Leslie's (LESL) Q2 2025 earnings summary

Executive summary

• Q2 FY2025 sales declined 6.1% year-over-year to $177.1 million, with comparable sales down 6.7% due to adverse weather trends impacting traffic and product mix.

• Net loss widened to $51.3 million from $34.6 million in the prior year, primarily due to lower gross profit and higher SG&A expenses.

• Adjusted EBITDA was $(36.1) million, a decrease of $16.8 million year-over-year, reflecting margin compression and increased operating costs.

• Strategic initiatives in customer centricity, convenience, asset utilization, and cost optimization are underway, with early improvements in conversion rates and inventory management.

• All 26 local fulfillment centers are operational, completed under budget, and improving in-stock rates and customer service.

Financial highlights

• Gross profit was $43.9 million (24.8% margin), down 19.1% year-over-year from $54.3 million (28.8% margin).

• SG&A expenses rose to $92.3 million (52.1% of sales), mainly due to labor, executive transition, and professional fees.

• Operating loss increased to $48.4 million from $30.5 million year-over-year.

• Cash and cash equivalents were $17.3 million as of March 29, 2025, with $101.5 million outstanding on the Revolving Credit Facility.

• Inventory reduced by 11.6% year-over-year to $335.1 million; inventory turns improved 8%.

Outlook and guidance

• Full-year guidance reaffirmed, with FY2025 sales expected between $1,304 million and $1,370 million and adjusted EBITDA forecasted at $96 million to $116 million.

• Gross profit guidance of $473 million to $505 million; net loss/income projected between $(10) million and $5 million.

• Capital expenditure guidance reduced by $5 million to $30–$35 million due to efficient LFC rollout.

• Inventory expected to be reduced by at least $15 million by year-end, with further optimization in 2026.

• Management expects liquidity from cash, operations, and credit facility to be sufficient for the next 12 months and beyond.