Leslie's, Inc. Reports Slight Revenue Increase but Wider Losses in Latest Quarter

Leslie's, Inc. reported a slight increase in revenue for the three months ended December 28, 2024, with sales reaching $175.2 million, up from $173.9 million in the same period last year, marking a 0.7% increase. However, the company experienced a decline in gross profit, which fell to $47.7 million from $50.4 million, resulting in a gross margin decrease to 27.2% from 29.0%. The operating loss widened to $39.7 million compared to a loss of $36.5 million in the prior year, while the net loss increased to $44.6 million from $39.6 million, leading to a diluted loss per share of $0.24, compared to $0.21 in the previous year.

The company's financial performance was impacted by several factors, including a 2.0% increase in transaction volume offset by a 1.3% reduction in average order value. Additionally, Leslie's reported increased inventory adjustments and higher occupancy and distribution costs, which contributed to the decline in gross margin. Selling, general, and administrative expenses rose slightly to $87.4 million, primarily due to increased consulting and professional fees, despite a decrease in payroll-related expenses.

Operationally, Leslie's maintained a network of over 1,000 locations across 39 states, with no new locations opened during the quarter. Comparable sales growth was reported at 0.2%, a significant improvement from the 11.7% decline in the previous year. The company continues to hold a market share of approximately 15% in the residential aftermarket pool and spa care industry. As of the end of the reporting period, Leslie's had approximately $11.6 million in cash and cash equivalents, a decrease from $108.5 million at the end of the previous quarter, and $40 million outstanding on its revolving credit facility.

Looking ahead, Leslie's management expressed confidence in the company's ability to navigate current market conditions and execute its growth strategies. The company plans to focus on enhancing its operational efficiencies and expanding its product offerings to drive sales growth. However, management acknowledged potential risks, including supply chain disruptions, competition, and macroeconomic factors such as inflation and interest rates, which could impact future performance. The company is committed to addressing its internal control weaknesses and expects to complete remediation efforts during fiscal year 2025.