Leslie's, Inc. (LESL) | Investment Case

1. Company Snapshot

1.a. Company Description

Leslie's, Inc.operates as a direct-to-consumer pool and spa care brand in the United States.The company markets and sells pool and spa supplies and related products and services.

It offers pool chemicals consisting of chlorine, sanitizers, water balancers, specialty chemicals, and algae control; pool covers, including winter, solar and safety covers, leaf nets, cover reels, and cover alternatives; pool equipment, which comprise pool cleaners, pool pumps, pool filters, pool heating, and lighting; and pools, such as above ground pools, soft side pools, above ground pools liners and equipment, ladders and rails, and diving boards.The company also provides pool maintenance products, including pool closing and opening supplies, filter catridges, chlorine floaters, backwash and vacuum hoses, and cleaning attachments; parts, such as automatic pool cleaner parts, pool filter and pump parts, and pool heater and heat pump parts; and safety, recreational, and fitness-related products.In addition, it provides pool equipment and repair services.

The company markets its products through 952 company operated locations in 38 states and e-commerce websites.It serves the residential, professional, and commercial consumers.The company was founded in 1963 and is headquartered in Phoenix, Arizona.

Show Full description

1.b. Last Insights on LESL

Leslie's, Inc. recent performance was marred by a Q2 loss of $0.25 per share, surpassing the Zacks Consensus Estimate of a loss of $0.24. This decline in profitability was a stark contrast to the loss of $0.17 per share reported in the same period last year. The company's inability to meet revenue estimates further exacerbated the situation, underscoring the challenges it faces in the pool and spa care industry.

1.c. Company Highlights

Last Price	2.72
Change Percentage	-3.89%
Open	2.88
Previous Close	2.83
Market Cap ( Millions)	25
Volume	202305
Year High	54.3
Year Low	2.69
M A 50	3.96
M A 200	10.14

FCF Yield	-96.27%
Dividend Yield	0.00%
ROE	82.88%
Debt / Equity	-63.68%
Net Debt / EBIDTA	-115.07%
Price To Book	-0.06
Price Earnings Ratio	-0.11
Price To FCF	-1.04
Price To sales	0.02
EV / EBITDA	-1.3

2. Leslie's Faces Challenges, Outlines Turnaround Strategy

Leslie's reported net sales of $389.2 million in Q4, a 2.2% decline from $397.9 million in the prior year, with the 53rd week contributing $18.3 million. Gross margin expanded to 38.6% from 36% in the prior year, driven by favorable vendor rebates and freight costs. However, the company reported a net loss of $162.8 million, or $17.54 per diluted share, due to a $184 million impairment charge related to goodwill and store closures. Adjusted EBITDA increased to $45.2 million. The actual EPS came out at -$17.54, significantly below estimates, while revenue was slightly above the high end of the guided range.

Publication Date: Dec -04

                                    📋 Highlights
                                    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.

3. NewsRoom

These Analysts Slash Their Forecasts On Leslie's After Q4 Results

Dec -03

Source: benzinga.com

Leslie's, Inc. (LESL) Q4 2025 Earnings Call Transcript

Dec -03

Source: seekingalpha.com

Leslie's, Inc. (LESL) Q4 Earnings Miss Estimates

Dec -02

Source: zacks.com

Leslie's, Inc. Announces Fourth Quarter & Fiscal 2025 Financial Results

Dec -02

Source: globenewswire.com

Ollie’s Bargain Outlet (NASDAQ:OLLI) vs. Leslie’s (NASDAQ:LESL) Head-To-Head Contrast

Dec -02

Source: defenseworld.net

Leslie's, Inc. to Report Fourth Quarter and Full Year Fiscal 2025 Financial Results on December 2, 2025

Nov -18

Source: globenewswire.com

BJ’s Wholesale Club (NYSE:BJ) and Leslie’s (NASDAQ:LESL) Financial Analysis

Nov -15

Source: defenseworld.net

Leslie's, Inc. Names Jeff White as Chief Financial Officer and Treasurer

Sep -16

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.00%)

6. Segments

Pool and Spa Supplies and Related Products and Services

Expected Growth: 4.0%

Leslie's, Inc. pool and spa supplies and related products and services segment growth of 4.0% is driven by increasing consumer spending on outdoor living, rising demand for pool maintenance and repair services, and expansion into e-commerce channels, as well as strategic acquisitions and partnerships.

7. Detailed Products

Pool Chemicals

Leslie's offers a wide range of pool chemicals, including chlorine tablets, shock treatments, and algaecides, to keep pools clean and safe.

Pool Equipment

Leslie's sells pool equipment such as pumps, filters, and heaters from top brands, ensuring efficient and effective pool operation.

Pool Accessories

Leslie's offers a variety of pool accessories, including pool toys, floats, and cleaning tools, to enhance the pool experience.

Pool Services

Leslie's provides professional pool services, including pool cleaning, maintenance, and repair, to keep pools in top condition.

Spa and Hot Tub Products

Leslie's sells a range of spa and hot tub products, including chemicals, accessories, and equipment, for relaxation and wellness.

8. Leslie's, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Leslie's, Inc. operates in a market with some substitutes, but they are not a significant threat to the company's business. The score is 3, indicating a moderate level of threat.

Bargaining Power Of Customers

Leslie's, Inc. has a diverse customer base, which reduces the bargaining power of individual customers. The score is 2, indicating a low level of bargaining power.

Bargaining Power Of Suppliers

Leslie's, Inc. has a moderate level of dependence on its suppliers, but it has implemented strategies to mitigate this risk. The score is 3, indicating a moderate level of bargaining power.

Threat Of New Entrants

The pool industry has low barriers to entry, making it easier for new entrants to join the market. The score is 4, indicating a high level of threat.

Intensity Of Rivalry

The pool industry is highly competitive, with many established players competing for market share. The score is 4, indicating a high level of rivalry.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	118.42%
Debt Cost	8.51%
Equity Weight	-18.42%
Equity Cost	9.27%
WACC	8.37%
Leverage	-642.90%

11. Quality Control: Leslie's, Inc. passed 4 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Haverty Furniture

A-Score: 4.8/10

Value: 3.9

Growth: 3.4

Quality: 3.8

Yield: 9.0

Momentum: 3.0

Volatility: 5.7

1-Year Total Return ->

Live Ventures

A-Score: 4.2/10

Value: 8.7

Growth: 3.7

Quality: 3.4

Yield: 0.0

Momentum: 9.0

Volatility: 0.3

1-Year Total Return ->

Clarus

A-Score: 4.2/10

Value: 9.6

Growth: 1.3

Quality: 4.4

Yield: 4.0

Momentum: 2.0

Volatility: 3.7

1-Year Total Return ->

Tile Shop Holdings

A-Score: 3.5/10

Value: 4.7

Growth: 3.4

Quality: 3.1

Yield: 2.0

Momentum: 3.0

Volatility: 4.7

1-Year Total Return ->

LL Flooring Holdings

A-Score: 3.3/10

Value: 9.5

Growth: 2.0

Quality: 2.8

Yield: 0.0

Momentum: 5.0

Volatility: 0.7

1-Year Total Return ->

Leslie's

A-Score: 2.7/10

Value: 8.0

Growth: 3.3

Quality: 3.9

Yield: 0.0

Momentum: 0.0

Volatility: 1.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

18.59%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

8.37%

Leslie's, Inc. - US5270641096

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on LESL

1.c. Company Highlights

Weak Momentum

More Volatile

Average Yield

Revenues Miss

Average Growth

Earnings Beats

Revenues Beats

Earnings Miss

Cheaper

Fairly Valued

Stable Momentum

Strong Momentum

2. Leslie's Faces Challenges, Outlines Turnaround Strategy

Operational Challenges and Strategic Initiatives

Guidance and Outlook

Valuation and Metrics

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.00%)

6. Segments

Pool and Spa Supplies and Related Products and Services

Expected Growth: 4.0%

7. Detailed Products

Pool Chemicals

Pool Equipment

Pool Accessories

Pool Services

Spa and Hot Tub Products

8. Leslie's, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Leslie's, Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

2.72$

Current Price

2.72$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA