Leslie's, Inc. (LESL) is having a rough day Wednesday, with shares tumbling after the pool supplies retailer delivered a confusing mix of good news and bad news in its fourth-quarter earnings report.
The Numbers Tell a Complicated Story
Here's where things get interesting. Leslie's reported adjusted earnings per share of just nine cents, a dramatic miss compared to the $1.29 analysts were expecting. That's the kind of gap that makes investors nervous. But revenue came in at $389.20 million, actually beating the consensus estimate of $370.63 million. So the company is bringing in more sales than expected, but profitability is another story entirely.
The Turnaround Plan Takes Shape
Leslie's isn't just sitting around hoping things improve. The company announced it's closing 80 to 90 underperforming stores plus one distribution center as part of what management is calling a broader optimization effort aimed at boosting EBITDA in fiscal 2026. They've also cut inventory by roughly 10% year-over-year and reported approximately $168 million in available liquidity with no borrowings under its asset-based lending facility, which suggests the balance sheet has some breathing room.
The operational details paint a mixed picture too. Gross profit increased 4.8% to $150.1 million, which is encouraging. But comparable sales declined 6.5%, meaning existing stores are struggling. SG&A expenses stayed roughly flat year-over-year, showing some cost discipline. The real eye-catcher: Leslie's recorded $183.8 million in impairment charges, including $180.7 million related to goodwill and $3.1 million tied to those underperforming stores. Despite all that, adjusted EBITDA rose to $45.2 million from $43 million a year ago.
Management framed these moves as the next phase of their strategic transformation plan, focusing on strengthening the balance sheet, optimizing the cost structure, and rebuilding stakeholder confidence. Translation: things have been rough, and they're taking significant action to fix it.
Wall Street Reacts
Analysts weren't exactly enthusiastic about the results. Baird analyst Peter Benedict maintained a Neutral rating but slashed his price target from $6.50 to $3. Mizuho analyst David Bellinger also kept a Neutral rating while lowering his target from $5 to $4. Telsey Advisory Group analyst Dana Telsey maintained a Market Perform rating and held steady at a $3 price target.
At the time of writing, Leslie's shares were trading 20.95% lower at $2.83. The market clearly isn't waiting around to see if the turnaround plan works—it's pricing in the pain right now.
