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Oct 04
Leslie's Q4 2025 Earnings Report
Leslie's Q4 2025 earnings report showed sales and adjusted EBITDA exceeding guidance, despite a significant net loss due to impairment charges.
Key Takeaways
Leslie's, Inc. reported fourth-quarter sales of $389.2 million, a decrease of 2.2% year-over-year, and a net loss of $(162.8) million, primarily driven by $183.8 million in impairment charges. However, adjusted EBITDA increased to $45.2 million, surpassing the high end of their guidance range. The company announced strategic store and distribution center optimizations, including the closure of 80-90 underperforming stores, to improve future profitability.
Fourth quarter sales were $389.2 million, a 2.2% decrease compared to the prior year.
The company reported a net loss of $(162.8) million, significantly impacted by $183.8 million in goodwill and asset impairment charges.
Adjusted EBITDA increased to $45.2 million, exceeding the high end of the company's guidance range.
Leslie's plans to close 80-90 underperforming stores and one distribution center to improve EBITDA for fiscal year 2026.
Leslie's
Leslie's
Forward Guidance
For Fiscal Year 2026, Leslie's anticipates sales between $1,100 million and $1,250 million and Adjusted EBITDA between $55 million and $75 million. The company expects to generate the majority of its sales and earnings in the second half of the year due to seasonality.
Positive Outlook
- Expected immediate EBITDA improvement for FY26 from store and DC optimization.
- Focus on rightsizing the cost base by reducing inventory by approximately 10% year-over-year.
- Direct cost reductions of $7-$12 million to be reinvested into customer price value proposition.
- Strategic transformation plan focused on strengthening the balance sheet and optimizing cost structure.
- Available liquidity of approximately $168 million with no borrowings under ABL.
Challenges Ahead
- Anticipated revenue impact from the closure of 80 to 90 underperforming stores.
- Uncertainty of expenses that may be incurred in the future, making GAAP reconciliation difficult for forward-looking non-GAAP measures.
- Business is highly seasonal, with the majority of sales and earnings expected in the second half of the year.
- The forward guidance includes the addback of expected costs incurred with store closures, which could be material to GAAP results.
- The company operates in a very competitive and rapidly changing environment, with various risks and uncertainties that could affect actual results.