- Customer Loss and Traffic Decline 160,000 residential customers lost, 8.6% residential traffic drop in FY2025.
- Store Closures and Cost Savings 80-90 underperforming stores to close, reducing $25-35M annual sales but boosting EBITDA by $4-10M.
- Q4 Net Sales Decline $389.2M reported, a 2.2% YoY decrease to $397.9M, with a 53rd week contributing $18.3M.
- Impairment and Loss $184M impairment charge led to a $162.8M net loss ($17.54/share), but adjusted EBITDA rose to $45.2M.
- 2026 Cost Optimization $7-12M annual savings target, $4-5M from SKU rationalization (over 2,000 SKUs eliminated).
Operational Challenges and Strategic Initiatives
The company faced significant operational challenges, including an 8.6% decline in residential traffic and a net loss of 160,000 residential customers due to pricing issues. To address these challenges, Leslie's is implementing a restructuring plan, including store optimization, SKU optimization, and a market leadership approach. The company plans to close 80-90 underperforming stores, representing $25-35 million in annual sales, and expects to incur further impairment charges in Q1 and Q2 2026.
Guidance and Outlook
For fiscal 2026, Leslie's expects sales of $1.1 billion to $1.25 billion and adjusted EBITDA of $55 million to $75 million. The company is focused on driving improvement through pricing investments, store optimization, and cost savings. Leslie's also plans to reduce inventory levels by $20 million to $40 million and eliminate over 2,000 SKUs, expecting $4 million to $5 million in incremental EBITDA savings.
Valuation and Metrics
Leslie's current valuation metrics indicate a challenging financial situation, with a P/E Ratio of -0.11, P/B Ratio of -0.06, and P/S Ratio of 0.02. The EV/EBITDA ratio stands at -1.3, and the Net Debt / EBITDA ratio is -1.15. These metrics suggest that the market is pricing in significant challenges for the company. Analysts estimate next year's revenue growth at 0.4%, indicating a slow recovery.