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    LESL
    Earnings call· Jun 2026(Q3 FY26)

    Leslie's Q3 FY26 earnings call LESL

    Aug 12, 2026 Source

    Executive summary

    Leslie's Q3 FY26 — Sales Decline Amid Challenging Environment, Guidance Withdrawn

    Leslie's faced a challenging Q3 FY26 with significant sales and margin declines driven by softer consumer demand and unfavorable weather, leading to the withdrawal of full-year guidance. Despite these headwinds, the company saw positive e-commerce comparable sales and success in reactivating past customers, reinforcing confidence in its ongoing transformation plan. Management is actively exploring strategic alternatives to address long-term debt obligations and strengthen the balance sheet.

    Highlights

    4

    • Comparable sales on leslies.com were positive this quarter, indicating successful pricing strategy resonance.

    • Achieved strong growth in reactivated customers who shopped between 2021-2024 but not last year, demonstrating effective targeted marketing.

    • SG&A decreased 17.9% to $106.4 million, improving 270 basis points as a percentage of sales.

    • Inventory decreased 15% to $233.4 million, reflecting continued optimization initiatives.

    Concerns

    5

    • Total sales declined 8.4% year-over-year to $458.5 million.

    • Comparable sales declined 6.2%, primarily due to lower transactions and customer traffic.

    • Gross profit margin decreased to 36.5% from 39.6% in the prior year, driven by lower sales of higher-margin products and product mix shift.

    • Adjusted EBITDA declined to $55.7 million from $81.6 million in Q3 FY25.

    • Full-year fiscal 2026 sales and adjusted EBITDA guidance has been withdrawn due to macroeconomic environment and lower traffic.

    Guidance & targets

    3
    CategoryTargetConfidence
    Full-year fiscal 2026 sales guidance
    Withdrawn
    high materiality
    Low
    Full-year fiscal 2026 adjusted EBITDA guidance
    Withdrawn
    high materiality
    Low
    Full-year fiscal 2026 capital expenditures
    Well below $20 million
    medium materiality
    High

    Operational metrics

    10
    Adjusted EBITDA
    $55.7 milliondown from $81.6 million in Q3 FY25
    Q3 FY26

    Year-over-year decline primarily driven by lower sales volume and gross margin pressures.

    Adjusted Net Income
    $37.8 millionimproved by $12.6 million
    Q3 FY26

    Compared to the third quarter of the prior year.

    Net Income
    $47.8 millionimproved by $26.1 million
    Q3 FY26

    Compared to the third quarter of the prior year.

    Capital Expenditures
    $10.5 millioncompared to $19.1 million a year ago
    YTD July 4, 2026

    Primarily related to maintenance of stores and distribution centers.

    Revolving Credit Facility Outstanding
    $30 millioncompared to $20 million in the prior year
    Q3 FY26 end

    Amount outstanding under the revolving credit facility.

    Net Long-Term Debt
    $753 million
    Q3 FY26 end

    Total net long-term debt as of quarter end.

    Available Liquidity
    $207 million
    Q3 FY26 end

    Includes cash on hand and borrowing capacity under the credit facility.

    Total Sales
    $458.5 milliondecreased 8.4% year over year
    Q3 FY26

    Compared to $500.3 million a year ago, reflecting softer customer demand and store closures.

    Store Closures
    80
    prior periods

    Underperforming stores closed as part of efforts to improve cost structure, impacting sales.

    Reactivated Customers Growth
    strong growth
    Q3 FY26

    Proof point that pricing strategy, targeted marketing, and renewed customer value proposition are successful.

    Industry KPIs

    6
    MetricValueDetails
    Sg a OPEX ratio23.2%%
    Comparable sales-6.2%%
    Store count growth80stores
    Gross margin drivers36.5%%
    Inventory position markdown risk$233.4 millionUSD
    Distribution supply chain cost economics—

    Deals & partnerships

    1
    Certain financial stakeholdersExploring strategic alternatives to address long-term debt obligations and strengthen the balance sheet.

    Strategic alternatives may include a deleveraging transaction, potentially combined with one or more financing transactions. No determinations have been made, and there is no assurance any such transaction will result.

    Risks & headwinds

    5
    Softer consumer demandQ3 FY26

    Total sales declined 8.4% year over year; comparable sales declined 6.2%

    Mitigation: Executing comprehensive transformation plan, disciplined cost management, investing in strategic initiatives.

    Unfavorable weather patternsQ3 FY26

    Impacted demand and traffic, resulting in fewer prescribed pool problems and purchases for higher margin specialty chemical offerings.

    Mitigation: Focus on targeted marketing and promotional efforts to drive sustained traffic gains.

    Heightened promotional activity and evolving customer purchase behaviorsQ3 FY26

    Competitors reacted with more aggressive inventory-driven pricing actions.

    Mitigation: New pricing strategy, targeted marketing campaigns, enhancing store operations, optimizing costs.

    Operating leverage headwindsQ3 FY26

    Modest improvements in mid-June were not sufficient to overcome headwinds.

    Mitigation: Disciplined cost management, evaluating cost structure and overall operating model.

    Traffic generation challengeQ3 FY26

    Declines in overall transaction count and overall customer count.

    Mitigation: Taking a hard look at how to drive new and retained customers into stores and digital channels, competitive pricing, clearer communication of expertise.

    What to watch in Q4 FY26

    4

    Progress on debt deleveraging transaction

    Next quarter
    CurrentExploring strategic alternatives with financial stakeholders; no determinations made.
    TargetAnnouncement of a specific deleveraging or financing transaction.

    Why it matters

    Addressing long-term debt obligations is crucial for financial flexibility and sustainable growth.

    As we discussed in May, we continue to evaluate opportunities to address our long-term debt obligations and strengthen our balance sheet. As part of that effort, we have begun exploring strategic alternatives with certain of our financial stakeholders to provide the incremental financial flexibility needed to continue delivering on our strategic priorities and drive sustainable growth.

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Transformation and Financial Position

    Leslie's is executing a comprehensive transformation plan in a challenging operating environment. The company is evaluating opportunities to address long-term debt obligations and strengthen its balance sheet, including exploring strategic alternatives like a deleveraging transaction potentially combined with financing. No determinations have been made, but the company is committed to providing updates.

    02

    Q3 Performance and Market Headwinds

    Total sales declined 8.4% year-over-year to $458.5 million, with comparable sales down 6.2%. This was primarily driven by lower transactions and customer traffic, exacerbated by unfavorable weather patterns and aggressive inventory-driven pricing actions from competitors. The decline also reflects the loss of sales from 80 underperforming store closures.

    03

    Customer Engagement and Pricing Strategy

    The company's new pricing strategy resonated with customers, leading to positive comparable sales on leslies.com. Targeted marketing campaigns successfully reactivated customers who had not shopped with Leslie's in the prior year but had between 2021 and 2024. However, translating this positive response into consistent store traffic improvement is taking longer.

    04

    Operational Improvements and Cost Management

    Leslie's maintained disciplined cost management, with SG&A decreasing $23.2 million or 17.9% year-over-year. The company completed full-scale training across its store organization, enhanced customer experience, and maintained strong in-stock levels on key SKUs, supporting healthy in-store conversion rates and units per transaction growth.

    05

    Inventory and Capital Allocation Discipline

    Inventory at quarter-end was $233.4 million, down 15% year-over-year, reflecting optimization initiatives and cleanup of non-go-forward inventory. Capital expenditures totaled $10.5 million, down from $19.1 million a year ago, with full-year fiscal 2026 capex expected to be well below $20 million, demonstrating disciplined capital allocation.

    06

    Liquidity and Debt Management

    The company ended the quarter with $30 million outstanding under its revolving credit facility and $753 million of net long-term debt. Total liquidity, including cash on hand and borrowing capacity, was approximately $207 million. Management is engaged in constructive discussions with financial stakeholders to explore strategic alternatives for deleveraging the balance sheet.

    AI-generated summary of the company’s earnings call. Not investment advice.