Leslie’s reported fourth quarter results that fell short of Wall Street’s expectations, with management highlighting operational changes and shifting customer dynamics as key drivers. The company attributed the revenue decline to several factors, including a net loss of 160,000 residential customers, ongoing store closures, and a strategic overhaul of its pricing model. CEO Jason McDonell described the period as “a pivotal time,” emphasizing the impact of rightsizing operations and cost optimization efforts. Management acknowledged that the customer churn and competitive pricing pressures weighed heavily on performance but pointed to progress in transformation initiatives as a positive development.
Is now the time to buy LESL? Find out in our full research report (it’s free for active Edge members).
Leslie's (LESL) Q4 CY2025 Highlights:
- Revenue: $147.1 million vs analyst estimates of $158 million (16% year-on-year decline, 6.9% miss)
- Adjusted EPS: -$5.24 vs analyst expectations of -$4.24 (23.7% miss)
- Adjusted EBITDA: -$40.29 million (-27.4% margin, 37.4% year-on-year decline)
- The company reconfirmed its revenue guidance for the full year of $1.18 billion at the midpoint
- EBITDA guidance for the full year is $65 million at the midpoint, below analyst estimates of $66.48 million
- Operating Margin: -46.7%, down from -22.7% in the same quarter last year
- Locations: 948 at quarter end, down from 1,021 in the same quarter last year
- Same-Store Sales fell 15.5% year on year (0.2% in the same quarter last year)
- Market Capitalization: $8.66 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Leslie's’s Q4 Earnings Call
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Simeon Gutman (Morgan Stanley) asked how management can maintain full-year guidance despite the significant pricing changes. CEO Jason McDonell and CFO Jeff White explained that cost reductions and increased store basket size are expected to offset lower gross margins from new pricing.
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Simeon Gutman (Morgan Stanley) followed up on positive sales momentum in January and questioned whether this represents a sustained business inflection. McDonell responded that a healthier store base and early campaign results support optimism for the pool season, but weather and regional variation remain factors.
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Jonathan Matuszewski (Jefferies) inquired about the results of price testing and its effects on basket size and customer recapture. McDonell explained that tests across multiple categories showed solid increases in units per transaction and conversion rates, though specific figures were not disclosed.
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Jonathan Matuszewski (Jefferies) questioned the long-term store footprint strategy following recent closures. McDonell emphasized ongoing optimization, combining physical locations with digital channels and delivery, while White noted there is still opportunity for expansion in underserved markets.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be monitoring (1) the impact of Leslie’s national pricing campaign and targeted marketing on recapturing lapsed customers, (2) the effectiveness of store and distribution center optimizations in driving cost savings, and (3) progress in expanding omnichannel offerings like same-day delivery and BOPIS. Execution on these initiatives will be critical during the peak pool season.
Leslie's currently trades at $0.94, down from $1.20 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).
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