Leslie's (LESL) Stock Forecast & Price Target

Leslies Inc. reported a positive impact on sales attributed to the inclusion of a 53rd week, with 1Q net sales outperforming expectations by approximately 1.0%, primarily driven by improved consumer traffic and notable growth in chemical sales and professional products. The company anticipates gross margin expansion in the second half of fiscal 2025, supported by favorable dynamics such as increased volume and the cycling of last year's one-time impacts, projecting margins to reach 36.3%-36.9%. Furthermore, the recent trend of positive comparable sales for the first time in eight quarters, alongside the anticipated stabilization and improvement of economic conditions, contributes to a constructive outlook on the company's performance moving forward.

The financial outlook for Leslies Inc appears negative due to disappointing initial guidance for the second quarter, coupled with an EBITDA loss that fell short of expectations, reflecting ongoing softness in consumer demand for large ticket items. Margin pressures are exacerbated by inventory adjustments and transformation-related expenses, which further strain profitability and financial performance metrics. Additionally, the company faces significant downside risks from deflation in key product categories, adverse weather impacting seasonal demand, and broader macroeconomic challenges that may hinder recovery in the pool and spa industry.