Personal-care products maker Helen of Troy Ltd posted a quarterly profit that handily beat market expectations, boosted by sales from its hair-care business acquisitions, lifting its shares as much as 13 percent.
The company is eyeing further acquisitions over the next 6 to 12 months, Chief Executive Gerald Rubin said on a conference call.
Sales at the company's personal care segment, which includes grooming, skin and hair products under the Revlon and Vidal Sassoon brands among others, have picked up as revenue rolled in from its hair-care buys Ogilivie and Infusium 23.
However, the strengthening of the US dollar against currencies in which the company transacts its sales partly offset the benefits from the new businesses, Helen of Troy said.
The company, whose rivals include Conair Corp and Lifetime Brands Inc, acquired Infusium 23 in March from rival Procter & Gamble Co.
Sales at the personal care segment rose 5 percent to $111.6 million, while Helen of Troy's housewares segment that consists of the OXO International brands saw sales rise 7 percent to $50.6 million.
Gross margins improved by 10 basis points during the quarter to 42.5 percent.
Jefferies and Co analyst Douglas Lane said he had expected the recent pattern of gross margin declines to continue into the second quarter.
It appears that the gross margin improvements we have been expecting from China sourcing and lower shipping rates are materializing earlier than we thought, he wrote in a note to clients.
Selling, general and administrative expenses fell 4 percent to $48.2 million and the company said it will continue to pursue further reductions.
For the second quarter ended Aug. 31, net income rose to $15.9 million, or 51 cents per share, from $10.6 million, or 34 cents per share, a year ago.
Sales rose 6 percent to $162.2 million.
Analysts on average were expecting the company to earn 39 cents per share, before special items, on revenue of $161.4 million, according to Thomson Reuters I/B/E/S.
Shares of the El Paso, Texas-based company were up 12 percent at $22.40 Wednesday afternoon on Nasdaq. They touched a high of $22.50 earlier in the session.
(Reporting by Viraj Nair in Bangalore; Editing by Anne Pallivathuckal and Unnikrishnan Nair)