Leslie's Q3 Sales Decline: Inventory Reduction and Cost Optimization Targets

Leslie's targets a $20M inventory reduction and intensifies cost optimization efforts amid a Q3 sales decline. CEO Jason B. McDonell attributes the decline to persistent macro pressures, unusual weather patterns, and heightened competition. He emphasizes the company's commitment to transformation and welcomes new Chief Merchandising Officer Amy College.

Leslie's Inc. (LESL) reported a challenging third quarter (Q3) in its fiscal year 2025, with sales declining by 12.2% year-over-year (YoY), largely due to persistent macro pressures, unusual weather patterns, and heightened competition. The company's CEO, Jason B. McDonell, attributed the decline to these factors, stating, "the team responded with urgency, focus, and a relentless commitment to transform Leslie's" [1].

McDonell emphasized the company's ongoing transformation efforts, welcoming Amy College as the new Chief Merchandising and Supply Chain Officer. College brings a unique blend of strategic vision and operational expertise to accelerate Leslie's transformation [1].

To mitigate the sales decline, Leslie's has set an ambitious target to reduce its inventory by at least $20 million year-over-year (YoY). This reduction is part of the company's broader cost optimization efforts aimed at improving profitability and cash flow [1]. The company expects this inventory reduction to contribute significantly to its financial turnaround.

Financial Highlights:
- Net sales for Q3 2025 were $500 million, down 12.2% YoY.
- Gross profit was $197.9 million, with a gross margin decline of 62 basis points YoY.
- SG&A expenses were $129.6 million.
- Inventory was reduced to $273.2 million, a decrease of approximately $29 million or 9.6% YoY.
- The company repaid its $20 million revolver and ended the quarter with $42.7 million in cash [1].

Outlook:
Leslie's expects full-year sales to range between $1,210 million and $1,235 million, with a net loss of $57 million to $65 million (GAAP) and an adjusted EBITDA of $50 million to $60 million (non-GAAP) for FY2025 [1]. The company has set a target to end the year with at least $20 million less inventory than the prior year-end.

Leslie's has also announced several strategic initiatives to boost sales and improve operational efficiency, including launching a same-day delivery test with Uber, enhancing the Pool Perks loyalty program, and implementing regional offers to boost traffic [1]. The company's focus on inventory reduction, cost optimization, and strategic initiatives underscores its commitment to long-term profitable growth.

Investors should monitor Leslie's ongoing strategic review, sales momentum, and inventory management as signals of stabilization or further risk. The company's transformation efforts and cost optimization strategies are critical for its future success.

References:
[1] https://www.nasdaq.com/articles/leslies-lesl-q3-sales-drop-12
[2] https://seekingalpha.com/news/4481055-leslies-targets-20m-inventory-reduction-and-intensifies-cost-optimization-amid-q3-sales