Leslies 2025 Q3 Earnings Misses Targets with Net Income Dropped 64.3%

Leslie's (LESL) reported its fiscal 2025 Q3 earnings on Aug 06th, 2025. The company missed expectations with a double-digit sales drop, significant net income decline, and downward guidance revisions. The results reflect ongoing operational and financial challenges.

Revenue
Leslie's total revenue for the quarter fell 12.2% year-over-year to $500.35 million, with comparable sales declining by 12.4%. This marked a sharp deterioration in performance during what is typically the company's peak selling season. The drop in sales highlights a combination of macroeconomic pressures, weather-related disruptions, and intensified competitive dynamics.

Earnings/Net Income
Net income plummeted by 64.3% to $21.73 million in 2025 Q3 compared to $60.65 million in 2024 Q3. Earnings per share (EPS) also dropped significantly, falling from $0.33 to $0.12. The continued decline in profitability underscores the severity of the company’s financial headwinds and the lack of meaningful recovery in its core business.

Price Action
The stock price of Leslie's has been volatile in recent periods, reflecting investor uncertainty. While it rose 3.70% on the latest trading day, it has tumbled 10.96% during the most recent full trading week and plummeted 22.35% month-to-date.

Post-Earnings Price Action Review
The historical strategy of buying Leslie's shares following a revenue increase quarter-over-quarter and holding for 30 days has proven ineffective. Over the past three years, this approach delivered a compound annual growth rate (CAGR) of 0.00% and an excess return of -70.41%, significantly underperforming the benchmark return of 70.41%. The strategy’s maximum drawdown and volatility of 0.00% indicate it is risk-averse but offers no value, highlighting the lack of positive momentum post-earnings.

CEO Commentary
Jason McDonell, CEO & Director, acknowledged the challenging Q3 driven by macroeconomic pressures, weather disruptions, and competitive dynamics. He highlighted the team’s efforts in cost control, conversion rate improvements, and strategic initiatives like same-day delivery and the enhanced Pool Perks loyalty program. McDonell expressed confidence in the Pro segment’s growth, noting a 12% year-to-date increase in Pro partner contracts. He emphasized a disciplined approach to customer centricity, convenience, asset utilization, and cost optimization, while maintaining a cautious but committed tone toward transforming Leslie’s for long-term profitable growth.

Guidance
Anthony A. Iskander, Interim CFO & Treasurer, outlined full-year 2025 expectations: revenue of $1.210–$1.235 billion, net loss of $57–$65 million, adjusted net loss of $31–$39 million, and adjusted EBITDA of $50–$60 million. Iskander noted a 9.6% year-to-date inventory reduction and a $20 million inventory reduction target for the year. He emphasized debt reduction as the top capital priority, with capital expenditures expected to be approximately $30 million.

Additional News
Leslie’s, Inc. announced its Q3 fiscal 2025 financial results, with sales down 12.2% to $500.3 million. The company attributed the performance to adverse weather and competitive pricing during its peak season. Management is conducting a strategic review to stabilize operations. The firm also updated its full-year guidance to a net loss range of $57–$65 million. Leslie’s stated it has $42.7 million in cash as of June 28, 2025, claiming sufficient liquidity for liability obligations. However, operating cash flow turned negative for the first nine months of fiscal 2025 at $(39.4) million compared to $60.4 million in the prior year. Capital expenditures were cut to $19.1 million from $34.3 million, signaling financial stress. The company is hosting a conference call on August 6 to discuss its financial results and transformation initiatives.