Leslie’s faced a difficult Q2, with the market reacting negatively to results as management attributed the performance to persistent cool weather, lower residential store traffic, and rising competitive pressures. CEO Jason McDonell described the quarter as challenging, highlighting that “significant precipitation and cooler temperatures across key geographies disrupted the peak pool season,” leading to notable declines in sales, especially in chemicals. The company also saw heightened price competition and shifts in customer behavior, prompting a cautious, self-critical tone as management acknowledged underperformance and the need for urgent changes.
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Leslie's (LESL) Q2 CY2025 Highlights:
- Revenue: $500.3 million vs analyst estimates of $524.9 million (12.2% year-on-year decline, 4.7% miss)
- Adjusted EPS: $0.20 vs analyst estimates of $0.19 (6.2% beat)
- Adjusted EBITDA: $81.57 million vs analyst estimates of $80.83 million (16.3% margin, 0.9% beat)
- The company dropped its revenue guidance for the full year to $1.22 billion at the midpoint from $1.34 billion, a 8.6% decrease
- EBITDA guidance for the full year is $55 million at the midpoint, below analyst estimates of $76.79 million
- Operating Margin: 13.7%, down from 17.2% in the same quarter last year
- Locations: 1,023 at quarter end, up from 1,020 in the same quarter last year
- Same-Store Sales fell 12.4% year on year (-7% in the same quarter last year)
- Market Capitalization: $51.23 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Leslie's’s Q2 Earnings Call
- Katharine Amanda McShane (Goldman Sachs) asked about the company’s response to aggressive competitor promotions and quarter-to-date traffic trends. CEO Jason McDonell said Leslie’s made mid-single-digit price investments and is seeing some traffic improvement, but it remains below expectations.
- Jonathan Richard Matuszewski (Jefferies) questioned gross margin recovery and competitive pressures in equipment. Interim CFO Anthony Iskander said fixed cost deleverage is a headwind but asset and cost optimization initiatives are underway to improve the trajectory.
- Steven Paul Forbes (Guggenheim) pressed on whether execution or price value is the main gap to peers. McDonell responded that while execution in stores is strong, the value proposition and strategic pricing need more work to increase traffic.
- Shaun Francis Calnan (Bank of America) asked if there is a shift away from DIY to Pro customers. McDonell stated there is no meaningful channel migration, but the focus is on growing the Pro segment and recapturing residential share through loyalty and targeted offers.
- Ryan James Merkel (William Blair) inquired about industry sales outlook and the scale of cost-cutting. Iskander indicated the industry is likely down low to mid-single digits and Leslie’s is targeting further cost reductions, with no store closures planned this year.
Catalysts in Upcoming Quarters
In coming quarters, the StockStory team will be monitoring (1) whether localized pricing and marketing programs drive sustainable traffic growth, (2) the pace and impact of cost and asset optimization—including warehouse closures and inventory reduction, and (3) the effectiveness of digital and omnichannel initiatives like same-day delivery. Progress on reducing debt and adapting to competitive pressures will also be important markers of management’s execution.
Leslie's currently trades at $0.28, down from $0.37 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free).
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