HELEN OF TROY LTD

Previous wording

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 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.

Current wording

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.

Previous wording

This MD&A, including the tables under the headings “Operating Income, Operating Margin, Adjusted Operating Income (non-GAAP), and Adjusted Operating Margin (non-GAAP) by Segment” and “Net Income, Diluted EPS, Adjusted Income (non-GAAP), and Adjusted Diluted EPS (non-GAAP),” reports operating income, operating margin, net income and diluted earnings per share (“EPS”) without the impact of acquisition-related expenses, asset impairment charges, a discrete tax charge to revalue existing deferred tax liabilities due to Barbados enacting domestic corporate income tax legislation (“Barbados tax reform”), a charge for uncollectible receivables due to the bankruptcy of Bed, Bath & Beyond (“Bed, Bath & Beyond bankruptcy”), gain on sale of distribution and office facilities, a transitional income tax benefit resulting from the recognition of a deferred tax asset in connection with the reorganization of our intangible assets (“intangible asset reorganization”), restructuring 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 EPS 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 limitation 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 EPS 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 disclosed by other companies. Accordingly, undue 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 51.

Current wording

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 (Loss) Income, Diluted (Loss) Earnings Per Share, Adjusted Income (non-GAAP) and Adjusted Diluted Earnings Per Share (non-GAAP),” reports operating (loss) income, operating margin, net (loss) income and diluted (loss) earnings per share without the impact of acquisition-related expenses, asset impairment 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 benefit 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”), restructuring 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 (loss) 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 limitation 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 disclosed by other companies. Accordingly, undue reliance should not be place…

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Previous wording

During the second quarter of fiscal 2025, we concluded that a goodwill impairment triggering event had occurred. We performed quantitative impairment testing on our goodwill and certain intangible assets and determined none were impaired. During the fourth quarter of fiscal 2025, we concluded a goodwill impairment triggering event had occurred. Thus, we performed quantitative impairment testing on our goodwill and certain intangible assets. As a result of such testing, we recorded asset impairment charges of $51.5 million ($47.6 million after tax), during the fourth quarter of fiscal 2025, to reduce the goodwill and definite-lived trade name of our Drybar business, which is included within our Beauty & Wellness segment. We did not incur any asset impairment charges during fiscal 2024 and 2023. 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”.

Current wording

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:

Previous wording

On December 16, 2024, we completed the acquisition of 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 $229.4 million, net of cash acquired, which included a preliminary net working capital adjustment and is subject to certain customary closing adjustments, 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. The acquisition of Olive & June complements and broadens our existing Beauty portfolio beyond the hair care category and advances our Elevate for Growth Strategy to deploy accretive capital that leverages our capabilities and scale to accelerate growth, further expand margins, and drive greater earnings growth and free cash flow conversion. We incurred pre-tax acquisition-related expenses of $3.0 million during fiscal 2025, which were recognized in SG&A within our consolidated statement of income.

Current wording

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 incurred pre-tax acquisition-related expenses of$3.0 million during fiscal 2025, which were recognized in SG&A within our consolidated statement of income.

Previous wording

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. We purchase a high concentration of our products from unaffiliated manufacturers located in China. This concentration exposes us to risks associated with doing business globally, including changes in tariffs. Furthermore, the new U.S. presidential administration has promoted and implemented plans to raise tariffs and pursue other trade policies intended to restrict imports. As of April 9, 2025, the U.S. has imposed an aggregate additional 145% tariff on imports from China. Other recent policy updates include a 25% tariff on imports from Mexico, which was subsequently postponed, and a 46% tariff on imports from Vietnam and specific tariffs on various U.S. trading partners, which were both subsequently paused for 90 days and replaced with a universal 10% tariff effective April 9, 2025. The U.S. tariff policies are continuing to evolve. As a result, our risks and mitigation plans as further described below will also continue to evolve as further developments arise. Any alteration of trade agreements and terms between China and the U.S., including limiting trade with China, imposing additional tariffs on imports from China and potentially imposing other restrictions on imports from China to the U.S. may result in further or higher tariffs or retaliatory trade measures by China (for example, China announced a reciprocal 125% tariff on imports from the U.S. effective April 11, 2025). We are in the process of determining our incremental tariff cost exposure in light of continuing changes to tariff policies, and the full extent of our potential mitigation plans, as well as the associated timing to implement such plans. 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 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 considering other mitigation actions, which could include cost reductions from suppliers, or price increases to customers, on products subject to tariffs.

Current wording

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.

Previous wording

The Federal Open Market Committee lowered the benchmark interest rate by 100 basis points during fiscal 2025 compared to an increase of 75 basis points and 450 basis points during fiscal 2024 and 2023, respectively. As a result, during fiscal 2025, we incurred lower average interest rates compared to the prior year. During fiscal 2024 and 2023, we incurred higher average interest rates compared to the previous years. As of February 28, 2025 and February 29, 2024, $550 million and $500 million of the outstanding principal balance under the Credit Agreement, respectively, 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. 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 and may continue to have an adverse impact. 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 and consumer confidence, both of which may adversely impact our results.

Current wording

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.

Previous wording

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 71% of our consolidated net sales revenue in fiscal 2025 was from U.S. shipments compared to 74% of consolidated net sales revenue in both fiscal 2024 and 2023.

Current wording

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.

Previous wording

Dynamic changes in consumer spending and shopping patterns are also having an impact on retailer inventory levels. Our ability to sell to retailers is predicated on their ability to sell to the end consumer. During fiscal year 2023, we experienced an adverse impact on orders from retail customers as they aimed to rebalance their inventory levels due to lower consumer demand and shifts in consumer spending patterns. We experienced some improvement in replenishment orders from certain retail customers in certain product categories during fiscal 2024. However, during fiscal 2025, we experienced reduced replenishment orders from retail customers in line with softer consumer demand and discretionary spending, which adversely impacted our sales, results of operations and cash flows. Additionally, during fiscal 2025, we experienced increased competition within our Beauty & Wellness segment and in the insulated beverageware category, which led to some declines in retail distribution. 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, changes in consumer spending patterns and increased competition. 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.”

Current wording

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 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.”

Previous wording

Our concentration of sales reflects the continued evolution of consumer shopping preferences. For fiscal 2025, 2024 and 2023, 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 comprised approximately 27%, 28% and 23%, respectively, of our total consolidated net sales revenue and decreased approximately 5.5% in fiscal 2025, grew approximately 14.3% in fiscal 2024 and decreased approximately 8.9% in fiscal 2023 over the prior fiscal year periods.

Current wording

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.

Previous wording

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 the first quarter of 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 lost efficiency 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.

Current wording

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 lost efficiency 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.

Previous wording

Project Pegasus is a global restructuring plan intended to expand operating margins through initiatives designed to improve efficiency and effectiveness and reduce costs. Project Pegasus includes 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 future growth investments. During fiscal 2025, 2024 and 2023, we incurred $14.8 million, $18.7 million, and $27.4 million, respectively, of pre-tax restructuring costs in connection with Project Pegasus, which were recorded as “Restructuring charges” in the consolidated statements of income. See further discussion below within “Significant Trends Impacting the Business,” under “Project Pegasus” and Note 11 to the accompanying consolidated financial statements.

Current wording

During fiscal 2023, we initiated a global restructuring plan intended to expand operating margins through initiatives designed to improve efficiency 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 million as of February 28, 2025, which was paid during fiscal 2026. See Note 11 to the accompanying consolidated financial statements for additional information.

Previous wording

•Estimated cadence of the recognition of the savings will be approximately 25% and 35% in fiscal 2024 and 2025, respectively, which were both achieved, and approximately 25% and 15% in fiscal 2026 and 2027, respectively.

Current wording

•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 which were achieved, and approximately 15% in fiscal 2027.

Previous wording

During fiscal 2025, our gross margin and operating margins were favorably impacted by lower commodity and product costs driven by our cost of goods savings projects. During fiscal 2024, our gross margin and operating margins were favorably impacted by our SKU rationalization efforts in Beauty & Wellness and lower commodity costs in Home & Outdoor driven by our cost of goods savings projects. In addition, during fiscal 2024 we had lower personnel costs as a result of our Project Pegasus role reductions; however, they were offset by higher annual incentive compensation expense, annual merit increases, and share-based compensation expense. During fiscal 2023, we implemented plans to reduce inventory levels, increase inventory turns, and improve cash flow and working capital. Improvements related to these initiatives began in the second half of fiscal 2023 and continued during fiscal 2024, enabling us to repay amounts outstanding under our long-term debt agreement and reduce our interest expense during fiscal 2024. 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.

Current wording

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.

Previous wording

On December 23, 2021, Brita LP filed the Patent Litigation, alleging patent infringement by the Company relating to its PUR gravity-fed water filtration systems. Brita LP simultaneously filed the ITC Action against Kaz USA, Inc., Helen of Troy Limited and five other unrelated companies that sell water filtration systems. 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 that is 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 is appealing the ITC's decision to the Federal Circuit and filed its Notice of Appeal on October 24, 2023. The Company intervened in the CAFC Appeal, but as of the filing date of this Form 10-K, oral argument has not been scheduled. The Patent Litigation remains stayed for the time being. We cannot predict the outcome of these legal proceedings, the amount or range of any potential loss, when the proceedings will be resolved, or customer acceptance of any replacement water filter. Litigation is inherently unpredictable, and the resolution or disposition of these proceedings could, if adversely determined, have a material and adverse impact on our financial position and results of operations. For additional information regarding the Patent Litigation and the ITC Action, see Item 3., “Legal Proceedings” and Note 12 to the accompanying consolidated financial statements.

Current wording

On December 23, 2021, Brita LP filed a complaint against 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.

Previous wording

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, and the U.S. Consumer Product Safety Commission.

Current wording

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.

Previous wording

During fiscal 2022 and 2023, we were in discussions with the EPA regarding the compliance of packaging claims on certain of our products in the air and water filtration categories and a limited subset of humidifier products 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 compliance discussions, we voluntarily implemented a temporary stop shipment action on the impacted products as we worked with the EPA towards an expedient resolution. We resumed normalized levels of shipping of the affected inventory during fiscal 2022 and we completed the repackaging and relabeling of our existing inventory of impacted products during fiscal 2023. Additionally, as a result of continuing dialogue with the EPA, we executed further repackaging and relabeling plans on certain additional humidifier products and certain additional air filtration products, which were also completed during fiscal 2023.

Current wording

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 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.

Previous wording

Changes in foreign currency exchange rates had anunfavorable impact on consolidated U.S. Dollar reported net sales revenue of approximately$2.5 million, or 0.1% for fiscal 2025, a favorable impact of approximately $6.8 million, or 0.3% for fiscal 2024 and an unfavorable impact of approximately $17.0 million, or 0.8% for fiscal 2023.

Current wording

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.

Previous wording

Sales in several of our Beauty & Wellness segment 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 2024-2025 and 2023-2024 cough/cold/flu seasons were below historical averages seen prior to the impact of COVID-19. The 2022-2023 cough/cold/flu season was above historical averages, primarily early in the season, as respiratory infections surged in both children and adults and COVID-19 continued to be prevalent.

Current wording

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.

Previous wording

This section provides an analysis of our results of operations for fiscal year 2025 as compared to fiscal year 2024 including discussion of material changes. Refer to Item 7., “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our 2024 Annual Report on Form 10-K, filed with the SEC on April 24, 2024, for an analysis and discussion ofour fiscal year 2024 financial condition andresults of operations as compared to fiscal year 2023, which such discussion is hereby incorporated by reference.

Current wording

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.

Previous wording

(1)Fiscal 2025 includes approximately eleven weeks of operating results from Olive & June, acquired on December 16, 2024. For additional information see Note 6 to the accompanying consolidated financial statements.

Current wording

(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.

Previous wording

•Consolidated operating income decreased 45.2%, or $117.8 million, to $142.7 million, compared to $260.6 million for the same period last year. Consolidated operating margin decreased 5.5 percentage points to 7.5%, compared to 13.0% for the same period last year. Consolidated operating income for fiscal 2025 includes 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 income for fiscal 2024 included a pre-tax gain on sale of distribution and office facilities of $34.2 million, pre-tax restructuring charges of $18.7 million related to Project Pegasus and a pre-tax Bed, Bath & Beyond bankruptcy charge of $4.2 million.

Current wording

•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.

Previous wording

•Adjusted income decreased 22.5% to $165.4 million, compared to $213.5 million for the same period last year. Adjusted diluted EPS decreased 19.5% to $7.17, compared to $8.91 for the same period last year.

Current wording

•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.

Previous wording

(1)On December 16, 2024, we completed the acquisition of Olive & June. Olive & June sales are reported in Acquisition for the Beauty & Wellness segment in fiscal 2025 and consist of approximately eleven weeks of operating results. For additional information see Note 6 to the accompanying consolidated financial statements.

Current wording

(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.

Previous wording

Consolidated net sales revenue decreased $97.4 million, or 4.9%, to $1,907.7 million, compared to $2,005.1 million. The decline was driven by a decrease from Organic business of $117.9 million, or 5.9%, primarily due to:

Current wording

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:

Previous wording

•a decline in Home & Outdoor primarily due to lower replenishment orders from retail customers, softer consumer demand, increased competition in the insulated beverageware category and the impact of shipping disruption at our Tennessee distribution facility due to automation startup issues affecting some of the segment's small retail customer and direct-to-consumer orders during the first quarter of fiscal 2025.

Current wording

•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.

Previous wording

The Olive & June acquisition contributed $23.0 million, or 1.1%, to consolidated net sales revenue growth. Net sales revenue was unfavorably impacted by net foreign currency fluctuations of approximately $2.5 million, or 0.1%.

Current wording

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%.

Previous wording

•a decrease in club and closeout channel sales in the home category;

Current wording

•a decrease in club channel sales in response to higher tariffs; and

Previous wording

•higher international sales primarily driven by new and expanded retailer distribution across all categories and strong demand for travel and lifestyle packs; and

Current wording

•strong demand for technical, travel and lifestyle packs;

Previous wording

•the impact of shipping disruption at our Tennessee distribution facility due to automation startup issues affecting some of the segment's small retail customer and direct-to-consumer orders during the first quarter of fiscal 2025.

Current wording

•the favorable comparative impact of shipping disruption at our Tennessee distribution facility due to automation startup issues during the first quarter of fiscal 2025.

Previous wording

Net sales revenue decreased $87.3 million, or 8.0%, to $1,001.3 million, compared to $1,088.7 million. The decrease was primarily driven by a decrease from Organic business of $108.7 million, or 10.0%, primarily due to:

Current wording

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:

Previous wording

•lower sales of humidifiers and air purifiers, primarily driven by reduced replenishment orders from retail customers due to a decline in consumer demand, overall softness in consecutive illness seasons and increased competition in air purification;

Current wording

•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;

Previous wording

Consolidated gross profit margin increased 0.6 percentage points to 47.9%, compared to 47.3%. The increase in consolidated gross profit margin was primarily due to favorable inventory obsolescence expense year-over-year and lower commodity and product costs, partly driven by Project Pegasus initiatives.

Current wording

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.

Previous wording

Consolidated SG&A ratio increased 3.6 percentage points to 37.0%, compared to 33.4%. The increase in the consolidated SG&A ratio was primarily due to:

Current wording

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:

Previous wording

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”.

Current wording

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

Previous wording

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 of$11.9 million and had a remaining liability of$7.7 million as of February 28, 2025.

Current wording

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.

Previous wording

Operating Income, Operating Margin, Adjusted Operating Income (non-GAAP), and Adjusted Operating Margin (non-GAAP) by Segment

Current wording

Operating (Loss) Income, Operating Margin, Adjusted Operating Income (non-GAAP) and Adjusted Operating Margin (non-GAAP) by Segment

Previous wording

In order to provide a better understanding of the impact of certain items on our operating income, the tables that follow report the comparative pre-tax impact of acquisition-related expenses, asset impairment charges, Bed, Bath & Beyond bankruptcy, gain on sale of distribution and office facilities, restructuring charges, amortization of intangible assets, and non‐cash share‐based compensation, as applicable, on operating 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.”

Current wording

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.”

Previous wording

(1)Fiscal 2025 includes approximately eleven weeks of operating results from Olive & June, acquired on December 16, 2024. For additional information see Note 6 to the accompanying consolidated financial statements.

Current wording

(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.

Previous wording

Consolidated operating income was $142.7 million, or 7.5% of net sales revenue, compared to $260.6 million, or 13.0% of net sales revenue. 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, compared to a pre-tax Bed, Bath & Beyond bankruptcy charge of $4.2 million, a pre-tax gain on sale of distribution and office facilities of $34.2 million and pre-tax restructuring charges of $18.7 million in fiscal 2024. The combined effect of these items unfavorably impacted the year-over-year comparison of consolidated operating margin by a combined 4.2 percentage points. The remaining 1.3 percentage point decrease in consolidated operating margin was primarily driven by:

Current wording

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:

Previous wording

Consolidated adjusted operating income decreased 16.3% to $252.3 million, or 13.2% of net sales revenue, compared to $301.5 million, or 15.0% of net sales revenue.

Current wording

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.