating results and financial condition.
We rely on central global Enterprise Resource Planning (“ERP”) systems and other peripheral information systems. A cybersecurity breach, obsolescence or interruptions in the operation of our computerized systems or other information technologies could have a material adverse effect on our operations and profitability.
Our operations are largely dependent on our ERP system. We continuously make adjustments to improve the effectiveness of the ERP and other peripheral information systems, including the installation of significant new subsystems. In fiscal 2026, we replaced our financial consolidation, planning and reporting system. In fiscal 2027, we are planning to replace our supply chain planning system. Our ERP system is subject to continually evolving cybersecurity and technological risks, including risks associated with cloud data storage. Any failures or disruptions in the ERP and other information systems, including a cybersecurity breach, or any complications resulting from ongoing adjustments to our systems could cause interruption or loss of data in our information or logistical systems that could materially impact our ability to procure products from our manufacturers, transport them to our distribution facilities, and store and deliver them to our customers on time and in the correct amounts. In addition, natural disasters or other extraordinary events may disrupt our information systems and other infrastructure, and our data recovery processes may not be sufficient to protect againstloss.
Table of Contents
In fiscal 2026, we replaced our financial consolidation, planning and reporting system, and we are planning to replace our supply chain planning system to leverage best in class ways of working and modernized technologies that enhanceefficiency, effectiveness and experience. In the future, we could identify and embark upon additional projects to upgrade or replace our information systems. These projects will require the investment of significant personnel and financial resources and the re-engineering of business processes. System implementations subject us to substantial costs and inherent risks associated with migrating from our legacy systems and processes. These costs and risks include, but are not limited to: significant capital and operating expenditures; diversion of associates’ and management’s attention from day-to-day business operations; disruptions to our supply chain; inability to deliver products to our customers in a timely manner; inability to process payments to manufacturers, vendors and associates accurately and in a timely manner; and possible weakened effectiveness of our internal controls over financial reporting. If we are not able to successfully design and implement new systems as planned and in a timely manner, we could incur increased costs, disruptions to our operations or other difficulties, each of which could have a material adverse effect on our business, operating results and financial condition.
We rely on licensed trademarks from third parties and license certain trademarks to third parties in exchange for royalty income, the loss of which could have a material adverse effect on our revenues and profitability.
A significant portion of our sales revenue comes from selling products under licensed trademarks, particularly in the Beauty & Wellness segment. As a result, we are dependent upon the continued use of these trademarks. Additionally, we license certain owned trademarks to third parties in exchange for royalty income. It is possible that certain actions taken by us, our licensors, licensees, or other third parties might greatlydiminish the value of any of our licensed trademarks. Our licensors and licensees also generally have the ability to terminate or non-renew their license agreements with us at their option subject to each parties’ right to continue the license for a period of time following notice of termination or non-renewal. If we, or our licensees, were unable to sell products under these licensed trademarks, or one or more of our license agreements were terminated or the value of the trademarks were diminished, the effect on our business, operating results and financial condition could be both negative and material.
To compete successfully, we must develop and introduce a continuing stream of innovative new products to meet changing consumer preferences.
Our long-term success in the competitive retail environment depends on our ability to develop and commercialize a continuing stream of innovative new products that meet changing consumer preferences and take advantage of opportunities sooner than our competition. We face the risk that our competitors will introduce and successfully market innovative new products that compete with our products, which could result in redeployment of shelf space to our competitors or lost distribution. We also face the risk that our competitors will adapt to changing consumer preferences more quickly, which could lead to a decline in our market share. There are numerous uncertainties inherent in successfully developing and commercializing new products on a continuing basis and new product launches may not deliver expected growth in sales or operating income. If we are unable to develop and introduce a continuing stream of competitive new products, it may have an adverse effect on our business, operating results and financial condition.
Large customers may take actions that adversely affect our gross profit and operating results .
With the continuing trend towards retail trade consolidation, we are increasingly dependent upon key customers whose bargaining strength is substantial and growing. We may be negatively affected by changes in the policies of our customers, such as on-hand inventory reductions, limitations on access to shelf space, use of private label brands, price and term demands, actions to respond to public health
Table of Contents
crises, and other conditions, which could negatively impact our business, operating results and financial condition.
Certain of our customers source and sell products under their own private label brands that compete with our products. Additionally, as large traditional retail and online customers grow even larger and become more sophisticated, they may continue to demand lower pricing, special packaging, shorter lead times for the delivery of products, smaller more frequent shipments, or impose other requirements on product suppliers. These business demands may relate to inventory practices, logistics or other aspects of the customer-supplier relationship. If we do not effectively respond to these demands, these customers could decrease their purchases from us. A reduction in the demand for our products by these customers and the costs of complying with their business demands could have a material adverse effect on our business, operating results and financial condition.
Our operating results are dependent on sales to several large customers and the loss of, or substantial decline in, sales to a top customer could have a material adverse effect on our revenues and profitability.
A few customers account for a substantial percentage of our net sales revenue. Our financial condition and operating results could suffer if we lost all or a portion of the sales to any one of these customers. In particular, sales to our two largest customers accounted for approximately 33% of our consolidated net sales revenue in fiscal 2026. While only three customers individually accounted for 10% or more of our consolidated net sales revenue in fiscal 2026, sales to our top five customers in aggregate accounted for approximately 50% of fiscal 2026 consolidated net sales revenue. We expect that a small group of customers will continue to account for a significant portion of our net sales revenue. Although we have long-standing relationships with our major customers, we generally do not have written agreements that require these customers to buy from us or to purchase a minimum amount of our products. A substantial decrease in sales to any of our major customers could have a material adverse effect on our financial condition and operating results. Some of our customers’ creditworthiness may be vulnerable to the impact of a prolonged economic downturn or a public health crisis. We regularly monitor and evaluate the credit status of our customers and attempt to adjust sales terms as appropriate. Despite these efforts, a deterioration in the credit worthiness or bankruptcy filing of a key customer could have a material adverse effect on our business, operating results and financial condition.
We are dependent on third-party manufacturers, most of which are located in Asia, and any inability to obtain products from such manufacturers could have a material adverse effect on our business, operating results and financial condition.
All of our products are manufactured by unaffiliated companies, most of which are in Asia. For fiscal 2026, finished goods manufactured in Asia comprised approximately 83% of total finished goods purchased, of which 57% was manufactured in China. This concentration exposes us to risks associated with doing business globally, including among others: global public health crises (such as pandemics and epidemics); changing international political relations and conflicts; labor availability and cost; changes in laws, including tax laws, regulations and treaties; changes in labor laws, regulations and policies; changes in customs duties, additional tariffs and other trade barriers; changes in shipping costs; currency exchange fluctuations; local political unrest; an extended and complex transportation cycle; the impact of changing economic conditions; and the availability and cost of raw materials and merchandise. In recent years, increasing labor costs, import tariffs, regional labor dislocations driven by new government policies, local inflation, changes in ocean cargo carrier capacity and costs, the impact of energy prices on transportation, and fluctuations in the Chinese Renminbi against the U.S. Dollar have resulted in variability in our cost of goods sold. In the past, certain Chinese suppliers have closed operations due to economic conditions that pressured their profitability. Although we have multiple sourcing partners for certain products, occasionally we may be unable to source certain items on a timely basis due to changes occurring with our suppliers. We continue to make progress in sourcing certain similar products
Table of Contents
outside of China and have initiated significant efforts to diversify our supplier base outside of China through continuously exploring the expansion of sourcing alternatives in other countries where we expect tariffs, overall costs or sourcing risks to be lower. However, the relocation of any production capacity will continue to require more time, could require substantial costs and may not be successful. The political, legal, trade and cultural environment in Asia is rapidly evolving, and any change that impairs our ability to obtain products from manufacturers in that region, or to obtain products at marketable rates, could have a material adverse effect on our business, operating results and financial condition. Recently imposed tariffs resulted in the pause or cancellation of direct import orders from China by certain of our key retailers, which adversely impacted our net sales revenue during fiscal 2026. Our sales were also negatively impacted by evolving dynamics in the China market, including a shift toward localized fulfillment models and heightened competition from domestic sellers benefiting from government subsidies. Any further trade-related developments between China and the U.S. could have a material adverse effect on our business, operating results and financial condition.
Any disruption to our supply chain, even for a relatively short period of time, could cause a loss of revenue, which could adversely affect our operating results. Additionally, surges in demand and shifts in shopping patterns, as well as other factors, can strain the global supply chain network resulting in higher inbound freight costs and surges in prices for raw materials, components and semiconductor chips, which could adversely impact our operating costs. Recently imposed tariffs have increased our cost of goods sold in fiscal 2026 and may continue to unfavorably impact our costs. If global supply chain disruptions or further trade-related policies or import restrictions emerge, we may experience further cost increases which could have a material adverse effect on our business, operating results and financial condition.
With most of our manufacturers located in Asia, our production lead times are relatively long. Therefore, we must commit to production in advance of customer orders. If we fail to forecast customer or consumer demand accurately, we may encounter difficulties in filling customer orders on a timely basis or in liquidating excess inventories. We may also find that customers are canceling orders or returning products. Any of these results could have a material adverse effect on our business, operating results and financial condition.
Our ability to deliver products to our customers in a timely manner and to satisfy our customers’ fulfillment standards are subject to several factors, some of which are beyond our control .
Retailers place great emphasis on timely delivery of our products for specific selling seasons, especially during our third fiscal quarter, and on the fulfillment of consumer demand throughout the year. We cannot control all of the various factors that might affect product delivery to retailers. Vendor production delays, difficulties encountered in shipping from overseas, customs clearance delays, and operational issues with any of the third-party logistics providers we use in certain countries are on-going risks of our business. We also rely upon third-party carriers for our product shipments from our distribution facilities to customers. In certain circumstances, we rely on the shipping arrangements our suppliers have made in the case of products shipped directly to retailers from the suppliers. Accordingly, we are subject to risks, including labor disputes, inclement weather, public health crises (such as pandemics and epidemics), natural disasters, possible acts of terrorism, port and canal backlogs and blockages, availability of shipping containers, carrier-imposed capacity restrictions, carrier delays, shortages of qualified drivers, tariffs and other trade restrictions and increased security restrictions associated with the carriers’ ability to provide delivery services to meet our shipping needs. Our third-party manufacturing partners are not equipped to hold meaningful amounts of inventory and if shipping container capacity is limited or unavailable, they could pause manufacturing, which could ultimately impact our ability to meet consumer demand on a timely basis. Further, our delivery process must often accommodate special vendor requirements to use specific carriers and delivery schedules. During the first quarter of fiscal 2025, we experienced automation system startup issues at our new distribution facility in Gallaway, Tennessee which impacted some of our Home & Outdoor segment’s small retail customer and direct-to-consumer orders. As a result, our sales during the first quarter of fiscal 2025 were adversely impacted due to
Table of Contents
shipping disruptions, and we incurred additional costs and lostefficiency during both the first and second quarters of fiscal 2025 as we worked to remediate the issues. As a result of the remediation efforts performed, the automation system began to operate as designed during the third quarter of fiscal 2025, and we achieved targeted efficiency levels by the end of fiscal 2025. Any future similar incidents could cause us to fail to deliver products to our retailers in a timely and effective manner which could damage our reputation and brands and result in the loss of customers or reduced orders, which could have a material adverse effect on our business, operating results and financial condition.
Our operating results may be adversely affected by trade barriers, exchange controls, expropriations, and other risks associated with domestic and foreign operations, including uncertainty and business interruptions resulting from political changes and events in the U.S. and abroad and volatility in the global credit and financial markets and economy.
The economies of foreign countries important to our operations, including countries in Asia, EMEA and Latin America, could sufferslower economic growth or economic, social and/or political instability or hyperinflation in the future. Our international operations in countries in Asia, EMEA and Latin America, including manufacturing and sourcing operations (and the international operations of our customers), are subject to inherent risks which could adversely affect us. Additionally, there may be uncertainty and business interruptions resulting from political changes and events in the U.S. and abroad, ongoing terrorist activity, and other global events. The global credit and financial markets continue to experience volatility and disruptions, including diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, and uncertainty about economic stability. The financial markets and the global economy may also be adversely affected by the current or anticipated impact of military conflict or other geopolitical events. Sanctions imposed by the U.S. and other countries in response to such conflicts may also adversely impact the financial markets and the global economy, and any economic countermeasures by affected countries and others could exacerbate market and economic instability. There can be no assurance that further deterioration in credit and financial markets and confidence in economic conditions will not occur.
The domestic and foreign risks of these changes include, among other things:
• protectionist policies restricting or impairing the manufacturing, sales or import and export of our products;
• new restrictions on access to markets;
• lack of required infrastructure;
• inflation (including hyperinflation) or recession;
• changes in, and the burdens and costs of compliance with, a variety of U.S. and foreign laws and regulations, including environmental laws, occupational health and safety laws, tax laws, and accounting standards;
• social, political or economic instability;
• acts of war and terrorism;
• natural disasters and public health crises, such as pandemics and epidemics;
• reduced protection of intellectual property rights in some countries;
• increases in duties, tariffs and taxation;
• restrictions on transfer of funds or exchange of currencies;
• currency devaluations;
• expropriation of assets; and
• other adverse changes in policies, including monetary, tax or lending policies, encouraging foreign investment or foreign trade by our host countries.
Some of these events have occurred, such as increases in tariffs, which adversely impacted our cost of goods sold and had cascading adverse impacts on our net sales revenue, business, results of operations and cash flows. Should any of these events reoccur or occur in the future, our ability to sell or export our products or repatriate profits could be impaired, we could experience a loss of sales and profitability from
Table of Contents
our domestic or international operations, and/or we could experience a substantial impairment or loss of assets, any of which could materially and adversely affect our business, operating results and financial condition.
We are subject to risks related to our dependence on the strength of retail economies and may be vulnerable in the event of a prolonged economic downturn, including a downturn from the effects of macroeconomic conditions, geopolitical conditions including global conflicts or wars, any public health crises or similar conditions.
Our business depends on the strength of the retail economies in various parts of the world, primarily in North America and to a lesser extent EMEA, Asia and Latin America. These retail economies are affected for the most part by factors such as consumer demand and the condition of the retail industry, which, in turn, are affected by general economic conditions and specific events such as natural disasters, public health crises (such as pandemics and epidemics), global trade and tariff policy disputes, terrorist attacks and political unrest. Consumer spending in any geographic region is generally affected by a number of factors, including among others, local economic conditions, government actions, including trade and tariff policies, inflation, interest rates and credit availability, energy costs, commodity prices, unemployment rates, higher consumer debt levels, reductions in net worth, home foreclosures and reductions in home values, gasoline prices, and consumer confidence, all of which are beyond our control. Consumer purchases of discretionary items tend to decline during recessionary periods, when disposable income is lower, and may impact sales of our products. Measures imposed, or that may be imposed, by national, state and local authorities in response to any public health crises or global trade and tariff policies may have impacts of uncertain severity and duration on domestic and foreign economies. The effectiveness of economic stabilization efforts, including government payments and loans to affected citizens and industries, is uncertain. Any sustained economic downturn in the U.S. or any of the other countries in which we conduct significant business, may cause significant readjustments in both the volume and mix of our product sales, which could materially and adversely affect our business, operating results and financial condition. We cannot reasonably estimate the duration and severity of existing macroeconomic conditions, which have had and may continue to have a material impact on our business. Additionally, global issues may affect our business and the global economy, including the geopolitical impact of military conflict (such as the Israel-United States and Iran conflict) and any related economic or other sanctions, including trade and tariff policies. While we have not experienced any direct impact from the conflicts including the Middle East and elsewhere, the extent and duration of the military action, sanctions and resulting disruptions to supply chains and the global economy are impossible to predict but could be substantial and could adversely affect our operating results as they continue to impact the global economy in the future. As a result, current financial information may not necessarily be indicative of future operating results, and our plans to address the impact of macroeconomic trends and global issues may change.
Our business is subject to weather conditions, the duration and severity of the cold and flu season and other related factors, which can cause our operating results to vary from quarter to quarter and year to year.
Sales in our Beauty & Wellness segment are influenced by weather conditions. Sales volumes for thermometers and humidifiers and heating appliances are higher during, and subject to the severity of, the cold weather months, while sales of fans are higher during, and subject to weather conditions in, spring and summer months. Weather conditions can also more broadly impact sales across the organization. Additionally, natural disasters (such as wildfires, hurricanes and ice storms), public health crises (such as pandemics and epidemics), or unusually severe winter weather may result in temporary unanticipated fluctuations in retail traffic and consumer demand, may impact our ability to staff our distribution facilities or could otherwise impede timely transport and delivery of products to and from our distribution facilities. Sales in our Beauty & Wellness segment are also impacted by cough, cold and flu seasonal trends, including the duration and severity of the cold and flu season. In fiscal 2026 and 2025,
Table of Contents
our Beauty & Wellness segment’s net sales revenue was adversely impacted by an illness season below historical averages globally. These factors could have a material effect on our business, operating results and financial condition.
We rely on our CEO and a limited number of other key senior officers to operate our business. The loss of any of these individuals could have a material adverse effect on our business.
During fiscal 2026, we had a transition in our CEO. The loss of our current CEO or any of our key senior officers could have a material adverse effect on our business, operating results and financial condition, particularly if we are unable to hire and integrate suitable replacements on a timely basis. Further, as we continue to grow our business, we will continue to adjust our senior management team. If we are unable to attract or retain the right individuals for the team, it could hinder our ability to efficiently execute our business, and could disrupt our operations or otherwise have a material adverse effect on our business.
We may be unsuccessful in executing and realizing expected synergies from strategic business initiatives such as acquisitions, divestitures, and global restructuring plans (including Project Pegasus), which may adversely affect the price of our common stock.
We continue to look for strategic business opportunities to drive long-term growth and operating efficiencies, which may include acquisitions, divestitures and/or global restructuring plans. We frequently evaluate our brand portfolio and product portfolio and may consider acquisitions that complement our business or divestitures, or exits of businesses, that we no longer believe to be an appropriate strategic fit. We initiated, and may initiate in the future, global restructuring plans, such as Project Pegasus, to achieve strategic objectives and improve financial results. Any acquisition, divestiture or global restructuring plan, if not favorably received by consumers, shareholders, analysts, and others in the investment community, could have a material adverse effect on the price of our common stock.
In addition, any acquisition, divestiture or global restructuring plan, including Project Pegasus, involves numerous risks, including:
• our ability to successfully complete the initiative in a timely manner, or at all;
• the initiative may not advance our business strategy as expected;
• challenges realizing anticipated cost savings, efficiencies, synergies, financial targets and other benefits;
• difficulties in accurately predicting costs and future savings;
• costs incurred in completing the initiative may be greater than anticipated;
• the initiative may lead to increases in costs in other aspects of our business such as increased conversion, outsourcing or distribution costs;
• diversion of management’s attention from other business concerns;
• challenges in integrating or separating personnel and financial or other systems;
• potential loss of key employees and/or reduced employee morale and productivity; and
• difficulties in transitioning and preserving customer, contractor, supplier, and other important third-party relationships.
Acquisitions pose additional risks, including:
• difficulties in the assimilation of the operations, technologies, and products;
• challenges in integrating distribution channels;
• changes in cash flows or other market-based assumptions or conditions that cause the value of acquired assets to fall below book value;
• risks associated with subsequent losses or operating asset write-offs, contingent liabilities and impairment of related acquired intangible assets including goodwill; and
• risks of entering markets in which we have no or limited experience.
Table of Contents
Divestitures pose additional risks, including:
• our ability to find appropriate buyers;
• difficulties executing transactions on favorable terms;
• separating divested business operations with minimal impact to our remaining operations;
• risks associated with operating asset write-offs and impairment charges; and
• challenges effectively managing any transition service arrangements.
Legal, Regulatory and Tax Risks
If significant tariffs or other restrictions continue to be placed on imports from China, Vietnam or Mexico, or any retaliatory trade measures are taken by China, Vietnam or Mexico, our business and results of operations could be materially and adversely affected.
All of our products are manufactured by unaffiliated manufacturers, most of which are located in China, Vietnam, Mexico and the U.S. This concentration exposes us to risks associated with doing business globally, including changes in tariffs. The U.S. government has implemented trade policies intended to restrict imports, including raising tariffs on certain goods. During calendar year 2025, the U.S. government announced and implemented a series of new and revised tariffs on imports from multiple countries, including China, Vietnam and Mexico, and has indicated the potential for additional changes to existing trade agreements. Some tariffs have been temporarily paused or adjusted, but the scope, magnitude and timing of future policies remain uncertain. In response to U.S. actions, other countries have imposed retaliatory tariffs on a broad range of goods, and further tariffs could be enacted by the U.S. or in response to international trade measures.
During fiscal 2026, the impact of the tariffs adversely impacted our cost of goods sold and had cascading adverse impacts on our net sales revenue, interest expense, business, results of operations and cash flows. Our cost of goods sold during fiscal 2026 included $50.7 million of additional pre-tax costs related to the changes in tariffs enacted. Our net sales revenue during fiscal 2026 was also negatively impacted by a combination of factors including the pause or cancellation of direct import orders from China by key retailers in response to increased tariff rates, a slowdown in retailer orders following pull forward activity in the fourth quarter of fiscal 2025 due to tariff uncertainty, and lower consumer confidence and demand. Sales were also negatively impacted by evolving dynamics in the China market, including a shift toward localized fulfillment models and heightened competition from domestic sellers benefiting from government subsidies. Net sales revenue during the second half of fiscal 2026 was unfavorably impacted by stop shipment actions in support of consistent adoption of tariff related price increases by our retail partners, which primarily impacted our Beauty & Wellness segment. We also incurred higher interest expense during fiscal 2026 due to the impact of tariffs resulting in higher inventory carrying costs and higher capital expenditures to diversify our production outside of China. In addition to the uncertainty from evolving global tariff policies, we experienced and expect continued unfavorable cascading impacts on inflation, consumer confidence, employment and overall macroeconomic conditions, all of which may continue to adversely impact our sales, results of operations and cash flows. For additional information regarding tariffs, refer to “Significant Trends Impacting the Business” in Item 7., “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.
Any further alteration of trade agreements and terms between China, Vietnam, Mexico and the U.S., including limiting trade with China, Vietnam and Mexico, imposing additional tariffs on imports from China, Vietnam or Mexico and potentially imposing other restrictions on imports from China, Vietnam or Mexico to the U.S. may result in further or higher tariffs, or further retaliatory trade measures by China, Vietnam or Mexico, all of which could have a material adverse effect on our business and operating results.
Table of Contents
Changes in laws and regulations, including environmental, employment and health and safety and tax laws, and the costs and complexities of compliance with such laws could have a material adverse impact on our business.
The impact of future legislation in the U.S. or abroad, including such things as employment and health insurance laws, environmental and climate change related legislation, tax legislation, regulations or treaties is always uncertain. Global, federal and local legislative agendas from time to time contain numerous proposals dealing with environmental policy, energy policy, taxes, financial regulation, transportation policy and infrastructure policy, among others that, if enacted into law, could increase our costs of doing business. Changes in government administrations in the U.S. or abroad increase the uncertainty of future changes in legislation, enhanced regulations, and greater oversight, or more stringent interpretations, of existing policies by regulatory agencies. Changes in such laws, regulations or oversight could cause us to incur material capital or operating expenditures in the future to comply with applicable laws and regulations, increase our effective income tax rate, delay or interrupt distribution of our products, or make them more costly to produce, all of which could have a material adverse impact on our business.
For example, the Organisation for Economic Co-operation and Development (“OECD”) has introduced a framework to implement a global minimum corporate income tax of 15%, referred to as “Pillar Two.” Certain countries in which we operate have enacted, or are in the process of enacting, domestic legislation aligned with OECD’s Pillar Two “Model Rules.” Pillar Two legislation in effect for our fiscal 2025 and 2026 has been incorporated into our consolidated financial statements. However, Pillar Two remains an evolving regime, and as additional jurisdictions adopt these rules, existing rules are revised, or administrative guidance and enforcement practices develop, we could experience adverse impacts on our global effective tax rate and an increase in the cost and complexity of compliance.
As additional tax or financial regulatory guidance is issued by the applicable authorities and accounting treatment is clarified, we perform additional analysis on the application of the law and we refine our estimates. Our final analysis may be different from provisional amounts, which could materially affect our tax obligations, effective tax rate and operating results in the period completed.
Increased focus and expectations on climate change and other sustainability matters could have a material adverse effect on our business, financial condition and results of operations and damage our reputation.
Increased focus and expectations on sustainability are emerging trends with governmental and non-governmental organizations, consumers, shareholders, retail customers, communities, and other stakeholders. These trends have led to, among other things, increased public and private social accountability reporting requirements relating to labor practices, climate change, human trafficking and other sustainability matters and greater demands on our packaging and products. The increased focus on sustainability matters may also lead to new or more regulations and customer, shareholder and consumer demands that could require us to incur additional costs or make changes to our operations to comply with new regulations or address these demands. We expect that these trends will continue. If we are unable to adequately respond to, or we are not perceived as adequately responding to, existing or new requirements or demands, customers and consumers may choose to purchase products from another company or a competitor. Increased requirements and costs to comply with these requirements, such as climate change regulations and international accords may also cause disruptions in or higher costs associated with manufacturing or distributing our products. Any failure to achieve our sustainability goals or a perception of our failure to act responsibly or to effectively respond to new, or changes in, legal or regulatory requirements relating to sustainability matters could adversely affect our business, financial condition, results of operations and reputation.
Table of Contents
Significant changes in or our compliance with regulations, interpretations or product certification requirements could adversely impact our operations.
As a global company, we are subject to U.S. and foreign regulations, including environmental, health and safety laws, and industry-specific product certifications. Many of the products we sell are subject to product safety laws and regulations in various jurisdictions. These laws and regulations specify the maximum allowable levels of certain materials that may be contained in our products, provide statutory prohibitions againstmisbranded and adulterated products, establish ingredients and manufacturing procedures for certain products, specify product safety testing requirements, and set product identification, labeling and claim requirements. For example, thermometers distributed by our Beauty & Wellness segment must comply with various regulations governing the production and distribution of medical devices.
We are encountering increasingly burdensome and costly requirements relating to the regulation of our company and our products. Significant new regulations, material changes to existing regulations, or greater oversight, enforcement or changes in interpretation of existing regulations, could further delay or interrupt distribution of our products in the U.S. and other countries, result in fines or penalties or cause our costs of compliance to increase. We cannot guarantee that our products will receive regulatory approval in all countries. Some of our Beauty & Wellness segment’s customers require that our hair appliances comply with various safety certifications, including UL certifications. Significant new certification requirements or changes to existing certification requirements could further delay or interrupt distribution of our products or make them more costly to produce.
We are not able to predict the nature of potential changes to, or enforcement of, laws, regulations, product certification requirements, repeals or interpretations. Nor are we able to predict the impact that any of these changes would have on our business in the future. Further, if we were found to be noncompliant with applicable laws and regulations in these or other areas, we could be subject to private rights of action and similar proceedings seeking to enforce regulatory requirements and governmental or regulatory actions, including fines, import detentions, injunctions, product withdrawals or recalls or asset seizures, any of which could have a material adverse effect on our business, results of operations and financial condition.
Additionally, some of our product lines are subject to product identification, labeling and claim requirements, which are monitored and enforced by regulatory agencies, such as the EPA, U.S. Customs and Border Protection, the U.S. Food and Drug Administration, the U.S. Consumer Product Safety Commission and the EU. As discussed elsewhere in this Annual Report, during fiscal 2022 and 2023, we were in discussions with the EPA regarding the compliance of packaging and labeling claims on certain of our products in the air and water filtration and humidification categories within the Beauty & Wellness segment that are sold in the U.S. As a result of these packaging and labeling compliance discussions, we completed the repackaging and relabeling of impacted products during fiscal 2023. We continue to have ongoing settlement discussions with the EPA related to this matter. As of February 28, 2026, we accrued an estimated liability of $4.4 million, which represents our best estimate of probable settlement costs related to this matter. As a result, our business, results of operations and financial condition could be adversely and materially impacted in ways that we are not able to predict today. For additional information refer to Item 7., “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” including “EPA Compliance Costs” in this Annual Report.
Global legal developments regarding privacy and data security could result in changes to our business practices, penalties, increased cost of operations, or otherwise harm our business.
As a global company, we are subject to global privacy and data security laws, regulations, and codes of conduct that apply to our various business units. These laws and regulations may be inconsistent across jurisdictions and are subject to evolving and differing interpretations. Government regulators, privacy advocates and class action attorneys are increasingly scrutinizing how companies collect, process, use,
Table of Contents
store, share and transmit personal data. This increased scrutiny may result in new interpretations of existing laws, thereby further impacting our business.
New and emerging global and local laws on privacy, data and related technologies, as well as industry self-regulatory codes, are creating new compliance obligations and expanding the scope of potential liability, either jointly or severally with our customers and suppliers. While we have invested in readiness to comply with applicable requirements, these new and emerging laws, regulations and codes may affect our ability to reach current and prospective consumers, to respond to consumer requests under such laws (such as individual rights of access, correction, and deletion of their personal information), and to implement our business models effectively. The costs of compliance or failure to comply with such laws, regulations, codes of conduct and expectations could have a material adverse impact on our financial condition and results of operations.
Our business involves the potential for product recalls, product liability and other claimsagainst us, which could materially and adversely affect our business, operating results and financial condition.
From time to time, we are involved in various claims, litigation matters and regulatory proceedings that arise in the ordinary course of our business and that could have a material adverse effect on us. These matters may include personal injury (including asbestos and similar claims) and other tort claims, deceptive trade practice disputes, intellectual property disputes, product recalls, contract disputes, private rights of action and similar proceedings seeking to enforce regulatory requirements, warranty disputes, employment and tax matters and other proceedings and litigation, including class actions. Litigation, in general, and securities, derivative action, class action and multi-district litigation, in particular, can be expensive and disruptive. These matters may include many plaintiffs, may involve parties seeking large and/or indeterminate amounts, including punitive or exemplarydamages, and may remain unresolved for several years.
Establishing loss reserves for any such matters is subject to uncertainties because of many factors, including adverse changes to the personal injury and tort environment (such as increased litigation, expanded theories of liability, higher jury awards and lawsuit abuse and third-party litigation finance, among others) and evolving judicial interpretations, including application of various theories of joint and several liabilities. Because of these uncertainties, additional liabilities may arise for amounts in excess of any loss reserves that we may establish. In addition, estimates of loss reserves may change with any of the developments noted. These additional liabilities or increases in estimates, or a range of either, could vary significantly from period to period and could materially and adversely affect our results of operations and/or our financial position.
It is not possible to predict the outcome of pending or future litigation. As with any litigation, it is possible that some of the actions could be decided unfavorably, resulting in significant liability and, regardless of the ultimate outcome, can be costly to defend. Our results and our business could also be negatively impacted if one of our brands suffers substantial damage to its reputation due to a significant product recall or other product-related litigation and if we are unable to effectively manage real or perceived concerns about the safety, quality, or efficacy of our products. The Company’s more significant legal proceedings are described in Item 3., “Legal Proceedings,” and in Note 12 to the accompanying consolidated financial statements.
Although we maintain liability insurance in amounts that we believe are reasonable, that insurance is, in most cases, subject to large self-insured retentions for which we are responsible. We cannot provide assurance that we will be able to maintain such insurance on acceptable terms, if at all in the future, or that product liability or other claims will not exceed the amount of insurance coverage, or that all such matters would be covered by our insurance. For example, asbestos and similar claims are generally
Table of Contents
excluded from coverage. As a result, these types of claims could have a material adverse effect on our business, operating results and financial condition.
Under current U.S. federal income tax law, tax treatment of our non-U.S. income is dependent on whether we are classified as a “controlled foreign corporation” for U.S. federal income tax purposes. Changes in the composition of our stock ownership could have an impact on our classification. If our classification were to change, it could have a material adverse effect on the largest U.S. shareholders and, in turn, on our business.
A non-U.S. corporation, such as ours, will constitute a “controlled foreign corporation” or “CFC” for U.S. federal income tax purposes if its largest U.S. shareholders together own more than 50 percent of the stock outstanding. A U.S. shareholder is defined as any U.S. person who owns directly, indirectly, or constructively: (1) 10 percent or more of the total combined voting power of all classes of stock, or (2) 10 percent or more of the total value of shares of all classes of stock. If the Internal Revenue Service or a court determined that we were a CFC at any time during the tax year, then each of our U.S. shareholders as defined above would be required to include in gross income for U.S. federal income tax purposes its pro rata share of our “subpart F income” (and the subpart F income of any of our subsidiaries determined to be a CFC) for the period during which we (and our non-U.S. subsidiaries) were deemed a CFC. In addition, any gain on the sale of our shares realized by such a shareholder may be treated as ordinary income to the extent of the shareholder’s proportionate share of our and our CFC subsidiaries’ undistributed earnings and profits accumulated during the shareholder’s holding period of the shares while we were deemed to be a CFC.
Changes in economic substance, tax governance and related regulatory regimes in Bermuda could adversely affect our operations.
We are organized in Bermuda, which previously adopted economic substance legislation in response to the EU’s review of potentially harmful tax practices. Bermuda’s economic substance regime requires entities that conduct “relevant activities” to demonstrate compliance with the Economic Substance Act 2018 and related regulations, which require core income generating activities to be undertaken in Bermuda and impose obligations relating to personnel, premises, governance and annual regulatory filings.
Although Bermuda is currently classified as a cooperative jurisdiction and does not appear on the EU list of noncooperative tax jurisdictions in the most recently published updates, future changes to how the jurisdiction is assessed under international tax governance standards, or changes in guidance or enforcement practices, could increase our compliance costs or require us to modify aspects of our operations. Any such changes could adversely affect our business, financial condition or results of operations.
Our judgments regarding the accounting for tax positions and the resolution of tax disputes may impact our net earnings and cash flow.
Significant judgment is required to determine our effective tax rate and evaluate our tax positions. We provide for uncertain tax positions when such tax positions do not meet the recognition thresholds or measurement criteria prescribed by applicable accounting standards. Fluctuations in federal, state, local and foreign taxes or a change to uncertain tax positions, including related interest and penalties, may impact our effective tax rate and financial results. Additionally, we are subject to audits in the various taxing jurisdictions in which we conduct business. In cases where audits are conducted and issues are raised, a number of years may elapse before such issues are finally resolved. Unfavorable resolution of any tax matter could increase the effective tax rate, which could have an adverse effect on our operating results and cash flow. For additional information regarding our taxes, see Note 18 to the accompanying consolidated financial statements.
Table of Contents
Financial Risks
Our business, liquidity or cost of capital may be materially adversely affected by constraints or changes in the capital and credit markets, interest rates and limitations under and compliance with our credit facility, including our debt covenants.
We need sufficient sources of liquidity to fund our working capital requirements, service our outstanding indebtedness and finance business opportunities. We may also assume or incur additional debt, including secured debt, in the future in connection with, or to fund, future acquisitions or for other operating needs. Without sufficient liquidity, we could be forced to curtail our operations, or we may not be able to pursue business opportunities. The principal sources of our liquidity are funds generated from operating activities, available cash, and borrowings under our credit facility. If our sources of liquidity do not satisfy our requirements, we may need to seek additional financing. The future availability of financing will depend on a variety of factors, such as economic and market conditions, the reaction by banks and financial institutions to a public health crisis (such as pandemics and epidemics), the regulatory environment for banks and other financial institutions, the availability of credit, our financial health and our reputation with potential lenders. Further, disruptions in national and international credit markets, including adverse developments impacting the financial services industry such as bank closures and investor concerns regarding the U.S. or international financial systems, could result in limitations on credit availability, tighter lending standards, higher interest rates on consumer and business loans and higher fees associated with obtaining and maintaining credit availability. Disruptions may also materially limit consumer credit availability and restrict credit availability to us and our customer base. In addition, in the event of disruptions in the financial markets, current or future lenders may become unwilling or unable to continue to advance funds under any agreements in place, increase their commitments under existing credit arrangements, or enter into new financing arrangements. In an economic downturn, we may also be unable to raise capital through debt or equity financings on terms acceptable to us or at all. Additionally, in challenging and uncertain economic environments, we cannot predict when macroeconomic uncertainty may arise, whether or when such circumstances may improve or worsen or what impact such circumstances could have on our business and our liquidity requirements. These factors could materially adversely affect our liquidity, costs of borrowing and our ability to pursue business opportunities or grow our business, and threaten our ability to meet our obligations as they become due.
Our credit facility contains financial covenants and other covenants that restrict or limit our ability to, among other things, incur debt or liens, make investments and dispose of assets. A breach of any of these covenants, including the failure to meet or maintain ratios or tests, may result in a default under our credit facility. In fiscal 2026, we amended our credit facility to, among other things, extend the leverage ratio holiday and change the interest coverage ratio to provide us with more flexibility as we navigate a continuation of negative sales trends and the unfavorable impact of tariffs and other macroeconomic conditions. If we are unable to comply with our financial or other covenants under our credit facility or obtain any necessary amendments to our credit facility in the future, an event of default could result. If an event of default occurs and is not cured or waived, the lenders under our credit facility may elect to accelerate the payment of our borrowings, together with accrued interest, terminate any commitments they have to provide further borrowings and to exercise any other rights they have under the facility or applicable law. The covenants, including financial covenants, in our credit facility could also restrict or delay our ability to obtain additional financing, potentially limiting our ability to adjust to rapidly changing market conditions or respond to business opportunities. If any of these events occur, it could have a material adverse effect on our business, financial condition, liquidity and ability to meet our obligations as they become due.
We currently have a substantial amount of indebtedness, which could adversely affect our financial condition and could have important consequences to our business. For example, it could make it more difficult for us to satisfy our obligations under our credit facility, increase our vulnerability to general adverse economic conditions, limit our ability to obtain necessary financing and to fund future working
Table of Contents
capital and other general corporate requirements, require us to dedicate our cash flow to payments on our indebtedness and limit our flexibility in planning for, or reacting to, changes in our business, competition and the industry in which we operate. Any of these events could have a material adverse effect on our liquidity, financial condition and business.
The Federal Open Market Committee lowered the benchmark interest rate by 75 basis points and 100 basis points during fiscal 2026 and 2025, respectively, compared to an increase of 75 basis points during fiscal 2024. Our variable rate debt and related interest rate swaps use the Secured Overnight Financing Rate (“SOFR”), a rate equal to the secured overnight financing rate as administered by the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate), as a benchmark for establishing interest rates. SOFR is a backward-looking measure, calculated based on short-term repurchase agreements, backed by U.S. Treasury securities. As such, if interest rates were to increase, our debt service obligations on variable rate debt subject to SOFR would increase, which could negatively impact our net income, cash flows and financial condition. Additionally, an increase in interest rates may impact our access to credit on favorable interest rate terms.
For additional information regarding our liquidity and the amendment to our credit facility, refer to Note 13 to the accompanying consolidated financial statements and Item 7., “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” including “Amended Credit Agreement” in this Annual Report.
If our goodwill, indefinite-lived and definite-lived intangible assets, or other long-lived assets become further impaired, we will be required to record additional impairment charges, which may be significant.
A significant portion of our non-current assets consists of goodwill and intangible assets recorded as a result of past acquisitions. We do not amortize goodwill and indefinite-lived intangible assets, but rather review them for impairment on an annual basis or more frequently whenever events or changes in circumstances indicate that their carrying value may not be recoverable. We review intangible assets with definite lives and long-lived assets held and used for impairment if a triggering event occurs during the reporting period. We evaluate any long-lived assets held for sale quarterly to determine if fair value less cost to sell has changed during the reporting period. We record impairment charges to the extent the carrying values of these assets are not recoverable in accordance with the applicable accounting standards.
During each quarter of fiscal 2026, we concluded a goodwill impairment triggering event had occurred due to a further sustained decline in our stock price, resulting in our carrying value (excluding long-term debt) exceeding the Company’s total enterprise value (market capitalization plus long-term debt). Additional factors that contributed to these conclusions included downward revisions to our internal forecasts and strategic long-term plans, which reflect the tariff policies in effect, timing of corresponding price increases and the related macroeconomic environment at the end of each quarter of fiscal 2026, including the corresponding impact on consumer spending and retailer orders. These factors were applicable to all of our reporting units, indefinite-lived trademark licenses and trade names and definite-lived trademark licenses, trade names, and certain other intangible assets. Thus, we performed quantitative impairment testing on our goodwill and intangible assets described above during each quarter of fiscal 2026.
As a result of such testing, we recorded pre-tax asset impairment charges during fiscal 2026 of $885.9 million, consisting of $332.6 million in our Home & Outdoor segment and $553.3 million in our Beauty & Wellness segment. Total pre-tax asset impairment charges included charges to reduce the carrying value of our goodwill, indefinite-lived intangible assets and definite-lived intangible assets by $706.5 million, $97.0 million and $82.4 million, respectively. Asset impairment charges recognized during fiscal 2026 for our Home & Outdoor segment included charges for our Hydro Flask and Osprey
Table of Contents
businesses of $184.4 million and $148.1 million, respectively. Asset impairment charges recognized during fiscal 2026 for our Beauty & Wellness segment included charges for our Health & Wellness, Drybar, Curlsmith and Revlon businesses of $242.2 million, $154.5 million, $133.0 million and $23.5 million, respectively. Such charges have had and may continue to have a significant negative impact on our results of operations.
During fiscal 2026, management sequentially reduced its forecasts for net sales revenue, gross margin and earnings before interest and taxes to reflect the tariff policies in effect, timing of corresponding price increases inclusive of the impact of stop shipment actions to support consistent adoption and the related macroeconomic environment at the end of each of quarter, including the corresponding impact on consumer spending, retailer orders and China cross border ecommerce due to a shift to localized distribution, as applicable. The revised forecasts also resulted in management selecting lower residual growth rates, which were also reflective of revised long-term industry growth expectations, and royalty rates, as applicable.
For additional information regarding our impairment testing, refer to “Critical Accounting Policies and Estimates” in Item 7., “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 1 and Note 7 to the accompanying consolidated financial statements.
Considerable management judgment is necessary in reaching a conclusion regarding the reasonableness of fair value estimates, evaluating the most likely impact of a range of possible external conditions, considering the resulting operating changes and their impact on estimated future cash flows, determining the appropriate discount factors to use, and selecting and weighting appropriate comparable market level inputs. The recoverability of these non-current assets is dependent upon achievement of our projections and the continued execution of key initiatives related to revenue growth and profitability. The net sales revenue and profitability growth rates used in our projections are management’s estimate of the most likely results over time, given a wide range of potential outcomes. The assumptions and estimates used in our impairment testing involve significant elements of subjective judgment and analysis by our management. Some of the inherent estimates and assumptions used in determining the fair value of these non-current assets are outside of the control of management, including interest rates, cost of capital, tax rates, tariff rates, strength of retail economies and industry growth. Certain future events and circumstances, including higher tariffs, deterioration of retail economic conditions, higher cost of capital, a decline in actual and expected consumer demand, among others, could result in changes to these assumptions and judgments. While we believe that the estimates and assumptions we use are reasonable at the time made, changes in business conditions or other unanticipated events and circumstances may occur that cause actual results to differ materially from projected results, and this could potentially require future adjustments to our asset valuations and recognition of additional impairment charges.
Events and changes in circumstances that may indicate there is impairment and which may indicate interim impairment testing is necessary include, but are not limited to: strategic decisions to exit a business or dispose of an asset made in response to changes in economic, political and competitive conditions; the impact of the economic environment on our customer base and on broad market conditions that drive valuation considerations by market participants; a further sustained decline in our stock price and market capitalization; our internal expectations with regard to future revenue growth, operating results and the assumptions we make when performing our impairment reviews including execution of strategic initiatives, such as tariff mitigation plans; a significant decrease in the market price of our assets; a significant adverse change in the extent or manner in which our assets are used; a significant adverse change in legal factors or the business climate that could affect our assets; an accumulation of costs significantly in excess of the amount originally expected for the acquisition of an asset; changes in tariff rates; and significant changes in the cash flows associated with an asset. As a result of such circumstances, we may be required to revise certain accounting estimates and judgments related to the valuation of goodwill, indefinite-lived and definite-lived intangible assets and other long-
Table of Contents
lived assets, which could result in additional material impairment charges. Any such impairment charges could have a material adverse effect on our results of operations.
Our projections of product demand, sales and net income are highly subjective in nature and our future sales and net income could vary by a material amount from our projections.
From time to time, we may provide financial projections to our shareholders, lenders, investment community, and other stakeholders of our future sales and net income. Since we do not require long-term purchase commitments from our major customers and the customer order and ship process is very short, it is difficult for us to accurately predict the demand for many of our products, or the amount and timing of our future sales, related net income and cash flows.
Our projections are based on management’s best estimate of sales using historical sales data and other relevant information available at the time. These projections are highly subjective since sales to our customers can fluctuate substantially based on the demand of their retail consumers and related ordering patterns, as well as other risks described in this Annual Report. Additionally, changes in consumer demand, retailer inventory management strategies, global trade and tariff policies, transportation lead times, supplier capacity and raw material availability could make our inventory management and sales forecasting more difficult. Due to these factors, our future sales and net income could vary materially from our projections.
We are dependent on discretionary spending, which is affected by, among other things, economic and political conditions, consumer confidence, interest, inflation and tax rates, a public health crisis (such as pandemics and epidemics), and financial and housing markets, which are all outside of our control. Consequently, these and other potential impacts we are not currently aware of could also cause future sales and net income to vary materially from our projections.
Increased costs of raw materials, energy and transportation may adversely affect our operating results and cash flow.
Significant increases in the costs and availability of raw materials, energy and transportation may negatively affect our operating results. Our suppliers purchase significant amounts of metals and plastics to manufacture our products, some of which are or may become subject to the recent tariffs imposed by the U.S. government. In addition, they also purchase significant amounts of electricity to supply the energy required in their production processes. Global political instabilities and tensions and many other factors may increase fuel prices resulting in higher transportation prices and product costs. We are heavily dependent on inbound sea, rail and truck freight. In the past, disruptions in the global supply chain and freight networks increased our cost of goods sold and certain operating expenses, and any future disruptions could have a material adverse impact on our costs. Most recently, the outcome of the ongoing Israel-United States and Iran conflict is highly unpredictable and could lead to significant market and other disruptions, including significant volatility in the commodity prices and supply of energy resources and supply chain interruptions.
The cost of raw materials, energy and transportation, in the aggregate, represents a significant portion of our cost of goods sold and certain operating expenses, which we may not be able to pass on to our customers. Our operating results could be adversely affected by future increases in these costs. Additionally, the loss or disruption of essential manufacturing and supply elements such as raw materials or other finished product components, restricted transportation or increased freight costs, reduced workforce, or other manufacturing and distribution disruption could adversely impact our ability to meet our customers’ needs.
Table of Contents
Our operating results may be adversely affected by foreign currency exchange rate fluctuations.
The U.S. Dollar is the functional currency for the Company and all of its subsidiaries. Changes in the relation of other foreign currencies to the U.S. Dollar will affect our sales and profitability and can result in exchange losses because we have operations and assets located outside the U.S. We transact a portion of our international business in currencies other than the U.S. Dollar (“foreign currencies”). Such transactions include sales and operating expenses. As a result, portions of our cash, accounts receivable and accounts payable are denominated in foreign currencies. Accordingly, foreign operations will continue to expose us to foreign currency exchange rate fluctuations, which may result in the recognition of foreign exchange losses upon remeasurement to U.S. Dollars. Additionally, we purchase a substantial amount of our products from Chinese manufacturers in U.S. Dollars, who source a significant portion of their labor and raw materials in Chinese Renminbi. The Chinese Renminbi has fluctuated against the U.S. Dollar in recent years. During fiscal 2026, the average exchange rate of the Chinese Renminbi strengthenedagainst the U.S. dollar by approximately 1%, compared to the average rate during fiscal 2025. Chinese Renminbi currency fluctuations have the potential to add volatility to our product costs over time.
Where operating conditions permit, we seek to reduce foreign currency risk by purchasing most of our inventory with U.S. Dollars and by converting cash balances denominated in foreign currencies to U.S. Dollars. We use derivative financial instruments including forward contracts to mitigate certain foreign currency exchange rate risk inherent in our transactions denominated in foreign currencies. It is not practical for us to mitigate all our exposures, nor are we able to accurately project the possible effect of foreign currency remeasurement on our operating results or future net income due to our constantly changing exposure to various foreign currencies, difficulty in predicting fluctuations in foreign currency exchange rates relative to the U.S. Dollar and the significant number of currencies involved.
The impact of future foreign currency exchange rate fluctuations on our results of operations cannot be accurately predicted. Accordingly, there can be no assurance that foreign currency exchange rates:
• will be stable in the future;
• can be mitigated with currency hedging or other risk management strategies; or
• will not have a material adverse effect on our business, operating results and financial condition.
Loss
Loss
loss
loss
loss
impairment
benefit
restructuring
loss
limitation
disclosed
undue
Table of Contents
Overview
We are a leading global consumer products company offering creative products and solutions for our customers through a diversified portfolio of brands. Our portfolio of brands includes OXO, Hydro Flask, Osprey, Vicks, Braun, Honeywell, PUR, Hot Tools, Drybar, Curlsmith, Revlon and Olive & June, among others. We have built leading market positions through new product innovation, product quality and competitive pricing. As of February 28, 2026, we operated two reportable segments: Home & Outdoor and Beauty & Wellness.
During fiscal 2026, we made significant organizational and operational changes designed to stabilize our business. The Board of Directors appointed a new Chief Executive Officer with transformation experience needed to help drive our next phase of value creation. Under this new leadership, we are currently engaged in a comprehensive review of our strategic priorities as we re-position our Company to deliver sustained revenue and profit growth, increase market share and create superior long-term value for all stakeholders.
We are taking steps to modernize our business model designed to move at the speed of the consumer and excel in a rapidly evolving environment with fragmented consumer attention and shifting value perceptions. Our strategy includes the following priorities: reenergize our brands and our people, adapt our organizational structure to put the consumer at the center of everything we do, strengthen our brand portfolio for predictable long-term growth, and improve asset efficiency. As part of our strategy, we plan to sharpen our focus on fewer, more impactful initiatives, which include investing more in product innovation, strengthening brand loyalty, and advancing commercial excellence. We intend to energize our brands through a disciplined investment approach focusing on impactful opportunities that generate competitive advantages and deliver product solutions and world-class innovation to our consumers. In addition, we believe our consumer-centric approach will enable us to better understand our consumers, allocate resources more efficiently, and accelerate the time to market for new products and brands with the bestopportunities for long-term sustainable growth. We expect this will strengthen our portfolio of brands to provide a pathway for strong cash flow generation to further invest back into our business. We remain focused on improving balance sheet health and productivity, by prioritizing our capital expenditures, optimizing our working capital, and monetizing less productive assets. While we are finalizing this strategy reset, we have already implemented many of the foundational changes intended to drive long-term performance, and we have taken immediate actions we believe will accelerate our product innovation, sharpen our go-to-market execution, strengthen our cash flow, and pay down our debt.
During fiscal 2026 and fiscal 2025, we concluded a goodwill impairment triggering event occurred during certain quarterly interim periods due to a sustained decline in our stock price, and performed quantitative impairment testing on our goodwill and certain intangible assets. As a result of such testing, we recorded pre-tax asset impairment charges as follows:
Fiscal Years Ended Last Day of February,
(in thousands)
Home & Outdoor (1)
Beauty & Wellness (2)
Total
(1) Asset impairment charges recognized for our Home & Outdoor segment included charges for our Hydro Flask and Osprey businesses of $184.4 million and $148.1 million, respectively, during fiscal 2026.
(2) Asset impairment charges recognized for our Beauty & Wellness segment included charges for our Health & Wellness, Drybar, Curlsmith and Revlon businesses of $242.2 million, $154.5 million, $133.0 million and $23.5 million, respectively, during fiscal 2026, and a charge for our Drybar business of $51.5 million during fiscal 2025.
Table of Contents
For additional information regarding the testing and analysis performed, refer to “Critical Accounting Policies and Estimates” in this Item 7., “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
On December 16, 2024, we completed the acquisition of Olive & June, LLC (“Olive & June”), an innovative, omni-channel nail care brand. Olive & June products deliver a salon-quality experience at home and include nail polish, press-on nails, manicure and pedicure systems, grooming tools and nail care essentials. The Olive & June brand and products were added to the Beauty & Wellness segment. The total purchase consideration consists of initial cash consideration of $224.7 million, which is net of cash acquired and a favorable post-closing adjustment of $3.9 million, and contingent cash consideration of up to $15.0 million subject to Olive & June’s performance during calendar years 2025, 2026, and 2027, payable annually. We incur red pre-tax acquisition-related expenses of $3.0 million during fiscal 2025, which were recognized in SG&A within our consolidated statement of income.
Subsequent to fiscal 2026, on April 14, 2026, we completed the sale of our distribution facility in Southaven, Mississippi for a total sales price of $82.0 million, less costs to sell of $3.8 million. Accordingly, we recognized a gain on the sale of $54.9 million within SG&A during the first quarter of fiscal 2027, which was recognized by our Beauty & Wellness segment. We used the proceeds from the sale to repay amounts outstanding under our credit facility.
Significant Trends Impacting the Business
Impact of Tariffs
Since 2019, the Office of the U.S. Trade Representative (“USTR”) has imposed, and in certain cases subsequently reduced or suspended, additional tariffs on products imported from China. Additionally, the current U.S. presidential administration has promoted and implemented plans to raise tariffs even further and pursue other trade policies intended to restrict imports. Our purchases of products from unaffiliated manufacturers located in China and other regions exposes us to higher costs of doing business from increases in tariffs.
Under the International Emergency Economic Powers Act (“IEEPA”), the U.S. presidential administration began implementing fentanyl-related IEEPA tariffs (“Fentanyl IEEPA Tariff”) and additional tariffs (“Reciprocal IEEPA Tariff”) during calendar year 2025. As of April 9, 2025, the U.S. had imposed (i) an aggregate additional 145% tariff on imports from China, consisting of a 20% Fentanyl IEEPA Tariff and 125% Reciprocal IEEPA Tariff and (ii) a global 10% Reciprocal IEEPA Tariff on imports from other countries including Mexico, Vietnam and other U.S. trading partners. The Reciprocal IEEPA Tariff on imports from China was subsequently lowered to 10% effective May 12, 2025, resulting in an aggregate additional 30% tariff. On July 31, 2025, the U.S. president signed an executive order imposing new IEEPA tariffs on a number of U.S. trading partners which became effective on August 7, 2025, including a 25% Fentanyl IEEPA Tariff on imports from Mexico and a 20% and 19% Reciprocal IEEPA Tariff on imports from Vietnam and Thailand, respectively. Effective November 10, 2025, the 10% Reciprocal IEEPA Tariff on imports from China, which was set to expire, was extended to remain in effect through November 10, 2026, and the Fentanyl IEEPA Tariff was reduced from 20% to 10%, reducing the aggregate additional tariff from 30% to 20%. On February 20, 2026, the U.S. Supreme Court ruled that tariffs imposed by the U.S. president under IEEPA were unconstitutional, and the U.S. president subsequently imposed a temporary global 10% Section 122 tariff under the Trade Act of 1974 (“Section 122 Tariff”) effective February 24, 2026 through July 24, 2026. As a result, the aggregate additional tariff on imports from China, Vietnam, Mexico and Thailand of 20%, 20%, 25% and 19%, respectively, were replaced by the 10% Section 122 Tariff. Our imports manufactured in Mexico are not impacted since they qualify for duty-free preference under the United States-Mexico-Canada Agreement. Further, we benefit from certain exclusions from tariffs as a result of the COVID-19 pandemic, which were recently extended to November 9, 2026. We are monitoring regulatory guidance regarding the potential for tariff refunds as a result of the U.S. Supreme Court ruling. As of February 28, 2026, we did not recognize any tariff
Table of Contents
refunds in our consolidated financial statements as we were unable to assert loss recovery is probable due to the uncertainty surrounding the tariff refund process and eligibility.
In March 2025, the U.S. president also implemented changes under Section 232 of the Trade Expansion Act of 1962 (“Section 232 Tariffs”) which resulted in additional sectoral tariffs to aluminum and steel of 25%. On June 4, 2025, the Section 232 Tariffs related to aluminum and steel were increased to 50%, and effective August 1, 2025, expanded to include copper products and components. Section 232 Tariffs were previously imposed based solely on a metal content-based calculation. Effective April 6, 2026, Section 232 Tariffs were expanded to apply to the entire customs value of covered products with tiered rates based on metal content and origin. Currently, our products are not subject to the Section 232 Tariffs on copper products and components. Our products are currently subject to (i) a Section 232 Tariff on aluminum and steel products of 25% to 50%, which primarily impacts certain products within our Home and Wellness businesses and (ii) the Section 122 Tariff or Section 301 Tariffs (defined below). In addition, the U.S. presidential administration is considering additional tariffs as a remedy for unfair trade practices under Section 301 of the Trade Act of 1974 (“Section 301 Tariffs”); however, no official Section 301 Tariffs have been published since the review process is ongoing.
U.S. tariff policies continue to evolve, as well as the corresponding impacts on global trade policies. As a result, our risks and mitigation plans, as further described below, will also continue to evolve as further developments arise. Any further alteration of trade agreements and terms between China, Vietnam, Mexico and the U.S., including limiting trade with China, Vietnam and Mexico, imposing additional tariffs on imports from China, Vietnam or Mexico and potentially imposing other restrictions on imports from China, Vietnam or Mexico, to the U.S., may result in further or higher tariffs or retaliatory trade measures by China, Vietnam or Mexico, all of which could have a material adverse effect on our business and operating results.
We are continuing to assess our incremental tariff cost exposure in light of continuing changes to global tariff policies and the full extent of our potential mitigation plans, as well as the associated timing to implement such plans and realize the anticipated benefits. To mitigate our risk of ongoing exposure to tariffs, we have initiated significant efforts to diversify our production outside of China into regions where we expect tariffs or overall costs to be lower and to source the same product in more than one region, to the extent it is possible and not cost-prohibitive. We are also continuing to implement other mitigation actions, which include cost reductions from suppliers and price increases to customers on products subject to tariffs. In addition to the uncertainty from evolving global tariff policies, we expect unfavorable cascading impacts on inflation, consumer confidence, employment and overall macroeconomic conditions, all of which may adversely impact our sales, results of operations and cash flows.
During fiscal 2026, the impact of the tariffs adversely impacted our cost of goods sold and had cascading adverse impacts on our net sales revenue, interest expense, business, results of operations and cash flows. Our cost of goods sold during fiscal 2026 included $50.7 million of additional pre-tax costs related to the changes in tariffs described above. Our net sales revenue during fiscal 2026 was also negatively impacted by a combination of factors including the pause or cancellation of direct import orders from China by certain of our key retailers in response to increased tariff rates, a slowdown in retailer orders following pull forward activity in the fourth quarter of fiscal 2025 due to tariff uncertainty and lower consumer confidence and demand. Sales were also negatively impacted by evolving dynamics in the China market, including a shift toward localized fulfillment models and heightened competition from domestic sellers benefiting from government subsidies. Net sales revenue during the second half of fiscal 2026 was unfavorably impacted by stop shipment actions in support of consistent adoption of tariff related price increases by our retail partners, which primarily impacted our Beauty & Wellness segment. We also incurred higher interest expense during fiscal 2026 due to the impact of tariffs resulting in higher inventory carrying costs and higher capital expenditures to diversify our production outside of China. In addition to the uncertainty from evolving global tariff policies, we experienced and expect continued unfavorable cascading impacts on inflation, consumer confidence, employment and overall
Table of Contents
macroeconomic conditions, all of which may continue to adversely impact our sales, results of operations and cash flows.
In the first quarter of fiscal 2026, we adjusted our measures to reduce costs and preserve cash flow as the environment continued to evolve. While we resumed targeted growth investments during the second and third quarters of fiscal 2026, we remain disciplined in our approach given continued tariff volatility. The measures in place continue to include the following:
• Suspension of projects and capital expenditures that are not critical or in support of supplier diversification or dual sourcing initiatives;
• Actions to reduce overall personnel costs and pause most project and travel expenses remain in place;
• A resumption of optimized marketing, promotional and new product development investments focused on opportunities with the highest returns;
• A measured approach to inventory purchases in expectation of softer consumer demand in the short to intermediate term; and
• Actions to optimize working capital and balance sheet productivity.
Impact of Macroeconomic Trends
The Federal Open Market Committee lowered the benchmark interest rate by 75 basis points during fiscal 2026. As a result, during fiscal 2026, we incurred lower average interest rates compared to fiscal 2025. As of February 28, 2026, $325 million of the outstanding principal balance under the Amended Credit Agreement (as defined below) was hedged with interest rate swaps to fix the interest rate we pay. While the actual timing and extent of additional future changes in interest rates remains unknown, lower average interest rates would reduce interest expense on our outstanding variable rate debt not subject to the interest rate swaps. The financial markets, the global economy and global supply chain may also be adversely affected by the current or anticipated impact of military conflicts or other geopolitical events, as well as recent U.S. tariff policies, that are continuing to evolve and the corresponding impacts on global trade. Most recently, the outcome of the ongoing Israel-United States and Iran conflict is highly unpredictable and could lead to significant market and other disruptions, including significant volatility in the commodity prices and supply of energy resources and supply chain interruptions. High inflation and interest rates have also negatively impacted consumer disposable income, credit availability and spending, among others, which have adversely impacted our business, financial condition, cash flows and results of operations during fiscal 2026 and may continue to have an adverse impact in fiscal 2027. The evolving global tariff policies could adversely impact inflation and interest rates which could further negatively impact consumer disposable income, credit availability and spending. See further discussion below under “Consumer Spending and Changes in Shopping Preferences.” We expect continued uncertainty in our business and the global economy due to pressure from inflation, tariffs and consumer confidence, any of which may adversely impact our results.
Consumer Spending and Changes in Shopping Preferences
Our business depends upon discretionary consumer demand for most of our products and primarily operates within mature and highly developed consumer markets. The principal driver of our operating performance is the strength of the U.S. retail economy. Approximately 72% of our consolidated net sales revenue in fiscal 2026 was from U.S. shipments, compared to 71% of consolidated net sales revenue in fiscal 2025.
Among other things, high levels of inflation, interest rates, military conflicts or other geopolitical events, and tariffs may negatively impact consumer disposable income, credit availability and spending. Consumer purchases of discretionary items, including some of the products that we offer, generally decline during recessionary periods or periods of economic uncertainty, when disposable income is reduced or when there is a reduction in consumer confidence. Dynamic changes in consumer spending and shopping patterns are also having an impact on retailer inventory levels. Our ability to sell to retailers
Table of Contents
is predicated on their ability to sell to the end consumer. During fiscal 2026, we experienced increased competition within our Beauty & Wellness segment and in the insulated beverageware category, which led to some declines in retail distribution. In addition, during fiscal 2026 we experienced and we continue to experience lower replenishment orders in line with softer consumer demand and discretionary spending and continued competition, which adversely impacted our sales, results of operations and cash flows. If orders from our retail customers continue to be adversely impacted, our sales, results of operations and cash flows may continue to be adversely impacted. We expect continued uncertainty in our business and the global economy due to inflation, evolving global tariff policies, continued competition and changes in consumer spending patterns. Accordingly, our liquidity and financial results could be impacted in ways that we are not able to predict today. For additional information on our related material risks, see Item 1A., “Risk Factors.”
Our concentration of sales reflects the continued evolution of consumer shopping preferences. For fiscal 2026 and 2025, our net sales to pure-play online retailers and retail customers fulfilling end-consumer online orders, as well as our own online sales directly to consumers (collectively “online channel net sales”) comprised approximately 26% and 27%, respectively, of our total consolidated net sales revenue and declined approximately 10.0% and 5.5% in fiscal 2026 and 2025, respectively.
With the continued importance of online sales in the retail landscape, many brick and mortar retailers are aggressively looking for ways to improve their customer delivery capabilities to be able to meet customer expectations. As a result, it has become increasingly important for us to leverage our distribution capabilities in order to meet the changing demands of our customers, including increasing our online capabilities to support our direct-to-consumer sales channels and online channel sales by our retail customers. To meet these needs, we completed the construction of an additional distribution facility in Gallaway, Tennessee, that became operational during fiscal 2024. During the first quarter of fiscal 2025, we experienced automation system startup issues at the facility which impacted some of our Home & Outdoor segment’s small retail customer and direct-to-consumer orders. As a result, our sales during the first quarter of fiscal 2025 were adversely impacted due to shipping disruptions, and we incurred additional costs and lostefficiency during both the first and second quarters of fiscal 2025 as we worked to remediate the issues. As a result of the remediation efforts performed, the automation system began to operate as designed during the third quarter of fiscal 2025, and we achieved targeted efficiency levels by the end of fiscal 2025.
Additionally, we have invested in a centralized cloud-based e-commerce platform, which most of our brands are currently utilizing. The centralized cloud-based e-commerce platform enables us to leverage a common system and rapidly deploy new capabilities across all of our brands, as well as more easily integrate new brands. We believe this platform enhances the customer experience by strengthening the digital presentation and product browsing capabilities and improving the checkout process, order delivery and post-order customer care.
Project Pegasus
During fiscal 2023, we initiated a global restructuring plan intended to expand operating margins through initiatives designed to improveefficiency and effectiveness and reduce costs (referred to as “Project Pegasus”). During the fourth quarter of fiscal 2025, we completed Project Pegasus, but still expect to realize the targeted savings through fiscal 2027. Project Pegasus included initiatives to further optimize our brand portfolio, streamline and simplify the organization, accelerate and amplify cost of goods savings projects, enhance the efficiency of our supply chain network, optimize our indirect spending and improve our cash flow and working capital, as well as other activities. These initiatives have created operating efficiencies, as well as provided a platform to fund growth investments. During fiscal 2025 and 2024, we incurred restructuring charges in connection with Project Pegasus primarily for professional fees and severance and employee related costs, which were recorded as “Restructuring charges” in the consolidated statements of (loss) income. Restructuring charges primarily represented cash expenditures and were substantially paid by the end of fiscal 2025, with a remaining liability of $7.7
Table of Contents
million as of February 28, 2025, which was paid during fiscal 2026. See Note 11 to the accompanying consolidated financial statements for additional information.
We continue to have the following expectations regarding Project Pegasus savings:
• Targeted annualized pre-tax operating profit improvements of approximately $75 million to $85 million, which began in fiscal 2024 and we expect to be substantially achieved by the end of fiscal 2027.
• Estimated cadence of the recognition of the savings will be approximately 25%, 35% and 25% in fiscal 2024, 2025 and 2026, respe ctively, all of whic h were achieved, and approximately 15% in fiscal 2027.
• Total profit improvements to be realized approximately 60% through reduced cost of goods sold and 40% through lower SG&A.
During fiscal 2026 and 2025 , our gross margin and operating margins were favorably impacted by lower commodity and product costs driven by our cost of goods savings projects. Expectations regarding our Project Pegasus initiatives and our ability to realize targeted savings are based on management’s estimates available at the time and are subject to a number of assumptions that could materially impact our estimates.
Water Filtration Patent Litigation
On December 23, 2021, Brita LP filed a complaintagainst Kaz USA, inc. and Helen of Troy Limited in the U.S. District Court for the Western District of Texas (the “Patent Litigation”), alleging patent infringement by the Company relating to its PUR gravity-fed water filtration systems. Brita LP simultaneously filed a complaint with the U.S. International Trade Commission (“ITC”) against Kaz USA, Inc., Helen of Troy Limited and five other unrelated companies that sell water filtration systems (the “ITC Action”). The complaint in the ITC Action also alleged patent infringement by the Company with respect to a limited set of PUR gravity-fed water filtration systems. This action sought injunctive relief to prevent entry of certain accused PUR products (and certain other products) into the U.S. and cessation of marketing and sales of existing inventory already in the U.S. On February 28, 2023, the ITC issued an Initial Determination in the ITC Action, tentatively ruling against the Company and the other unrelated respondents. The ITC has a guaranteed review process, and thus all respondents, including the Company, filed a petition with the ITC for a full review of the Initial Determination. On September 19, 2023, the ITC issued its Final Determination in the Company’s favor. The ITC determined there was no violation by the Company and terminated the investigation. Brita LP subsequently appealed the ITC’s decision to the Federal Circuit (“CAFC Appeal”) and filed its Notice of Appeal on October 24, 2023. The Company intervened in the CAFC Appeal and oral argument occurred on August 5, 2025.
In connection with the CAFC Appeal, on October 15, 2025, the Federal Circuit issued a precedential opinion affirming the ITC’s decision that Brita LP’s claims were invalid. Following the ITC’s determinations with respect to the ITC Action and the Federal Circuit’s opinion in the CAFC Appeal, on December 22, 2025, Brita filed a notice to dismiss the Patent Litigation in the District Court, ending the Patent Litigation in the Company’s favor. For additional information regarding the Patent Litigation and the ITC Action, see Note 12 to the accompanying consolidated financial statements.
EPA Compliance Costs
Some of our product lines are subject to product identification, labeling and claim requirements, which are monitored and enforced by regulatory agencies, such as the EPA, U.S. Customs and Border Protection, the U.S. Food and Drug Administration, the U.S. Consumer Product Safety Commission and the EU.
During fiscal 2022 and 2023, we were in discussions with the EPA regarding the compliance of packaging and labeling claims on certain of our products in the air and water filtration and humidification categories within the Beauty & Wellness segment that are sold in the U.S. The EPA did not raise any product quality, safety or performance issues. As a result of these packaging and labeling compliance
Table of Contents
discussions, we completed the repackaging and relabeling of impacted products during fiscal 2023. We continue to have ongoing settlement discussions with the EPA related to this matter. As of February 28, 2026, we accrued an estimated liability of $4.4 million, which represents our best estimate of probable settlement costs related to this matter. See Note 12 to the accompanying consolidated financial statements for additional information and Item 1A., “Risk Factors” in this Annual Report for additional information on our related material risks.
Talcum Powder Litigation
In fiscal 2022, we completed the sale of our North America personal care business to HRB Brands LLC (“HRB Brands”). After the sale, we were named as a defendant in multiple lawsuits related to the use of personal care products containing talcum powder, primarily Brut deodorant and Ammens powder sold by our wholly-owned subsidiary, Idelle Labs, Ltd. We tendered indemnification of these cases to HRB Brands, which assumed control of the defense of the claims. After many years, during the fourth quarter of fiscal 2026, we learned that HRB Brands asserted that it was contesting the indemnification of these cases and tendered the indemnification back to us. Consequently, in order to protect the Company and its rights and defenses, we began to defend these cases. The Company maintains its position that HRB Brands is obligated to defend and indemnify the Company against these claims and plans to vigorously contest HRB Brands’ position. With respect to the talcum powder cases, we believe we have substantial defenses to the claims. The ultimate outcome of enforcing our indemnification claimsagainst HRB Brands and the litigation relating to the talcum cases is inherently uncertain, and we cannot predict its resolution. As of February 28, 2026, we had accrued an estimated liability of $1.5 million for potential settlements of these cases. We cannot estimate the amount or range of amounts by which the liability may exceed the accrual established because of (i) the inherent difficulty in projecting the number of claims that have not yet been asserted or the time period in which future claims may be asserted, (ii) the complaints nearly always assert claimsagainst multiple defendants where the damagesalleged are typically not attributed to individual defendants so that a defendant’s share of liability may turn on the law of joint and several liability, which can vary by state, and (iii) the several possible developments that may occur that could affect the Company’s estimate of the liability. For additional information, see Note 12 to the accompanying consolidated financial statements.
Foreign Currency Exchange Rate Fluctuations
Due to the nature of our operations, we have exposure to the impact of fluctuations in exchange rates from transactions that are denominated in a currency other than our functional currency (the U.S. Dollar). Such transactions include sales and operating expenses. The most significant currencies affecting our operating results are the Euro, British Pound and Canadian Dollar.
Changes in foreign currency exchange rates had a favorable impact on consolidated U.S. Dollar reported net sales revenue of approximately $5.6 million, or 0.3% for fiscal 2026, and an unfavorable impact of approximately $2.5 million, or 0.1% for fiscal 2025.
Variability of the Cough/Cold/Flu Season
Sales in several of our Beauty & Wellness categories are highly correlated to the severity of winter weather and cough/cold/flu incidence. In the U.S., the cough/cold/flu season historically runs from November through March, with peak activity normally in January to March. The 2025-2026 and 2024-2025 cough/cold/flu seasons were below historical averages seen prior to the impact of COVID-19.
Table of Contents
Results of Operations
This section provides an analysis of our results of operations for fiscal year 2026 as compared to fiscal year 2025 including discussion of material changes. Refer to Item 7., “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our 2025 Annual Report on Form 10-K, filed with the SEC on April 24, 2025, for an analysis and discussion of our fiscal year 2025 financial condition and results of operations as compared to fiscal year 2024, which such discussion is hereby incorporated by reference.
The following table provides selected operating data, in U.S. Dollars, as a percentage of net sales revenue, and as a year-over-year percentage change.
Fiscal Years Ended
Last Day of February,
% of Sales Revenue, net
% Change
(in thousands)
Sales revenue by segment, net
Home & Outdoor
Beauty & Wellness
Total sales revenue, net
Cost of goods sold
Gross profit
Selling, general and administrative expense (“SG&A”)
Asset impairment charges
Restructuring charges
Operating (loss) income
Non-operating income, net
Interest expense
(Loss) income before income tax
Income tax expense (benefit)
Net (loss) income
(1) Fiscal 2026 includes a full year of operating results from Olive & June, acquired on December 16, 2024, compared to approximately eleven weeks of operating results in fiscal 2025. For additional information see Note 6 to the accompanying consolidated financial statements.
* Calculation is not meaningful.
Table of Contents
Comparison of Fiscal 2026 to Fiscal 2025 Financial Results
• Consolidated net sales revenue decreased 6.4%, or $121.4 million, to $1,786.3 million, compared to $1,907.7 million for the same period last year.
• Consolidated operating loss was $782.1 million, compared to consolidated operating income of $142.7 million for the same period last year. Consolidated operating loss for fiscal 2026 includes pre-tax asset impairment charges of $885.9 million, pre-tax EPA compliance costs of $4.4 million , pre-tax CEO succession costs of $3.5 million and pre-tax restructuring charges of $3.0 million. Consolidated operating income for fiscal 2025 included pre-tax asset impairment charges of $51.5 million, pre-tax restructuring charges of $14.8 million related to Project Pegasus and pre-tax acquisition-related expenses of $3.0 million. Consolidated operating margin decreased to (43.8)% of consolidated net sales revenue, compared to 7.5% for the same period last year.
• Consolidated adjusted operating income decreased 41.1% to $148.6 million, or 8.3% of net sales revenue, compared to $252.3 million, or 13.2% of net sales revenue, for the same period last year.
• Net loss was $899.0 million, compared to net income of $123.8 million for the same period last year. Diluted loss per share was $39.08, compared to diluted earnings per share of $5.37 for the same period last year.
• Adjusted income decreased 50.4%, or $83.3 million, to $82.1 million, compared to $165.4 million for the same period last year. Adjusted diluted earnings per share decreased 50.5% to $3.55, compared to $7.17 for the same period last year.
Consolidated and Segment Net Sales Revenue
The following table summarizes the impact that Organic business, foreign currency and acquisitions had on our net sales revenue by segment:
Fiscal Year Ended Last Day of February,
(in thousands)
Home & Outdoor
Beauty & Wellness
Total
Fiscal 2025 sales revenue, net
Organic business
Impact of foreign currency
Acquisition (1)
Change in sales revenue, net
Fiscal 2026 sales revenue, net
Total net sales revenue growth (decline)
Organic business
Impact of foreign currency
Acquisition
(1) On December 16, 2024, we completed the acquisition of Olive & June. Olive & June sales prior to the first annual anniversary of the acquisition are reported in Acquisition for the Beauty & Wellness segment in fiscal 2026 and consist of approximately forty-one weeks of operating results. For additional information see Note 6 to the accompanying consolidated financial statements.
In the above table, Organic business refers to our net sales revenue associated with product lines or brands after the first twelve months from the date the product line or brand was acquired, excluding the impact that foreign currency remeasurement had on reported net sales revenue. Net sales revenue from internally developed brands or product lines is considered Organic business activity.
Table of Contents
Consolidated Net Sales Revenue
Comparison of Fiscal 2026 to 2025
Consolidated net sales revenue decreased $121.4 million, or 6.4%, to $1,786.3 million, compared to $1,907.7 million. The decline was driven by a decrease from Organic business of $233.7 million, or 12.2%, due to:
• a decline in Beauty & Wellness primarily due to a decrease in sales of thermometers and fans primarily due to reduced replenishment and direct import orders from retail customers in Wellness, and a decline in Beauty driven by softer consumer demand, increased competition, a net distribution loss year-over-year, and the cancellation of direct import orders from China in Beauty; and
• a decline in Home & Outdoor primarily due to continued competition and a net distribution loss year-over-year in the insulated beverageware category, lower replenishment orders from retail customers, softer consumer demand, and a decrease in club channel sales.
These factors were partially offset by:
• strong demand for technical, travel and lifestyle packs in Home & Outdoor;
• incremental sales from new product launches in the insulated beverageware category within Home & Outdoor; and
• the favorable comparative impact of shipping disruption at our Tennessee distribution facility due to automation startup issues affecting Home & Outdoor during the first quarter of fiscal 2025.
The Olive & June acquisition contributed $106.7 million, or 5.6%, to consolidated net sales revenue growth. Consolidated net sales revenue was favorably impacted by net foreign currency fluctuations of approximately $5.6 million, or 0.3%.
Segment Net Sales Revenue
Home & Outdoor
Comparison of Fiscal 2026 to 2025
Net sales revenue decreased $73.5 million, or 8.1%, to $832.9 million, compared to $906.3 million. The decrease was primarily driven by:
• softer consumer demand and lower replenishment orders from retail customers, partially due to retailer inventory rebalancing in response to demand trends;
• continued competition, a net distribution loss year-over-year, lower closeout channel sales, and cancellation of direct import orders in response to higher tariffs in the insulated beverageware category;
• a decrease in club channel sales in response to higher tariffs; and
• the unfavorable impact of retailer pull-forward activity in the fourth quarter of fiscal 2025 in response to tariff uncertainty and anticipated supply disruption.
These factors were partially offset by:
• strong demand for technical, travel and lifestyle packs;
• incremental sales from new product launches in the insulated beverageware category;
• higher sales from expanded distribution in the home category; and
• the favorable comparative impact of shipping disruption at our Tennessee distribution facility due to automation startup issues during the first quarter of fiscal 2025.
Segment net sales revenue was favorably impacted by net foreign currency fluctuations of approximately $4.2 million, or 0.5%.
Table of Contents
Beauty & Wellness
Comparison of Fiscal 2026 to 2025
Net sales revenue decreased $47.9 million, or 4.8%, to $953.4 million, compared to $1,001.3 million. The decrease was primarily driven by a decrease from Organic business of $156.0 million, or 15.6%, due to:
• a decline in Beauty primarily due to softer consumer demand, increased competition, a net distribution loss year-over-year, the cancellation of direct import orders from China in response to higher tariffs and lower closeout channel sales;
• a decline in thermometry primarily due to evolving dynamics in the China market, including a shift away from cross-border ecommerce toward localized fulfillment models, heightened competition from domestic sellers benefiting from government subsidies, and lower replenishment;
• a decrease in fan sales primarily driven by reduced replenishment orders from retail customers due to a decline in consumer demand and the cancellation of direct import orders from China in response to higher tariffs;
• an overall decrease in Wellness due to stop shipment actions in support of consistent adoption of tariff related price increases by our retail partners and softer consumer demand; and
• the impact of below average illness season on the humidification and thermometry categories.
These factors were partially offset by an increase in organic net sales revenue from Olive & June and the favorable comparative impact of the shipping disruption from the Curlsmith system integration during the first quarter of fiscal 2025 .
The Organic business decline was partially offset by the inorganic contribution from the Olive & June acquisition of $106.7 million, or 10.7%, to segment net sales revenue growth. Segment net sales revenue was favorably impacted by net foreign currency fluctuations of approximately $1.4 million, or 0.1%.
Consolidated Gross Profit Margin
Comparison of Fiscal 2026 to 2025
Consolidated gross profit margin decreased 2.2 percentage points to 45.7%, compared to 47.9%. The decrease in consolidated gross profit margin was primarily due to the net unfavorable impact of tariffs, higher retail trade and promotional expense, and a less favorable inventory obsolescence impact year-over-year.
These factors were partially offset by the favorable impact of the acquisition of Olive & June within the Beauty & Wellness segment and lower commodity and product costs, partly driven by Project Pegasus initiatives.
Consolidated SG&A
Comparison of Fiscal 2026 to 2025
Consolidated SG&A ratio increased 2.7 percentage points to 39.7%, compared to 37.0%. The increase in the consolidated SG&A ratio was primarily due to:
• an increase in annual incentive compensation expense;
• higher outbound freight costs;
• the impact of the Olive & June acquisition;
• EPA compliance costs of $4.4 million;
• CEO succession costs of $3.5 million; and
• the impact of unfavorable operating leverage due to the decrease in net sales.
Table of Contents
These factors were partially offset by the favorable comparative impact of higher distribution center expense in the prior year primarily due to additional costs and lostefficiency associated with automation startup issues at our Tennessee distribution facility.
Asset Impairment Charges
Fiscal 2026
During fiscal 2026, we recorded asset impairment charges of $885.9 million ($866.1 million after tax) to reduce our goodwill by $706.5 million and our other intangible assets by $179.4 million .
Fiscal 2025
During the fourth quarter of fiscal 2025, we recorded asset impairment charges of $51.5 million ($47.6 million after tax) to reduce the goodwill and definite-lived trade name of our Drybar business, which is
included within our Beauty & Wellness segment.
For additional information regarding the testing and analysis performed, refer to “Critical Accounting Policies and Estimates” in this Item 7., “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Restructuring Charges
Fiscal 2026
During fiscal 2026, we incurred $3.0 million of pre-tax restructuring charges for severance and employee related costs as a result of personnel reductions outside of the scope of Project Pegasus.
During fiscal 2026, we made the remaining cash restructuring payments related to Project Pegasus of $7.7 million.
Fiscal 2025
We incurred $14.8 million of pre-tax restructuring costs related primarily to severance and employee related costs, professional fees and contract termination costs under Project Pegasus. During fiscal 2025, we made total cash restructuring payments related to Project Pegasus of $11.9 million and had a remaining liability of $7.7 million as of February 28, 2025.
Table of Contents
Operating (Loss) Income, Operating Margin, Adjusted Operating Income (non-GAAP) and Adjusted Operating Margin (non-GAAP) by Segment
In order to provide a better understanding of the impact of certain items on our operating (loss) income, the tables that follow report the comparative pre-tax impact of acquisition-related expenses, asset impairment charges, CEO succession costs, EPA compliance costs, restructuring charges, amortization of intangible assets and non‐cash share‐based compensation, as applicable, on operating (loss) income and operating margin for each segment and in total for the periods presented below. Adjusted operating income and adjusted operating margin may be considered non-GAAP financial measures as contemplated by SEC Regulation G, Rule 100. For additional information regarding management’s decision to present this non-GAAP financial information, see the introduction to this Item 7., “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Fiscal Year Ended February 28, 2026
(in thousands)
Home & Outdoor
Beauty & Wellness (1)
Total
Operating loss, as reported (GAAP)
Asset impairment charges
CEO succession costs
EPA compliance costs
Restructuring charges
Subtotal
Amortization of intangible assets
Non-cash share-based compensation
Adjusted operating income (non-GAAP)
Fiscal Year Ended February 28, 2025
(in thousands)
Home & Outdoor
Beauty & Wellness (1)
Total
Operating income, as reported (GAAP)
Acquisition-related expenses
Asset impairment charges
Restructuring charges
Subtotal
Amortization of intangible assets
Non-cash share-based compensation
Adjusted operating income (non-GAAP)
(1) Fiscal 2026 includes a full year of operating results from Olive & June, acquired on December 16, 2024, compared to approximately eleven weeks of operating results in fiscal 2025. For additional information see Note 6 to the accompanying consolidated financial statements.
Table of Contents
Consolidated Operating (Loss) Income
Comparison of Fiscal 2026 to 2025
Consolidated operating loss was $782.1 million, or (43.8)% of net sales revenue, compared to consolidated operating income of $142.7 million, or 7.5% of net sales revenue. Fiscal 2026 includes pre-tax asset impairment charges of $885.9 million, pre-tax restructuring charges of $3.0 million, pre-tax EPA compliance costs of $4.4 million and pre-tax CEO succession costs of $3.5 million. Fiscal 2025 includes pre-tax acquisition-related expenses of $3.0 million, pre-tax asset impairment charges of $51.5 million and pre-tax restructuring charges of $14.8 million. The combined effect of these items unfavorably impacted the year-over-year comparison of consolidated operating margin by a combined 46.6 percentage points. The remaining 4.7 percentage point decrease in consolidated operating margin was primarily due to:
• the net unfavorable impact of higher tariffs on our gross profit;
• higher retail trade and promotional expense;
• a less favorable inventory obsolescence impact year-over-year;
• an increase in annual incentive compensation expense;
• increased outbound freight costs; and
• the impact of unfavorable operating leverage due to the decrease in net sales.
These factors were partially offset by:
• the favorable impact of the acquisition of Olive & June within Beauty & Wellness;
• lower commodity and product costs, partly driven by Project Pegasus initiatives; and
• the favorable comparative impact of higher distribution center expense in the prior year primarily due to additional costs and lostefficiency associated with automation startup issues at our Tennessee distribution facility.
Consolidated adjusted operating income decreased 41.1% to $148.6 million, or 8.3% of net sales revenue, compared to $252.3 million, or 13.2% of net sales revenue.
Home & Outdoor
Comparison of Fiscal 2026 to 2025
Operating loss was $269.7 million, or (32.4)% of segment net sales revenue, compared to operating income of $119.6 million, or 13.2% of segment net sales revenue. Operating loss in fiscal 2026 included $332.6 million of pre-tax asset impairment charges. The remaining 5.7 percentage point decrease in segment operating margin was primarily due to:
• the net unfavorable impact of higher tariffs on our gross profit;
• higher retail trade and promotional expense;
• less favorable inventory obsolescence impact year-over-year;
• an increase in annual incentive compensation expense;
• higher outbound freight costs; and
• the impact of unfavorable operating leverage due to the decrease in net sales.
These factors were partially offset by lower commodity and product costs, partly driven by Project Pegasus initiatives, and the favorable comparative impact of higher distribution center expense in the prior year.
Adjusted operating income decreased 44.5% to $78.8 million, or 9.5% of segment net sales revenue, compared to $141.9 million, or 15.7% of segment net sales revenue.
Table of Contents
Beauty & Wellness
Comparison of Fiscal 2026 to 2025
Operating loss was $512.3 million, or (53.7)% of segment net sales revenue, compared to operating income of $23.1 million, or 2.3% of segment net sales revenue. Operating loss in fiscal 2026 included $553.3 million of pre-tax asset impairment charges, compared to $51.5 million in fiscal 2025. The remaining 3.1 percentage point decrease in segment operating margin was primarily due to:
• the net unfavorable impact of higher tariffs on our gross profit;
• a less favorable inventory obsolescence impact year-over-year;
• an increase in annual incentive compensation expense;
• increased marketing expense;
• EPA compliance costs of $4.4 million;
• higher outbound freight costs; and
• the impact of unfavorable operating leverage due to the decrease in net sales.
These factors were partially offset by the favorable impact of the acquisition of Olive & June and lower commodity and product costs, partly driven by Project Pegasus initiatives.
Adjusted operating income decreased 36.8% to $69.7 million, or 7.3% of segment net sales revenue, compared to $110.4 million, or 11.0% of segment net sales revenue.
Interest Expense
Comparison of Fiscal 2026 to 2025
Interest expense was $57.7 million, compared to $51.9 million. The increase in interest expense was primarily due to higher average borrowings outstanding to fund the acquisition of Olive & June and the cost of tariffs in working capital and capital expenditures, partially offset by a lower average effective interest rate inclusive of the impact of our interest rate swaps compared to the prior year.
Income Tax Expense
The comparison of our effective tax rate between periods is often impacted by the geographic mix of earnings among our various tax jurisdictions. Due to our organization in Bermuda and the ownership structure of our foreign subsidiaries, many of which are not owned directly or indirectly by a U.S. parent company, an immaterial amount of our foreign income is subject to U.S. taxation on a permanent basis under current law. Additionally, our intangible assets are primarily owned by foreign affiliates, resulting in proportionally higher earnings in jurisdictions with statutory tax rates lower than that of the U.S.
In July 2025, a reconciliation bill, commonly referred to as the One Big Beautiful Bill Act, was signed into law. The legislation includes a broad range of U.S. tax reform provisions. There were no discrete effects upon enactment in the second quarter of fiscal 2026 or material impacts on our fiscal 2026 consolidated financial statements. This legislation is not expected to have a material impact on our consolidated financial statements in the foreseeable future.
The OECD has introduced a framework to implement a global minimum corporate income tax of 15%, referred to as “Pillar Two.” Certain countries in which we operate have enacted, or are in the process of enacting, domestic legislation aligned with OECD’s Pillar Two “Model Rules.” Pillar Two legislation in effect for our fiscal 2025 and 2026 has been incorporated into our consolidated financial statements. Differences in how Pillar Two rules are implemented and administered across jurisdictions may increase compliance complexity and could impact our future global effective tax rate.
In June 2025, the Group of Seven, comprised of Canada, France, Germany, Italy, Japan, the United Kingdom and the U.S., announced an agreement under which U.S. multinational companies would be
Table of Contents
excluded from certain elements of the Pillar Two global minimum tax framework in exchange for the U.S. withdrawing planned retaliatory tax measures. In January 2026, the OECD released administrative guidance detailing a side-by-side (“SbS”) package that reflects this agreement and establishes a framework permitting U.S. multinational enterprise groups to coexist with the Pillar Two rules. Under this guidance, U.S. parented groups may qualify for the Side by Side Safe Harbour and the Ultimate Parent Entity Safe Harbour, which can eliminate top-up taxes under the Income Inclusion Rule and the Undertaxed Profits Rule when elected, while leaving Qualified Domestic Minimum Top-up Taxes unaffected.
The SbS package also includes additional administrative guidance, such as a permanent simplified effective tax rate safe harbour, an extension of the transitional country by country reporting safe harbour and a new substance-based tax incentive safe harbour. We do not expect the SbS package to materially affect our Pillar Two related tax positions or liabilities going forward. We will continue to monitor the implications of the OECD guidance and domestic adoption as jurisdictions implement these rules.
In response to Pillar Two, on May 24, 2024, Barbados enacted a domestic corporate income tax rate of 9%, effective for our fiscal 2025 and a domestic minimum top-up tax (“DMTT”) of 15% which was effective beginning with our fiscal 2026. During the first quarter of fiscal 2025, we incorporated the corporate income tax into our estimated annual effective tax rate and revalued our existing deferred tax liabilities subject to the Barbados legislation, which resulted in a discrete tax charge of $6.0 million. However, as a result of the reorganization of our intangible assets in the fourth quarter of 2025 described below, the Barbados corporate income tax and DMTT did not have a material impact on our consolidated financial statements in fiscal 2026 and is not expected to in the foreseeable future.
Like Barbados, the government of Bermuda enacted a 15% corporate income tax that was effective for us beginning in fiscal 2026. This Bermuda tax did not have a material impact on our consolidated financial statements in fiscal 2026 and is not expected to in the foreseeable future.
In the fourth quarter of fiscal 2025, we implemented a reorganization involving the transfer of intangible assets previously held by Helen of Troy Limited (Barbados) to our subsidiary in Switzerland. The reorganization resulted in the consolidation of the ownership of intangible assets, supporting streamlined internal licensing and centralized management of the intangible assets. Further, the reorganization resulted in a transitional income tax benefit of $64.6 million from the recognition of deferred tax assets of $74.0 million, partially offset by taxes associated with the transfer. As described below, a full valuation allowance was recorded on these deferred tax assets as of the end of the third quarter of fiscal 2026.
During fiscal 2026 and 2025, we recognized goodwill and other intangible asset impairment charges of $885.9 million and $51.5 million, respectively, which included $602.2 million and $22.5 million, respectively, that will not result in a tax benefit. Tax benefits, net of valuation allowances, of $19.8 million and $3.9 million on the impairment charges were recognized in fiscal 2026 and 2025, respectively.
The downward revisions to our internal forecasts utilized in our impairment testing during fiscal 2026 negatively impacted our assessment of the realizability of net deferred tax assets for our Switzerland subsidiary as of the beginning of the fiscal year and deferred tax assets generated by asset impairments during fiscal 2026. Based on these revisions and in accordance with ASC 740, Income Taxes , we recorded discrete partial valuation allowances during the first and second quarters of fiscal 2026. As fiscal 2026 progressed, impairment-related losses resulted in a cumulative loss position over recent periods, which constituted significant objective negative evidence under ASC 740 and ultimately led to the recording of a full valuation allowance beginning in the third quarter of fiscal 2026. As a result, we recognized a cumulative valuation allowance of $106.6 million during fiscal 2026. We expect to maintain a full valuation allowance on these net deferred tax assets until we have objective factors that demonstrate the likelihood of realizing these deferred tax benefits.
Table of Contents
Fiscal 2026 income tax expense was $60.1 million on a pre-tax loss of $838.8 million, compared to an income tax benefit of $32.1 million on pre-tax income of $91.7 million for fiscal 2025. The increase in the tax expense relative to pre-tax (loss) income is primarily due to non-deductible impairment charges and valuation allowances on deferred tax assets recorded during fiscal 2026, as described above, and the unfavorable comparative impacts of the transitional tax benefit resulting from the intangible asset reorganization and a tax benefit related to a resolution of an uncertain tax position in the prior year.
Table of Contents
Net (Loss) Income, Diluted (Loss) Earnings Per Share, Adjusted Income (non-GAAP) and Adjusted Diluted Earnings Per Share (non-GAAP)
In order to provide a better understanding of the impact of certain items on our (loss) income and diluted (loss) earnings per share, the tables that follow report the comparative after-tax impact of acquisition-related expenses, asset impairment charges, Barbados tax reform, CEO succession costs, EPA compliance costs, intangible asset reorganization, restructuring charges, amortization of intangible assets and non‐cash share‐based compensation, as applicable, on (loss) income and diluted (loss) earnings per share for the periods presented below. Adjusted income and adjusted diluted earnings per share may be considered non-GAAP financial measures as contemplated by SEC Regulation G, Rule 100. For additional information regarding management’s decision to present this non-GAAP financial information, see the introduction to this Item 7., “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Fiscal Year Ended February 28, 2026
(Loss) Income
Diluted (Loss) Earnings Per Share
(in thousands, except per share data)
Before Tax
Tax
Net of Tax
Before Tax
Tax
Net of Tax
As reported (GAAP)
Asset impairment charges
CEO succession costs
EPA compliance costs
Intangible asset reorganization
Restructuring charges
Subtotal
Amortization of intangible assets
Non-cash share-based compensation
Adjusted (non-GAAP)
Weighted average shares of common stock used in computing:
Diluted loss per share, as reported
Adjusted diluted earnings per share (non-GAAP)
Fiscal Year Ended February 28, 2025
Income
Diluted Earnings Per Share
(in thousands, except per share data)
Before Tax
Tax
Net of Tax
Before Tax
Tax
Net of Tax
As reported (GAAP)
Acquisition-related expenses
Asset impairment charges
Barbados tax reform
Intangible asset reorganization
Restructuring charges
Subtotal
Amortization of intangible assets
Non-cash share-based compensation
Adjusted (non-GAAP)
Weighted average shares of common stock used in computing reported and non-GAAP diluted earnings per share
Table of Contents
Comparison of Fiscal 2026 to 2025
Net loss was $899.0 million, compared to net income of $123.8 million . Diluted loss per share was $39.08, compared to diluted earnings per share of $5.37 . The decrease is primarily due to the recognition of after-tax asset impairment charges of $866.1 million during fiscal 2026, higher income tax expense primarily from the recognition of valuation allowances on deferred tax assets in fiscal 2026 and the comparative impact of the recognition of a transitional income tax benefit in fiscal 2025, both related to our intangible asset reorganization in fiscal 2025, lower operating income exclusive of asset impairment charges and an increase in interest expense.
Adjusted income decreased $83.3 million, or 50.4%, to $82.1 million, compared to $165.4 million . Adjusted diluted earnings per share decreased 50.5% to $3.55, compared to $7.17 .
Liquidity and Capital Resources
We principally rely on our cash flow from operations and borrowings under our Amended Credit Agreement to finance our operations, capital and intangible asset expenditures, acquisitions and share repurchases. Historically, our principal uses of cash to fund our operations have included operating expenses, primarily SG&A, and working capital, predominantly for inventory purchases and the extension of credit to our retail customers. We have typically been able to generate positive cash flow from operations sufficient to fund our operating activities. In the past, we have utilized a combination of available cash and existing, or additional, sources of financing to fund strategic acquisitions, share repurchases and capital investments. We generated $171.1 million in cash from operations during fiscal 2026 and had $18.9 million in cash and cash equivalents at February 28, 2026. As of February 28, 2026, the amount of cash and cash equivalents held by our foreign subsidiaries was $16.4 million. We have no existing activities involving special purpose entities or off-balance sheet financing.
Our anticipated material cash requirements in fiscal 2027 include the following:
• operating expenses, primarily SG&A and working capital predominately for inventory purchases and to carry normal levels of accounts receivable on our balance sheet;
• repayment of a current maturity of long term debt of $25.0 million;
• estimated interest payments of approximately $46.8 million based on scheduled outstanding debt obligations, weighted average interest rates and interest rate swaps in effect at February 28, 2026;
• minimum operating lease payments under existing obligations of approximately $10.3 million;
• minimum royalty payments under existing license agreements of approximately $6.2 million;
• contingent consideration payment of $5.0 million as a result of Olive & June achieving an annual adjusted EBITDA target in calendar year 2025; and
• capital and intangible asset expenditures between approximately $28 million to $32 million to support ongoing operations and future infrastructure needs, including investments to transfer sourcing of certain products out of China and support new product development.
Our anticipated material cash requirements beyond fiscal 2027 include the following:
• operating expenses, primarily SG&A and working capital predominately for inventory purchases and to carry normal levels of accounts receivable on our balance sheet;
• outstanding long-term debt obligations maturing during fiscal 2028 and fiscal 2029, in an aggregate principal value of approximately $760.5 million, with $735.5 million of that amount maturing in fiscal 2029 (refer to Note 13 to the accompanying consolidated financial statements for additional information);
• estimated interest payments of approximately $46.3 million and $42.8 million in fiscal 2028 and fiscal 2029, respectively, based on scheduled outstanding debt obligations, weighted average interest rates and interest rate swaps in effect at February 28, 2026 (refer to Note 13 to the accompanying consolidated financial statements for additional information);
Table of Contents
• minimum operating lease payments of approximately $71.7 million over the term of our existing operating lease arrangements (refer to Note 3 to the accompanying consolidated financial statements for additional information);
• minimum royalty payments of approximately $19.8 million over the term of the existing license agreements (refer to Note 12 to the accompanying consolidated financial statements for additional information); and
• capital and intangible asset expenditures to support ongoing operations and future infrastructure needs.
Based on our current financial condition and current operations, we believe that cash flows from operations and available financing sources will continue to provide sufficient capital resources to fund our foreseeable short- and long-term liquidity requirements. In the short-term we plan to prioritize repaying our debt outstanding.
Subsequent to fiscal 2026, on April 14, 2026, we completed the sale of our distribution facility in Southaven, Mississippi for a total sales price of $82.0 million, less costs to sell of $3.8 million. We used the proceeds from the sale to repay amounts outstanding under our credit facility. See Note 4 to the accompanying consolidated financial statements for additional information.
As part of our long-term strategy, we will continue to evaluate acquisition opportunities. We may finance acquisitions with available cash, the issuance of shares of common stock, additional debt, including secured debt, or other sources of financing, depending upon the size and nature of any such transaction and the status of the capital markets at the time of such acquisition.
Also, as part of our long-term strategy, we may elect to repurchase additional shares of common stock under our Board of Directors’ authorization, subject to limitations contained in our debt agreement and based upon our assessment of a number of factors, including share price, trading volume and general market conditions, working capital requirements, general business conditions, financial conditions, any applicable contractual limitations and other factors, including alternative investment opportunities. We may finance share repurchases with available cash, additional debt, including secured debt, or other sources of financing. For additional information, see Item 5., “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” in this Annual Report.
Operating Activities
Comparison of Fiscal 2026 to 2025
Operating activities provided net cash of $171.1 million, compared to $113.2 million. The increase was primarily driven by decreases in cash used primarily for accounts receivable, annual incentive compensation, income taxes and restructuring activities, partially offset by a decrease in cash earnings and increases in payments for interest.
Investing Activities
Investing activities used cash of $34.4 million and $263.1 million in fiscal 2026 and 2025, respectively.
Highlights from Fiscal 2026
• We made investments in capital and intangible asset expenditures of $39.2 million, partially offset by a favorable net working capital settlement during the first quarter of fiscal 2026 related to the acquisition of Olive & June. Capital and intangible asset expenditures included expenditures for tooling, molds, and other production equipment, primarily driven by manufacturing diversification outside of China, software, computer, furniture and other equipment, and buildings and improvements.
Table of Contents
Highlights from Fiscal 2025
• We paid $229.4 million, net of cash acquired before final working capital adjustments, to acquire Olive & June and made investments in capital and intangible asset expenditures of $30.1 million, of which $5.6 million primarily related to the implementation of an automation system at our new two million square foot distribution facility. Capital and intangible asset expenditures also included expenditures for computer, furniture and other equipment and tooling, molds, and other production equipment.
Financing Activities
Financing activities used cash of $136.7 million and provided cash of $150.2 million in fiscal 2026 and 2025, respectively.
Highlights from Fiscal 2026
• we had proceeds of $566.4 million from revolving loans under our Amended Credit Agreement;
• we repaid $936.3 million of revolving loans drawn under our Amended Credit Agreement;
• we received proceeds of $250.0 million from term loans under our Amended Credit Agreement; and
• we repaid $16.4 million of long-term debt.
Highlights from Fiscal 2025
• we had proceeds of $1,096.6 million from revolving loans under our Credit Agreement;
• we repaid $840.5 million of revolving loans drawn under our Credit Agreement;
• we repaid $6.3 million of long-term debt; and
• we repurchased and retired 1,038,696 shares of common stock at an average price of $99.34 per share for a total purchase price of $103.2 million through a combination of open market purchases and the settlement of certain stock awards.
Amended Credit Agreement
Amended Credit Agreement
On February 15, 2024, we entered into a credit agreement (the “Credit Agreement”) with Bank of America, N.A., as administrative agent, and other lenders that provides for aggregate commitments of $1.5 billion, which are available through (i) a $1.0 billion revolving credit facility, which includes a $50 million sublimit for the issuance of letters of credit, (ii) a $250 million term loan facility and (iii) a committed $250 million delayed draw term loan facility, which permitted multiple drawdowns until August 15, 2025. Proceeds can be used for working capital and other general corporate purposes, including funding permitted acquisitions. At the closing date, February 15, 2024, we borrowed $457.5 million under the revolving credit facility and $250.0 million under the term loan facility and utilized the proceeds to repay all debt outstanding under our prior credit agreement. During the first quarter of fiscal 2026, we borrowed $250.0 million under the delayed draw term loan facility and utilized the proceeds to repay debt outstanding under the revolving credit facility. During the first quarter of fiscal 2026, we capitalized $0.4 million of lender fees and a de minimis amount of third-party fees incurred in connection with the delayed draw term loan facility borrowing, which were recorded as prepaid financing fees in long-term debt.
On November 25, 2025, we entered into an amendment to the Credit Agreement (the “Amendment”, or as amended, the “Amended Credit Agreement”), which provides for the following:
• Reduces the commitment under the revolving credit facility from $1.0 billion to $750.0 million;
• Adds a maximum tier level pursuant to which, if the Net Leverage Ratio is greater than or equal to 4.00 to 1.00, then borrowings under the Amended Credit Agreement bear floating interest at either the Base Rate or Term SOFR, plus a margin of 1.375% and 2.375% for Base Rate and Term
Table of Contents
SOFR borrowings, respectively, plus a credit spread of 0.10% for Term SOFR borrowings (as those terms are defined in the Amended Credit Agreement);
• Amends the minimum Interest Coverage Ratio financial covenant to replace the numerator with a Consolidated EBITDA measure instead of a Consolidated EBIT measure (as those terms are defined in the Amended Credit Agreement);
• Amends the maximum Leverage Ratio financial covenant so that it is not permitted to be greater than as set forth below as of the end of the fiscal quarter:
Fiscal Quarter Ending
Maximum
Leverage Ratio
November 30, 2025
February 28, 2026 through August 31, 2026
November 30, 2026
February 28, 2027 through May 31, 2027
August 31, 2027 and each fiscal quarter thereafter
We may elect to use the Leverage Holiday in connection with the consummation of a Qualified Acquisition after August 31, 2027, if we are in compliance with the terms of the Amended Credit Agreement and meet the other terms and conditions relating to a Qualified Acquisition (as those terms are defined in the Amended Credit Agreement).
• Until August 31, 2027, the following negative covenants are reduced, as described in the Amendment, a general investments basket, an unsecured indebtedness basket and the Permitted Receivables Financings (as defined in the Amended Credit Agreement) basket.
In connection with the Amendment, we recognized a $0.9 million charge within “Interest expense” to write-off unamortized prepaid financing fees related to the revolver due to the reduced commitment and capitalized $1.0 million of lender and third-party fees during the third quarter of fiscal 2026, which were recorded as prepaid financing fees in long-term debt.
Table of Contents
The Amended Credit Agreement includes an accordion feature, which permits the Company to request to increase its borrowing capacity by an additional $300 million plus an unlimited amount when the Leverage Ratio, on a pro-forma basis, is less than 3.25 to 1.00. The Company’s exercise of the accordion is subject to certain conditions being met, including lender approval. Th e Amended C redit Agreement matures on February 15, 2029. We are able to repay amounts borrowed at any time without penalty. Borrowings accrue interest under one of two alternative methods pursuant to the Amended Credit Agreement as described below. With each borrowing against our credit line, we can elect the interest rate method based on our funding needs at the time. We also incur loan commitment and letter of credit fees under the Amended Credit Agreement ranging from 0.1% to 0.45% per annum and 1.0% to 2.375% per annum, respectively, based on our Net Leverage Ratio pursuant to the below table . Th e term loans are payable at the end of each fiscal quarter in equal installments of 0.625% through February 28, 2025, 0.9375% through February 28, 2026, and 1.25% thereafter of the original principal balance of the term loans, which began in the first quarter of fiscal 2025 for the term loan facility and began in the second quarter of fiscal 2026 for the delayed draw term loan facility, with the remaining balance due at the maturity date. Borrowings under the Amended Credit Agreement bear floating interest at either the Base Rate or Term SOFR, plus a margin based on the Net Leverage Ratio of 0% to 1.375% and 1.0% to 2.375% for Base Rate and Term SOFR borrowings, respectively, pursuant to the below table.
Pricing Level
Net Leverage Ratio
Revolving Commitment Fee and Delayed Draw Commitment Fee
Term SOFR for Loans &
Letter of Credit Fees
Base Rate for Loans
Less than 1.00 to 1.00
Greater than or equal to 1.00 to
1.00 but less than 1.50 to 1.00
III
Greater than or equal to 1.50 to
1.00 but less than 2.00 to 1.00
Greater than or equal to 2.00 to
1.00 but less than 2.50 to 1.00
Greater than or equal to 2.50 to
1.00 but less than 3.00 to 1.00
Greater than or equal to 3.00 to
1.00 but less than 3.50 to 1.00
VII
Greater than or equal to 3.50 to
1.00 but less than 4.00 to 1.00
VIII
Greater than or equal to 4.00 to 1.00
The floating interest rates on our borrowings under the Amended Credit Agreement are hedged with interest rate swaps to effectively fix interest rates on $325 million and $550 million of the outstanding principal balance under the Amended Credit Agreement as of February 28, 2026 and February 28, 2025, respectively. For additional information regarding our interest rate swaps, see Notes 14, 15, and 16 to the accompanying consolidated financial statements.
As of February 28, 2026, the outstanding Amended Credit Agreement principal balance was $785.5 million (excluding prepaid financing fees) and the balance of outstanding letters of credit was $9.5 million. The weighted average interest rate on borrowings outstanding under the Amended Credit Agreement was 5.7% at February 28, 2026.
Debt Covenants
Our debt under our Amended Credit Agreement is unconditionally guaranteed, on a joint and several basis, by the Company and certain of its subsidiaries. Our Amended Credit Agreement requires the maintenance of certain key financial covenants, defined in the table below. Our Amended Credit Agreement also contains other customary covenants, including, among other things, covenants restricting or limiting us, except under certain conditions set forth therein, from (1) incurring liens on our properties,
Table of Contents
(2) making certain types of investments, (3) incurring additional debt, and (4) assigning or transferring certain licenses. Our Amended Credit Agreement also contains customary events of default, including failure to pay principal or interest when due, among others. Upon an event of default under our Amended Credit Agreement, the lenders may, among other things, accelerate the maturity of any amounts outstanding. The commitments of the lenders to make loans to us under the Amended Credit Agreement are several and not joint. Accordingly, if any lender fails to make loans to us, our available liquidity could be reduced by an amount up to the aggregate amount of such lender’s commitments under the Amended Credit Agreement.
As of February 28, 2026, the amount available for revolving loans under the Amended Credit Agreement was $432.3 million, and the amount available per the maximum Leverage Ratio was $91.1 million. Covenants in the Amended Credit Agreement limit the amount of total indebtedness we can incur. As of February 28, 2026, these covenants effectively limited our ability to incur more than $91.1 million of additional debt from all sources, including the Amended Credit Agreement. As of February 28, 2026, we were in compliance with all covenants as defined under the terms of the Amended Credit Agreement.
The table below provides the formulas currently in effect for certain key financial covenants as defined under our Amended Credit Agreement:
Applicable Financial Covenant
Amended Credit Agreement
Minimum Interest Coverage Ratio
EBITDA (1) ÷ Interest Expense (1)
Minimum Required: 3.00 to 1.00
Maximum Leverage Ratio
Total Current and Long Term Debt (2) ÷
EBITDA (1) + Pro Forma Effect of Transactions
Maximum Currently Allowed: 4.50 to 1.00 (3)
Key Definitions:
EBITDA:
Earnings + Interest Expense + Taxes + Depreciation + Amortization Expense + Non-Cash Charges (4) + Certain Allowed Addbacks (4) - Certain Non-Cash Income (4)
Pro Forma Effect of Transactions:
For any acquisition, pre-acquisition EBITDA of the acquired business is included so that the
EBITDA of the acquired business included in the computation equals its twelve month trailing total. In addition, the amount of certain pro forma run-rate cost savings for acquisitions or dispositions may be added to EBITDA.
(1) Computed using totals for the latest reported four consecutive fiscal quarters.
(2) Computed using the ending debt balances as of the latest reported fiscal quarter.
(3) In the event a qualified acquisition is consummated after August 31, 2027, the maximum leverage ratio is 4.50 to 1.00 for the first four fiscal quarters after the qualified acquisition is consummated.
(4) As defined in the Amended Credit Agreement.
Critical Accounting Policies and Estimates
The SEC defines critical accounting estimates as those made in accordance with generally accepted accounting principles that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on a company’s financial condition or results of operations. We consider the following estimates to meet this definition and represent our more critical estimates and assumptions used in the preparation of our consolidated financial statements.
Income Taxes
We must make certain estimates and judgments in determining our provision for income tax expense. The provision for income tax expense is calculated on reported (loss) income before income taxes based on current tax law and includes, in the current period, the cumulative effect of any changes in tax rates from those used previously in determining deferred tax assets and liabilities. Tax laws may require items to be included in the determination of taxable income at different times from when the items are reflected in the financial statements. Deferred tax balances reflect the effects of temporary differences between the financial statement carrying amounts of assets and liabilities and their tax bases, as well as from net
Table of Contents
operating losses and tax credit carryforwards, and are stated at enacted tax rates in effect for the year taxes are expected to be paid or recovered.
Deferred tax assets represent tax benefits for tax deductions or credits available in future years and require certain estimates and assumptions to determine whether it is more likely than not that all or a portion of the benefit will not be realized. The recoverability of these future tax deductions and credits is determined by assessing the adequacy of future expected taxable income from all sources, including the future reversal of existing taxable temporary differences, taxable income in carryback years, estimated future taxable income and available tax planning strategies. In projecting future taxable income, we begin with historical results and incorporate assumptions including future operating income, the reversal of temporary differences and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment and are consistent with the plans and estimates we are using to manage our underlying business. Should a change in facts or circumstances, such as changes in our business plans, economic conditions or future tax legislation, lead to a change in judgment about the ultimate recoverability of a deferred tax asset, we record or adjust the related valuation allowance in the period that the change in facts and circumstances occurs, along with a corresponding increase or decrease in income tax expense. Additionally, if future taxable income varies from projected taxable income, we may be required to adjust our valuation allowance in future years.
In addition, the calculation of our tax liabilities requires us to account for uncertainties in the application of complex and evolving tax regulations. We recognize liabilities for uncertain tax positions based on the two-step process prescribed within GAAP. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained upon examination by the tax authority based upon its technical merits assuming the tax authority has full knowledge of all relevant information. To be recognized in the financial statements, the tax position must meet this more-likely-than-not threshold. For positions meeting this recognition threshold, the second step requires us to estimate and measure the tax benefit as the largest amount that has greater than a 50 percent likelihood of being realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as this requires us to determine the probability of various possible outcomes. We reevaluate these uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit, historical experience with similar tax matters, guidance from our tax advisors, and new audit activity. For tax positions that do not meet the threshold requirement, we record liabilities for unrecognized tax benefits as a tax expense or benefit in the period recognized or reversed and disclose as a separate liability in our financial statements, including related accrued interest and penalties. A change in recognition or measurement would result in the recognition of a tax benefit or an additional charge to the tax provision in the period in which the change occurs.
Valuation of Inventory
We record inventory on our balance sheet at the lower of average cost or net realizable value. We write down a portion of our inventory to net realizable value based on the historical sales trends of products and estimates about future demand and market conditions, among other factors. We regularly review our inventory for slow-moving items and for items that we are unable to sell at prices above their original cost. When we identify such an item, we use net realizable value as the basis for recording such inventory and base our estimates on expected future selling prices less expected disposal costs. These estimates entail a significant amount of inherent subjectivity and uncertainty. As a result, these estimates could vary significantly from the amounts that we may ultimately realize upon the sale of inventories if future economic conditions, product demand, product discontinuances, competitive conditions or other factors differ from our estimates and expectations. Additionally, changes in consumer demand, retailer inventory management strategies, transportation lead times, supplier capacity and raw material availability could make our inventory management and reserves more difficult to estimate.
Table of Contents
Acquisitions, Goodwill and Indefinite-Lived Intangibles, and Related Impairment Testing
A significant portion of our non-current assets consists of goodwill and intangible assets recorded as a result of past acquisitions. Accounting for business combinations requires the use of estimates and assumptions in determining the fair value of assets acquired and liabilities assumed in order to properly allocate the purchase price. Goodwill is recorded as the difference, if any, between the aggregate consideration paid and the fair value of the net tangible and intangible assets acquired in the acquisition of a business. Our intangible assets acquired primarily include trade names and customer relationships. The fair value of our assets acquired and liabilities assumed are typically based upon valuations performed by independent third-party appraisers using the income approach, including estimated future discounted cash flow models (“DCF Models”), the relief from royalty method for trade names, and the distributor method for customer relationships. The fair value of our trade names and customer relationships acquired involved significant estimates and assumptions, including revenue growth rates, gross profit and operating profit margins, discount rates and royalty and customer attrition rates (as applicable). We believe that the fair value assigned to the assets acquired and liabilities assumed are based on reasonable assumptions and estimates that marketplace participants would use.
We review goodwill and indefinite-lived intangible assets for impairment on an annual basis or more frequently whenever events or changes in circumstances indicate that their carrying value may not be recoverable. We consider whether circumstances or conditions exist which suggest that the carrying value of our goodwill and indefinite-lived intangible assets might be impaired. If such circumstances or conditions exist, we perform a qualitative assessment to determine whether it is more likely than not that the assets are impaired. We evaluate goodwill at the reporting unit level (operating segment or one level below an operating segment). We operate two reportable segments, Home & Outdoor and Beauty & Wellness, which are comprised of eight reporting units, one of which did not have any goodwill recorded as of the beginning of fiscal 2026 and two of which were fully impaired during fiscal 2026. If the results of the qualitative assessment indicate that it is more likely than not that the assets are impaired, further steps are required in order to determine whether the carrying value of each reporting unit and indefinite-lived intangible assets exceeds its fair market value. An impairment charge is recognized to the extent the goodwill or indefinite-lived intangible asset recorded exceeds the reporting unit’s or asset’s fair value. We perform our annual impairment testing for goodwill and indefinite-lived assets as of the beginning of the fourth quarter of our fiscal year.
We use an enterprise premise to determine the fair value and carrying amount of our reporting units. All assets and liabilities that are employed in or relate to the operations of a reporting unit and will be considered in determining the fair value of the reporting unit are included in the carrying value of the reporting unit. Our reporting units’ net assets primarily consist of goodwill and intangible assets, which are assigned to a reporting unit upon acquisition, and accounts receivable and inventory which are directly identifiable. Assets and liabilities employed in or related to the operations of multiple reporting units as well as corporate assets and liabilities are primarily allocated to the reporting units based on specific identification or a percentage of net sales revenue.
We estimate the fair value of our reporting units using an income approach based upon projected future DCF Models. Under the DCF Model, the fair value of each reporting unit is determined based on the present value of estimated future cash flows, discounted at a risk-adjusted rate of return. We use internal forecasts and strategic long-term plans to estimate future cash flows, including net sales revenue, gross profit margin, and earnings before interest and taxes margins. Our internal forecasts and strategic long-term plans take into consideration historical and recent business results, industry trends and macroeconomic conditions. Other key estimates used in the DCF Model include, but are not limited to, discount rates, statutory tax rates, terminal growth rates, as well as working capital and capital expenditures needs. The discount rates are based on a weighted-average cost of capital utilizing industry market data of our peer group companies. Our goodwill impairment analysis also includes a reconciliation of the aggregate estimated fair values of our reporting units to the Company’s total enterprise value (market capitalization plus long-term debt).
Table of Contents
We estimate the fair value of our indefinite-lived trade names and trademark licenses using the relief from royalty method income approach which is based upon a DCF Model. The relief-from-royalty method estimates the fair value of a trade name or trademark license by discounting the hypothetical avoided royalty payments to their present value over the economic life of the asset. The determination of fair value using this method entails a significant number of estimates and assumptions, which require management judgment, and include net sales revenue growth rates, discount rates, royalty rates, and residual growth rates. We use internal forecasts and strategic long-term plans to estimate net sales revenue growth rates and royalty rates. We utilize a constant growth model to determine the residual growth rates which are based upon long-term industry growth expectations and long-term expected inflation.
Considerable management judgment is necessary in determining the fair value of goodwill and intangible assets (initially acquired and as part of our impairment testing), including the reasonableness of fair value estimates, evaluating the most likely impact of a range of possible external conditions, considering the resulting operating changes and their impact on estimated future cash flows, determining the appropriate discount factors to use, and selecting and weighting appropriate comparable market level inputs. When estimating expected future cash flows judgment is necessary in evaluating the impact of operational and external economic factors on future cash flows, all of which are subject to uncertainty. The recoverability of these assets is dependent upon achievement of our projections and the continued execution of key initiatives related to revenue growth and profitability. The assumptions and estimates used in our fair value analysis involve significant elements of subjective judgment and analysis by management. Certain future events and circumstances, including higher tariffs, deterioration of retail economic conditions, higher cost of capital, a decline in actual and expected consumer demand, among others, could result in changes to these assumptions and judgments. While we believe that the estimates and assumptions we use are reasonable at the time made, changes in business conditions or other unanticipated events and circumstances may occur that cause actual results to differ materially from projected results and this could potentially require future adjustments to our asset valuations.
During each quarter of fiscal 2026, we concluded that a goodwill impairment triggering event had occurred due to a further sustained decline in our stock price, resulting in our carrying value (excluding long-term debt) exceeding the Company’s total enterprise value (market capitalization plus long-term debt). Additional factors that contributed to these conclusions included downward revisions to our internal forecasts and strategic long-term plans, which reflect the tariff policies in effect, timing of corresponding price increases and the related macroeconomic environment at the end of each quarter of fiscal 2026, including the corresponding impact on consumer spending and retailer orders. These factors were applicable to all of our reporting units, indefinite-lived trademark licenses and trade names and definite-lived trademark licenses, trade names and certain other intangible assets. Thus, we performed quantitative impairment testing on our goodwill and intangible assets described above during each quarter of fiscal 2026.
During the first quarter of fiscal 2026, in connection with our annual budgeting and forecasting process, management reduced its forecasts for net sales revenue, gross margin and earnings before interest and taxes to reflect the tariff policies in effect and the related macroeconomic environment at the end of our first quarter of fiscal 2026, including the corresponding impact on consumer spending and retailer orders, as applicable. The revised forecasts also resulted in management selecting lower residual growth rates, which were also reflective of revised long-term industry growth expectations. During the second, third and fourth quarters of fiscal 2026, management further reduced its forecasts for net sales revenue, gross margin and earnings before interest and taxes to reflect the tariff policies in effect, timing of corresponding price increases inclusive of the impact of stop shipment actions to support consistent adoption and the related macroeconomic environment at the end of each quarter of fiscal 2026, including the impact on consumer spending, retailer orders and China cross border ecommerce due to a shift to localized distribution, as applicable. Our forecasts for fiscal 2027 were also updated during the fourth quarter of fiscal 2026, in connection with our annual budgeting process, which primarily resulted in an
Table of Contents
increase in operating expense, shifts in sales forecasts between brands and a reduction to the residual growth rate assumption for one of our reporting units.
The quantitative assessments performed resulted in total pre-tax goodwill impairment charges of $706.5 million during fiscal 2026, which includes impairment charges of $229.1 million in our Home & Outdoor segment and $477.4 million in our Beauty & Wellness segment. The Beauty & Wellness segment includes goodwill impairment charges related to our Health & Wellness, Drybar and Curlsmith reporting units of $235.2 million, $134.3 million and $107.9 million, respectively, during fiscal 2026. The Home & Outdoor segment includes goodwill impairment charges related to our Hydro Flask and Osprey reporting units of $115.9 million and $113.1 million, respectively, during fiscal 2026.
The remaining carrying values of the Osprey, Health & Wellness and Curlsmith reporting units’ goodwill as of February 28, 2026 were $96.6 million, $49.7 million and $9.2 million, respectively. The goodwill impairment charges recognized for the Hydro Flask and Drybar reporting units reduced the carrying values of their goodwill to zero.
Our indefinite-lived intangible asset testing resulted in total impairment charges of $97.0 million during fiscal 2026, which includes $55.0 million related to our Hydro Flask trade name, $35.0 million related to our Osprey trade name and $7.0 million related to our PUR trade name. The remaining carrying values of the Osprey and PUR trade names as of February 28, 2026 were $135.0 million and $47.0 million, respectively. The remaining carrying value of the Hydro Flask trade name of $4.0 million was reclassified to a definite-lived trade name as of November 30, 2025 and was subsequently fully impaired during the fourth quarter of fiscal 2026. See further discussion below under “Impairment of Long-Lived Assets.” Our Hydro Flask and Osprey intangible assets are included within our Home & Outdoor segment. Our PUR intangible asset is included within our Beauty & Wellness segment.
The fair value of our OXO reporting unit, within our Home & Outdoor reportable segment, represented 104% of its carrying value as of February 28, 2026. We performed a sensitivity analysis on key assumptions used in the valuation. A hypothetical adverse change of 10% in the forecasted sales used to estimate the fair value of the OXO reporting unit would have resulted in an impairment charge of approximately $166.1 million, reducing its goodwill carrying value to zero.
The fair value of our Osprey reporting unit, within our Home & Outdoor reportable segment, represented 104% of its carrying value as of February 28, 2026. We performed a sensitivity analysis on key assumptions used in the valuation. A hypothetical adverse change of 10% in the forecasted sales used to estimate the fair value of the Osprey reporting unit would have resulted in an impairment charge of approximately $96.6 million reducing its goodwill carrying value to zero.
As of February 28, 2026, our remaining reporting unit, Olive & June had a fair value that exceeded its carrying value by at least 10%.
The fair value of our PUR indefinite-lived trade name, within our Beauty & Wellness reportable segment, represented 104% of its carrying value as of February 28, 2026. We performed a sensitivity analysis on key assumptions used in the valuation. A hypothetical adverse change of 10% in the forecasted sales used to estimate the fair value of the PUR trade name would have resulted in an impairment charge of approximately $3.0 million against its carrying value of $47.0 million as of February 28, 2026.
The fair value of our Osprey indefinite-lived trade name, within our Home & Outdoor reportable segment, represented 101% of its carrying value as of February 28, 2026. We performed a sensitivity analysis on key assumptions used in the valuation. A hypothetical adverse change of 10% in the forecasted sales used to estimate the fair value of the Osprey trade name would have resulted in an impairment charge of approximately $12.0 million against its carrying value of $135.0 million as of February 28, 2026.
Table of Contents
As of February 28, 2026, all of our other indefinite-lived intangible assets had a fair value that exceeded their carrying value by at least 10%.
Refer to “Impairment of Long-Lived Assets” below for discussion of our definite-lived trademark license and trade name testing.
During the second and fourth quarters of fiscal 2025, we concluded a goodwill impairment triggering event had occurred due to a continued sustained decline in our stock price, resulting in our carrying value (excluding long-term debt) exceeding the Company’s total enterprise value (market capitalization plus long-term debt). Additional factors that contributed to this conclusion included downward revisions to our internal forecasts and strategic long-term plans. These factors were applicable to all of our reporting units and indefinite-lived trademark licenses and trade names. The quantitative assessments performed during the fourth quarter of fiscal 2025 resulted in an impairment charge of $38.7 million to reduce the goodwill of our Drybar reporting unit, which is included within our Beauty & Wellness segment. The quantitative assessments performed during the second quarter of fiscal 2025 did not result in impairment of our goodwill or indefinite-lived intangible assets.
We performed our annual impairment testing of our goodwill and indefinite-lived intangible assets during the fourth quarter of fiscal 2024 and determined based on our qualitative assessment that it is not more likely than not that the fair value of each reporting unit and indefinite-lived intangible asset is lower than its carrying value. Therefore, quantitative impairment testing in fiscal 2024 was not required. Accordingly, no impairment changes were recorded during fiscal 2024.
Some of the inherent estimates and assumptions used in determining the fair value of our reporting units and indefinite-lived intangible assets are outside of the control of management, including interest rates, cost of capital, tax rates, tariff rates, strength of retail economies and industry growth. While we believe that the estimates and assumptions we use are reasonable at the time made, it is possible changes could occur. The recoverability of our goodwill and indefinite-lived intangible assets is dependent upon discretionary consumer demand and the execution of our strategic plan, which includes investing in our brands, growing internationally, new product introductions and expanded distribution to drive revenue growth and profitability and achieve our projections, and our tariff mitigation plans. The net sales revenue and profitability growth rates used in our projections are management’s estimate of the most likely results over time, given a wide range of potential outcomes. Actual results may differ from those assumed in forecasts; thereby, an inability to achieve expected revenue and profitability in line with our internal projections could result in further declines in the fair value, which could result in material impairment charges. We will continue to monitor our reporting units and indefinite-lived intangible assets for any triggering events or other signs of impairment including consideration of changes in tariff rates and the macroeconomic environment, significant declines in operating results, further significant sustained decline in market capitalization from current levels, and other factors, which could result in impairment charges in the future.
Impairment of Long-Lived Assets
We review intangible assets with definite lives and long-lived assets held and used for impairment whenever a triggering event occurs that indicates their carrying value may not be recoverable. If such circumstances or conditions exist, we assess recoverability based on estimated future pre-tax undiscounted cash flows. If the carrying value exceeds the estimated future pre-tax undiscounted cash flows, further steps are required in order to determine whether the carrying value of each of the individual assets exceeds its fair value. If our analysis indicates that an individual asset’s carrying value does exceed its fair market value, the next step is to record a loss equal to the excess of the individual asset’s carrying value over its fair value. We evaluate any long-lived assets held for sale quarterly to determine if estimated fair value less cost to sell has changed during the reporting period.
Table of Contents
We estimate the fair value of our trade names and trademark licenses using the relief from royalty method income approach (described above) which is based upon a DCF Model. We estimate the fair value of our customer relationships and lists using the distributor method income approach which is based upon a DCF Model. The distributor method uses financial margin information for distributors within the applicable industry and most representative of the Company to estimate a royalty rate. The determination of fair value using these methods entails a significant number of estimates and assumptions, which require management judgment, and include net sales revenue growth rates, discount rates, royalty rates, residual growth rates (as applicable) and customer attrition rates (as applicable). We use internal forecasts and strategic long-term plans (which are described above) to estimate net sales revenue growth rates and royalty rates. We utilize a constant growth model to determine the residual growth rates which are based upon long-term industry growth expectations and long-term expected inflation.
The assumptions and estimates used in determining the fair value of our definite-lived intangible assets and long-lived assets involve significant elements of subjective judgment and analysis by management. Certain future events and circumstances, including higher tariffs, deterioration of retail economic conditions, higher cost of capital, a decline in actual and expected consumer demand, could result in changes to these assumptions and judgments. A revision of these estimates and assumptions could cause the fair values of the definite-lived intangible assets and long-lived assets to fall below their respective carrying values, resulting in impairment charges, which could have a material adverse effect on our results of operations.
As described above, during each quarter of fiscal 2026, we concluded that an impairment triggering event had occurred and concluded to perform quantitative impairment analyses on our definite-lived trademark licenses, trade names and certain other intangibles, which were determined to not be recoverable.
During the first quarter of fiscal 2026, in connection with our annual budgeting and forecasting process, management reduced its forecasts for net sales revenue, gross margin and earnings before interest and taxes to reflect the tariff policies in effect and the related macroeconomic environment at the end of our first quarter of fiscal 2026, including the corresponding impact on consumer spending and retailer orders, as applicable. The revised forecasts also resulted in management selecting lower residual growth rates, which were also reflective of revised long-term industry growth expectations, and royalty rates, as applicable. During the second, third and fourth quarters of fiscal 2026, management further reduced its forecasts for net sales revenue, gross margin and earnings before interest and taxes to reflect the tariff policies in effect, timing of corresponding price increases inclusive of the impact of stop shipment actions to support consistent adoption and the related macroeconomic environment at the end of each quarter of fiscal 2026, including the impact on consumer spending, retailer orders and China cross border ecommerce due to a shift to localized distribution, as applicable. Our forecasts for fiscal 2027 were also updated during the fourth quarter of fiscal 2026, in connection with our annual budgeting process, which primarily resulted in an increase in operating expense, shifts in sales forecasts between brands and a reduction in the residual growth rate assumption for one of our reporting units. An inability to achieve expected revenue and profitability in line with our internal projections could result in further declines in the fair value that may result in additional impairment charges to these intangible assets.
Our definite-lived trademark license and trade name testing resulted in total impairment charges of $49.6 million during fiscal 2026, which includes $23.5 million related to our Revlon trademark license, $15.4 million related to our Curlsmith trade name, $6.7 million related to our Drybar trade name and $3.9 million related to our Hydro Flask trade name. The Hydro Flask trade name impairment charges reflect charges recorded during the fourth quarter of fiscal 2026, as its remaining carrying value was reclassified to a definite-lived trade name as of November 30, 2025. Impairment charges recognized during fiscal 2026 on the Hydro Flask trade name prior to November 30, 2025 are discussed above under “Acquisitions, Goodwill and Indefinite-Lived Intangibles, and Related Impairment Testing.” The remaining carrying values of the Revlon trademark license and Curlsmith trade name as of February 28, 2026 were
Table of Contents
$39.4 million and $1.9 million, respectively. The impairment charges recognized for the Drybar and Hydro Flask trade names reduced the carrying values of these assets to zero.
Our definite-lived customer relationships and lists assessment resulted in a total impairment charge of $29.2 million, during fiscal 2026, which includes $10.7 million, $9.7 million and $8.8 million related to our Drybar, Curlsmith and Hydro Flask customer relationships, respectively, which reduced the carrying values of these assets to zero.
Our other intangible assets assessment resulted in a total impairment charge of $3.6 million, during fiscal 2026, which includes $2.8 million and $0.8 million related to Drybar and Hydro Flask other intangibles, respectively, which reduced the carrying values of these assets to zero.
Our Hydro Flask intangible assets are included within our Home & Outdoor segment. Our Revlon, Curlsmith and Drybar intangible assets are included within our Beauty & Wellness segment.
As described above, during the second and fourth quarters of fiscal 2025, we concluded that an impairment triggering event had occurred and concluded to perform quantitative impairment analyses on our definite-lived trademark licenses and trade names and certain other intangible assets, as applicable. The quantitative assessments performed during the fourth quarter of fiscal 2025 resulted in an impairment charge of $12.8 million to reduce the carrying value of our Drybar definite-lived trade name to an estimated fair value of $7.0 million. The quantitative assessments performed during the second quarter of fiscal 2025 did not result in impairment of our definite-lived intangible assets.
During fiscal 2024 we determined no changes in circumstances or conditions or events occurred that would indicate the carrying value of our definite-lived intangible assets may not be recoverable.
The estimates and assumptions inherent in determining the fair value of our definite-lived intangible assets are subject to the same risks described above for determining the fair value of our goodwill and indefinite-lived intangible assets. Further declines in anticipated consumer spending or an inability to achieve expected revenue growth and profitability in line with our strategic long-term plans, including our tariff mitigation plans, could result in declines in the fair value that may result in impairment charges to our definite-lived intangible assets. We will continue to monitor our definite-lived intangible assets and long-lived assets for any triggering events or other signs of impairment including consideration of changes in tariff rates and the macroeconomic environment, significant declines in sales or operating results and other factors, which could result in impairment charges in the future. For additional information, refer to Note 1 and Note 7 to the accompanying consolidated financial statements.
Economic Useful Lives of Intangible Assets
We amortize intangible assets, such as trademark licenses, trade names, customer relationships and lists, patents and non-compete agreements over their economic useful lives, unless those assets’ economic useful lives are indefinite. If an intangible asset’s economic useful life is deemed indefinite, that asset is not amortized. The determination of the economic useful life of an intangible asset requires a significant amount of judgment and entails significant subjectivity and uncertainty. When we acquire an intangible asset, we consider factors such as our plans for the asset, the market for products associated with the asset, economic factors, any legal, regulatory or contractual provisions and industry trends. We consider these same factors when reviewing the economic useful lives of our previously acquired intangible assets as well. We review the economic useful lives of our intangible assets at least annually. We complete our analysis of the remaining useful economic lives of our intangible assets during the fourth quarter of each fiscal year or when a triggering event occurs.
In connection with the impairment testing described above, the remaining carrying value of the Hydro Flask trade name of $4.0 million was reclassified to a definite-lived trade name and assigned a useful life of 10 years as of November 30, 2025 and was subsequently fully impaired during the fourth quarter of
Table of Contents
fiscal 2026. The remaining useful life of the Revlon trademark license was revised from 35 years to 10 years as of November 30, 2025, which will increase annual amortization expense by approximately $2.9 million.
Share-Based Compensation
We grant share-based compensation awards to non-employee directors and certain associates under our equity plans. We measure the cost of services received in exchange for equity awards, which include grants of restricted stock awards (“RSAs”), restricted stock units (“RSUs”), performance stock awards (“PSAs”), and performance stock units (“PSUs”), based on the fair value of the awards on the grant date. These awards may be subject to attainment of certain service conditions, performance conditions and/or market conditions.
We grant PSAs and PSUs to certain officers and associates, which cliff vest after three years and are contingent upon meeting one or more defined operational performance metrics over the three year performance period (“Performance Condition Awards”). The quantity of shares ultimately awarded can range from 0% to 200% of “Target”, as defined in the award agreement as 100%, based on the level of achievementagainst the defined operational performance metrics. We recognize compensation expense for Performance Condition Awards over the requisite service period to the extent performance conditions are considered probable. Estimating the number of shares of Performance Condition Awards that are probable of vesting requires judgment, including assumptions about future operating performance. While the assumptions used to estimate the probability of achievementagainst the defined operational performance metrics are management’s best estimates, such estimates involve inherent uncertainties. The extent actual results or updated estimates differ from our current estimates, such amounts will be recorded as a cumulative adjustment to share-based compensation expense in the period estimates are revised.
The critical accounting estimates described above supplement the description of our accounting policies disclosed in Note 1 to the accompanying consolidated financial statements. Note 1 describes several other policies that are important to the preparation of our consolidated financial statements, but do not meet the SEC’s definition of critical accounting estimates.
Information Regarding Forward-Looking Statements
Certain written and oral statements in this Annual Report may constitute “forward-looking statements” as defined under the Private Securities Litigation Reform Act of 1995. This includes statements made in this Annual Report, in other filings with the SEC, in press releases, and in certain other oral and written presentations. Generally, the words “anticipates”, “assumes”, “believes”, “expects”, “plans”, “may”, “will”, “might”, “would”, “should”, “seeks”, “estimates”, “project”, “predict”, “potential”, “currently”, “continue”, “intends”, “outlook”, “forecasts”, “targets”, “reflects”, “could”, and other similar words identify forward-looking statements. All statements that address operating results, events or developments that we expect or anticipate may occur in the future, including statements related to sales, expenses, including cost reduction measures, EPS results, and statements expressing general expectations about future operating results, are forward-looking statements and are based upon our current expectations and various assumptions. We currently believe there is a reasonable basis for our expectations and assumptions, but there can be no assurance that we will realize our expectations or that our assumptions will prove correct. Forward-looking statements are only as of the date they are made and are subject to risks, many of which are beyond our control, that could cause them to differ materially from actual results. Accordingly, we caution readers not to place undue reliance on forward-looking statements. We believe that these risks include but are not limited to the risks described in this Annual Report under Item 1A., “Risk Factors” and that are otherwise described from time to time in our SEC reports as filed. We undertake no obligation to publicly update or revise any forward-looking statements as a result of new information, future events or otherwise.
