Leslie's, Inc. Reports Q2 Fiscal 2026 Revenue Growth of 4.3% Despite Net Loss

Leslie's, Inc. reported its financial results for the second quarter of fiscal 2026, revealing a revenue of $184.7 million, a 4.3% increase from $177.1 million in the same period last year. The growth was attributed to a strong retail performance and favorable calendar shifts, although it was partially offset by sales losses from the closure of underperforming stores. For the first half of the fiscal year, total sales decreased by 5.8% to $331.9 million compared to $352.4 million in the prior year, primarily due to the impact of store closures and a challenging comparison to the previous year's heightened demand following a hurricane season.

The company's gross profit for the quarter rose to $53.3 million, a 21.4% increase from $43.9 million, with gross margin improving to 28.9% from 24.8%. This increase was driven by savings in occupancy and distribution costs, improved product mix, and inventory reserve adjustments. However, for the six-month period, gross profit fell to $80.4 million, down 12.3% from $91.7 million, with gross margin declining to 24.2% due to an inventory impairment charge related to store closures.

Selling, general, and administrative expenses (SG&A) remained relatively stable at $92.2 million for the quarter, slightly down from $92.3 million year-over-year. As a percentage of sales, SG&A improved to 49.9% from 52.1%. For the first half, SG&A was $177.9 million, a decrease of 1.0% from the previous year, but as a percentage of sales, it increased to 53.6%. The company also recorded a non-cash impairment of $9.0 million for the six months, primarily related to property and equipment and right-of-use asset impairments due to the store closures.

Leslie's reported a net loss of $52.5 million for the quarter, slightly higher than the $51.3 million loss in the prior year, while the six-month net loss increased to $135.5 million from $95.9 million. The increase in losses was attributed to lower gross profit, impairment charges, and the absence of a tax benefit that had positively impacted the prior year's results. Adjusted net loss for the quarter was $50.0 million, compared to $48.3 million in the previous year, and for the six months, it was $117.5 million, up from $91.2 million.

Looking ahead, Leslie's remains focused on its strategic initiatives, including the closure of underperforming stores to enhance operational efficiency. The company is also committed to improving its internal controls and financial reporting processes, as it continues to navigate a competitive retail environment marked by macroeconomic challenges. The management expressed confidence that its liquidity position, supported by cash reserves and borrowing capacity, will be sufficient to meet its operational needs and strategic plans in the coming months.