HELE
#Yes, this is <UNK>.
I will talk about SG&A a little bit.
I would say that our SG&A ratio for the quarter is higher than you would expect on a normalized basis and I think that would be expected by you.
As we tried to call out, there are advertising and promotional and the product development costs incurred in the quarter that will benefit future quarters.
So, I think the way we've tried to picture this or put this in perspective for you guys is on annualized, more on an annualized basis, not a quarter to quarter basis.
And I think what we've set for the long-term targets still remains true, which is the 30 to 40 basis points of improvement in operating margin.
And the cost savings that we have outlaid or are laid out for you guys, some of that being returned to the bottom line, but some of that being pumped back into the business for future growth.
So that is the way that I would layout margin expansion and the SG&A costs.
A quick build on SG&A, and then I'll talk about your beauty question.
Remember Healthy Directions, by its very nature, has higher SG&A.
And nonetheless, higher margins that the average for the Company on the bottom line, just because we're fulfilling the orders.
There is no retailer in between.
The marketing and new product development investments that <UNK> was talking about, both in the script and his comments now, speak to a bit higher SG&A in this first half of the year as a percentage of the sales which are at their seasonal low point, so there is just a bit of math there.
And then remember the FX comments, as we incurred expenses in foreign exchange, such as Swiss francs in Europe, the sales come in at a lower dollar translation as they come back to us from euros.
And nonetheless, our dollars go out the door in expense in Swiss francs, so that is a double whammy effect.
So, those are the things that I would add as built on the SG&A front.
And in the case of the beauty progress, a lot to like here.
We're taking all those key areas that I have mentioned a few times, and I will touch each of them here.
But before I do, I'll just say, the quarterly progress is looking pretty good.
If you take that 4.7% that <UNK> talked about in terms of decline, first of all, it's in line with our mid single-digit target that we said for the year in terms of the decline rate in beauty.
As we try to get back to flat, remember that was an 18 month glide path.
And if you look at the impact of foreign exchange, which I believe was about 2% of that 4.7%, as well as the port strike ---+ sorry, port labor disruption, which largely impacted beauty more than our other businesses.
Those were headwinds of the 4.7%, and nonetheless, the 4.7% in line with our projection.
So, we found that aspect encouraging.
I'll also say that if you take the last couple of quarters together, the last two quarters of last year and the first quarter of this year.
That is three and a row at this point, and you compare them, for example, to the first half of last year where you saw strong double-digit declines, you can see a deceleration.
And that's why I say progress towards deceleration, despite the minus 4.7%.
So, that's just the comparison and the math and the trend of it.
And then you take the other aspects like packaging, new product development, quality, marketing and the other areas that we've outlined as the elements of stabilization and we have excellent progress in all of them.
If you go to the shelf, you'll see increasingly better products coming online.
If you look at our quality, we are making meaningful improvements in some key products.
And if you look at our packaging, you'll see much better branding.
You will see fewer SKUs that are more appropriate for the assortment that our consumers want and that retailers will support.
And you'll see more statement of benefits, and just better branding on the package.
Better brand blocks, et cetera.
And then if you look at the work being done in new product development.
While we haven't put new beauty products onto the market, it is only been a few months since we started that effort, there are several that are soon coming to the market.
We cannot wait to share them with you as soon as they shipped.
And we are seeing nice customer reception at the sell in phase.
So, it is nice to see a real innovation being grabbed by customers.
When it's on shelf, we'll talk all about it and hopefully see it sell through nicely.
And then as an example that did ship in the last couple of quarters is that callous buffer under Dr.
Scholl's that also has the high margin consumable model.
We're distributing that through outside distribution agent, and it is just selling well.
So, there is a lot of examples in beauty progress.
That said, plenty of headwinds.
And then lastly, the reorganization that we talked about here on the call today is significant.
We have unified multiple retail sales and marketing organizations.
We've kept our professional organization separate, but nonetheless, unified the ethnic part with the general market part within professional.
And we have put a shared service concept within beauty in things like sales, marketing ---+ sorry, finance, marketing services, and a few other creative services a few other aspects that allow us to take a bit of cost out and to have less silos within that area.
So, lots of progress would be my long answer.
<UNK>, just one more point going back to the SG&A.
We had multiple impacts to sales in the quarter, currency, the West Coast port thing, and then the shifting of orders from OXO which obviously impacts our operating leverage, and makes our SG&A ratio look higher for the quarter.
So, it will naturally be higher because of those events.
But as those normalize and we get more on a normalized sales pattern for the year, you should see the SG&A ratio decrease.
Thank you.
Thank you very much, everyone, for joining our call and for your continued interest in Helen of Troy, and especially for your support.
We are looking forward to speaking with many of you in the coming day and weeks and updating you on our second-quarter results in October.
And with there being no further question, thank you and have a wonderful evening.
