Leslie's (LESL) Stock Forecast & Price Target

Leslie's Inc. demonstrated a solid financial performance in the fourth quarter of FY25, with adjusted EBITDA dollars increasing by 5.1% year-over-year to $45.2 million, surpassing expectations and reflecting improved gross margins driven by vendor rebates and reduced freight costs. The company effectively reduced inventory by $26 million while enhancing in-stock levels for top-selling SKUs, achieving an increase of over 400 basis points, which indicates ongoing operational efficiency and demand management. Strategic initiatives such as the rollout of local fulfillment centers, the enhancement of customer loyalty programs, and the introduction of new services like same-day delivery have positioned Leslie's to attract and retain customers, significantly bolstering its market position within the non-discretionary pool and spa maintenance sector.

Leslies Inc. is facing a challenging financial outlook, with guidance indicating a high single-digit sales decline in the fourth quarter of FY25 and a contraction in adjusted EBITDA margin to approximately 10.7%, resulting in an estimated adjusted EBITDA of $39.2 million. The company is experiencing significant drops across all product categories, notably a 7.1% decrease in chemicals and a 7.6% decrease in equipment, driven by adverse weather conditions that have disrupted demand and led to a net loss of 160,000 customers this year. Furthermore, the FY25 full-year guidance suggests a total sales decrease of 7.2% to 9.0%, totaling between $1.210 billion and $1.235 billion, alongside reduced capital expenditure expectations, highlighting a deteriorating market position and profitability challenges amidst a competitive pricing environment.