Latest news with #LESL
Yahoo
10-05-2025
- Business
- Yahoo
LESL Q1 Earnings Call: Weather-Driven Sales Miss, Strategic Initiatives Take Center Stage
Pool products retailer Leslie's (NASDAQ:LESL) fell short of the market's revenue expectations in Q1 CY2025, with sales falling 6.1% year on year to $177.1 million. On the other hand, the company's outlook for the full year was close to analysts' estimates with revenue guided to $1.34 billion at the midpoint. Its non-GAAP loss of $0.25 per share was 4.6% below analysts' consensus estimates. Is now the time to buy LESL? Find out in our full research report (it's free). Revenue: $177.1 million vs analyst estimates of $184.5 million (6.1% year-on-year decline, 4% miss) Adjusted EPS: -$0.25 vs analyst expectations of -$0.24 (4.6% miss) Adjusted EBITDA: -$36.06 million vs analyst estimates of -$35.14 million (-20.4% margin, 2.6% miss) Adjusted EPS guidance for the full year is $0.03 at the midpoint, beating analyst estimates by 11.1% EBITDA guidance for the full year is $106 million at the midpoint, above analyst estimates of $105 million Operating Margin: -27.3%, down from -16.2% in the same quarter last year Free Cash Flow was -$55.76 million compared to -$56.48 million in the same quarter last year Locations: 1,020 at quarter end, up from 1,010 in the same quarter last year Same-Store Sales fell 6.7% year on year (-12.1% in the same quarter last year) Market Capitalization: $129.7 million Leslie's first quarter results reflected the impact of unusually cold weather, which management cited as the main factor behind reduced foot traffic and weaker sales performance. CEO Jason McDonald pointed specifically to February as a period of significant disruption, while highlighting steady progress in conversion rates and inventory optimization. The company reported that improved in-stock levels and enhanced store team expertise contributed to higher conversion, but these gains were not enough to offset the top-line softness caused by weather-related headwinds. Looking ahead, Leslie's leadership reaffirmed its full-year outlook, attributing its confidence to ongoing transformation initiatives. Management emphasized the expected benefits from recent investments in local fulfillment centers, enhanced loyalty programs, and cost optimization. Interim CFO Tony Iskander noted that strategic pricing actions and reduced capital expenditures are expected to help offset tariff impacts and support debt reduction. While acknowledging that some initiatives will take time to yield visible results, management maintained that continued execution on its strategic priorities positions the company for improved performance through the rest of the year. Despite a challenging quarter shaped by external and internal factors, Leslie's management outlined several operational and strategic actions that underpinned both the reported results and the company's outlook. Weather-driven sales impact: Management attributed the sales decline primarily to colder-than-usual weather in February, which led to reduced store traffic and lower demand for pool-related products, especially in residential categories. Inventory and fulfillment upgrades: The rollout of 26 local fulfillment centers (LFCs) was completed ahead of schedule and under budget. These centers are already supporting improved inventory availability and higher in-stock rates, which management believes contributed to a notable increase in customer conversion rates. Pro customer focus: Leslie's saw relative strength in its Pro segment (serving pool service professionals), where targeted efforts such as new partner contracts and strategic communications are helping to gain market share. Management noted that all 1,000+ stores are now focused on professional customers, not just historically designated Pro locations. Loyalty and digital enhancements: The company introduced a revamped Pool Perks loyalty program—including new tier structures and greater personalization—alongside website and mobile app enhancements. These digital upgrades have improved service scheduling and shopping experiences, with early signs of increased engagement. Cost optimization initiatives: Leslie's has identified $5 to $10 million in annualized cost savings, primarily within indirect procurement. The company is also leveraging improved analytics to reduce inventory and working capital, with the goal of accelerating EBITDA growth and supporting debt reduction. Management's outlook for the remainder of the year centers on executing transformation initiatives to drive operational efficiency, customer engagement, and financial improvement, while remaining cautious about external risks and evolving customer behavior. Peak season execution: The company expects that improvements in inventory management, fulfillment speed, and enhanced loyalty programs will support higher sales and profitability during the critical summer pool season. Cost discipline and margin recovery: Strategic pricing actions are intended to offset tariff-related cost pressures, while cost optimization efforts and lower capital expenditures should help improve margins and free cash flow. Uncertainties in consumer demand: Management acknowledged that weather variability and lingering softness in residential demand present ongoing risks to sales growth, but believes that investments in customer experience and omnichannel capabilities can help mitigate these risks. Jonathan Matuszewski (Jefferies): Asked about Leslie's competitive positioning and market share trends versus peers. CEO Jason McDonald said Pro sales are gaining share, while residential remains an area of focus for improvement. Jonathan Matuszewski (Jefferies): Inquired about the scope and rationale of upcoming pricing actions. Interim CFO Tony Iskander clarified that price increases will only be used to offset tariff impacts, which represent less than 1% of sales. Lauren Ng (Morgan Stanley): Probed whether comp weakness was driven by factors besides weather. Management pointed to data showing conversion rate improvements and emphasized that weather was the main driver of the sales decline. David Bellinger (Mizuho): Asked if improved in-stock levels would translate to better sales in future quarters. Jason McDonald stated that higher conversion rates should benefit sales, particularly as LFCs become fully operational during peak season. Steve Forbes (Guggenheim): Sought clarity on the cost optimization pillar and long-term expense ratio improvement. Tony Iskander outlined initial savings in indirect spend and emphasized ongoing evaluation of asset utilization and organizational efficiency. Looking ahead, the StockStory team will be monitoring (1) the impact of Leslie's local fulfillment centers and improved in-stock rates on both conversion and sales during peak pool season, (2) initial customer response and incremental sales from the enhanced Pool Perks loyalty program and digital experience upgrades, and (3) tangible progress in cost optimization and debt reduction efforts. The effectiveness of these initiatives in offsetting external pressures, such as tariffs and variable weather, will be key to the company's trajectory. Leslie's currently trades at a forward P/E ratio of 9.9×. Should you double down or take your chips? See for yourself in our free research report. Market indices reached historic highs following Donald Trump's presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth. While this has caused many investors to adopt a "fearful" wait-and-see approach, we're leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years. Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
Yahoo
09-05-2025
- Business
- Yahoo
Leslies Inc (LESL) Q2 2025 Earnings Call Highlights: Navigating Challenges with Strategic ...
Sales: $177.1 million, down from $188.7 million in the prior year. Gross Profit: $43.9 million, compared to $54.3 million in the prior year. Gross Margin: 24.8%, down from 28.8% in the prior year. SG&A Expenses: $92.3 million, up from $84.9 million in the prior year. Adjusted EBITDA: Loss of $36 million. Inventory Reduction: 12% decrease year-over-year, ending at $335.1 million. Pro Sales Improvement: 700 basis point improvement from a 9% decline in the prior year. Conversion Rate Improvement: Increased by 174 basis points year-over-year. Inventory Turns: Improved by 8% year-over-year. Debt Reduction: $27 million reduction in secured term loan, now at $756.7 million. Revolving Credit Facility: $101.5 million outstanding, expected to be repaid in full during the third quarter. Capital Expenditure Reduction: Reduced by $5 million, now expected to be $30 to $35 million for the year. Warning! GuruFocus has detected 8 Warning Signs with LESL. Release Date: May 08, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Leslies Inc (NASDAQ:LESL) achieved a 174 basis point improvement in conversion rates, attributed to enhanced in-stock levels and team expertise. The company successfully launched 26 Local Fulfillment Centers (LFCs) on time and under budget, improving inventory management and customer service. Leslies Inc (NASDAQ:LESL) introduced a new loyalty program with tiered benefits, aiming to increase customer engagement and retention. The partnership with Uber for same-day delivery is expected to enhance customer convenience and optimize asset utilization. Pro sales showed a 700 basis point improvement year over year, indicating strong momentum in the professional segment. Sales declined by 6% year over year, primarily due to weaker foot traffic and colder temperatures affecting demand. Gross margin decreased from 28.8% to 24.8%, impacted by increased distribution center and occupancy costs, as well as mix and volume challenges. SG&A expenses rose to 52.1% of net sales, driven by higher labor costs and executive transition expenses. The company reported an adjusted EBITDA loss of $36 million for the quarter, reflecting ongoing financial challenges. Leslies Inc (NASDAQ:LESL) faces tariff exposure estimated at $10 to $12 million annually, which could impact product costs. Q: Can you provide context on Leslie's competitive landscape and market share performance this quarter? A: Jason McDonell, CEO, explained that the quarter's top-line performance was impacted by weather, particularly in January and February. While specific market share numbers are not available due to varied competition across product categories, Leslie's is making significant progress in the pro segment, suggesting a gaining share position. The company is focusing on engaging both pro and DIY customers through initiatives like improved in-stock rates, enhanced mobile app features, and new marketing programs. Q: Could you expand on the strategic pricing increases mentioned, and how they relate to tariffs? A: Tony Iskander, Interim CFO, stated that pricing adjustments will only be made to offset tariff impacts, which represent less than 1% of total sales. Therefore, significant pricing changes are not anticipated. Q: Aside from weather, are there other factors contributing to the comp weakness in Q2? A: Jason McDonell noted that weather was a significant factor, but the company is seeing positive trends in conversion rates, which improved by 174 basis points. This improvement is attributed to better in-stock rates and the expertise of team members, particularly after water tests. Q: How is Leslie's planning for inventory purchases in the second half of 2025, given past slow starts to spring? A: Jason McDonell emphasized a precision inventory mindset, focusing on optimizing inventory levels to improve working capital and reduce debt. Tony Iskander added that inventory optimization will help mitigate tariff impacts by utilizing existing stock. Q: Can you discuss the cost optimization pillar and its impact on the expense ratio? A: Tony Iskander highlighted that the cost optimization pillar focuses on indirect procurement costs, with expected savings of $5 to $10 million. The company is also evaluating asset utilization for further cost efficiencies. Jason McDonell added that local fulfillment centers (LFCs) are helping drive cost efficiency and improve inventory management. Q: How does the partnership with Uber for same-day delivery fit into Leslie's strategy? A: Jason McDonell explained that the partnership with Uber aligns with the company's focus on customer centricity and convenience. It allows Leslie's to fulfill customer needs quickly, reducing delivery times from days to minutes or hours, while also providing cost savings by fulfilling orders locally. Q: What gives Leslie's confidence in reiterating its full-year sales outlook despite Q2 challenges? A: Jason McDonell noted that a significant portion of sales is still expected in the second half of the year. The company is optimistic due to improvements in conversion rates, the launch of new initiatives like the DIY loyalty program, and enhanced customer engagement strategies. Q: What factors contribute to the expected gross margin improvement in the second half of the year? A: Tony Iskander mentioned that the Q4 tailwind from rebate timing will benefit gross margins. Additionally, new initiatives focused on customer centricity and convenience are expected to positively impact margins, despite earlier challenges from mix and lower volume. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
23-04-2025
- Business
- Yahoo
3 Cash-Producing Stocks That Concern Us
Generating cash is essential for any business, but not all cash-rich companies are great investments. Some produce plenty of cash but fail to allocate it effectively, leading to missed opportunities. Cash flow is valuable, but it's not everything - StockStory helps you identify the companies that truly put it to work. That said, here are three cash-producing companies that don't make the cut and some better opportunities instead. Trailing 12-Month Free Cash Flow Margin: 20.9% Founded in 2000 as a business unit within MicroStrategy, (NASDAQ:ALRM) is a software-as-a-service platform that enables users to control their security systems and smart home appliances from a single app. Why Does ALRM Give Us Pause? Offerings struggled to generate meaningful interest as its average billings growth of 6.5% over the last year did not impress Estimated sales growth of 4.1% for the next 12 months implies demand will slow from its three-year trend Gross margin of 65.3% is below its competitors, leaving less money to invest in areas like marketing and R&D stock price of $51.89 implies a valuation ratio of 3.1x forward price-to-sales. Read our free research report to see why you should think twice about including ALRM in your portfolio, it's free. Trailing 12-Month Free Cash Flow Margin: 2.5% Named after founder Philip Leslie, who established the company in 1963, Leslie's (NASDAQ:LESL) is a retailer that sells pool and spa supplies, equipment, and maintenance services. Why Are We Wary of LESL? Poor same-store sales performance over the past two years indicates it's having trouble bringing new shoppers into its brick-and-mortar locations Smaller revenue base of $1.33 billion means it hasn't achieved the economies of scale that some industry juggernauts enjoy High net-debt-to-EBITDA ratio of 10× increases the risk of forced asset sales or dilutive financing if operational performance weakens At $0.61 per share, Leslie's trades at 9.6x forward price-to-earnings. Check out our free in-depth research report to learn more about why LESL doesn't pass our bar. Trailing 12-Month Free Cash Flow Margin: 6.9% Formerly Crown Cork & Seal, Crown Holdings (NYSE:CCK) produces packaging products for consumer marketing companies, including food, beverage, household, and industrial products. Why Should You Dump CCK? Underwhelming constant currency revenue performance over the past two years suggests its product offering at current prices doesn't resonate with customers Projected sales growth of 1.8% for the next 12 months suggests sluggish demand Earnings per share have dipped by 2.5% annually over the past two years, which is concerning because stock prices follow EPS over the long term Crown Holdings is trading at $87.80 per share, or 12.7x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than CCK. Market indices reached historic highs following Donald Trump's presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth. While this has caused many investors to adopt a "fearful" wait-and-see approach, we're leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years. Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Axon (+711% five-year return). Find your next big winner with StockStory today for free. Sign in to access your portfolio
Yahoo
07-02-2025
- Business
- Yahoo
Leslies Inc (LESL) Q1 2025 Earnings Call Highlights: Navigating Growth in Pro Sales Amidst ...
Revenue: $175 million, up 0.7% compared to the first fiscal quarter of 2024. Pro Pool Sales: Increased 9% year over year. Residential Pool Sales: Declined 1% year over year. Residential Hot Tub Sales: Declined 5% year over year. Adjusted EBITDA: Loss of $29 million. Gross Margin: Decreased 180 basis points to 27.2%. Inventory Reduction: Decreased by $63 million or 19% compared to the prior year quarter. Adjusted Net Loss: $41 million, compared to a loss of $37 million in the same period last year. Adjusted Diluted Loss Per Share: $0.22, compared to a loss of $0.20 in the same period last year. Cash and Cash Equivalents: $12 million at the end of the first quarter. Debt Reduction: Paid down $27 million of debt in the quarter. Store Openings: Plan to open three new stores in fiscal 2025. Warning! GuruFocus has detected 8 Warning Signs with LESL. Release Date: February 06, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Leslies Inc (NASDAQ:LESL) reported revenue at the top end of guidance with sales of $175 million, marking a 0.7% increase compared to the first fiscal quarter of 2024. Pro pool sales grew by 9%, driven by better in-stock positions and a double-digit increase in pro partner contracts. The company achieved a 300 basis point improvement in in-stock levels for key categories, enhancing customer conversion rates. Leslies Inc (NASDAQ:LESL) successfully reduced overall inventory by $63 million or 19% year-over-year, improving working capital and enabling debt reduction. The company is establishing local fulfillment centers (LFCS) to improve inventory management and customer service, leveraging existing store networks with minimal capital expenditure. Adjusted EBITDA was at the bottom end of guidance, with a loss of $29 million, impacted by inventory optimization decisions and additional professional fees. Residential pool sales declined by 1% and residential hot tub sales declined by 5%, indicating challenges in these segments. Gross margin rate decreased by 180 basis points to 27.2%, primarily due to increased inventory adjustments and deleverage on occupancy and distribution costs. The company reported an adjusted net loss of $41 million, compared to a loss of $37 million in the same period last year. Leslies Inc (NASDAQ:LESL) faces challenges in improving DIY customer traffic, despite a 160 basis point increase in conversion rates. Q: Can you share any early signs of progress from the transformation initiatives? A: Jason McDonell, Chief Executive Officer, mentioned that they are seeing progress in asset utilization and convenience. Local fulfillment centers (LFCs) are helping adjust inventory levels, improving working capital, and reducing store inventory. This initiative is already showing benefits in inventory efficiency and in-stock reliability, crucial for customer trust. Q: How significant is the issue of out-of-stocks, and do you plan to expand the number of LFCs? A: Jason McDonell emphasized the importance of inventory availability for customer trust. They have improved in-stock positions by 300 basis points. Currently, 26 LFCs are planned, each serving about 20 stores. They will evaluate the performance of these centers before considering further expansion. Q: What are the assumptions behind your revenue outlook, and how do tariffs impact your chemical sales? A: Scott Bowman, Chief Financial Officer, explained that the revenue outlook is cautious due to the uncertain timing and magnitude of benefits from new initiatives. They are not expecting significant tariff impacts as their chemical sourcing is primarily domestic. Q: Can you explain the factors affecting gross margins and the outlook for improvement? A: Scott Bowman noted that gross margins were impacted by inventory adjustments and fixed cost deleverage. They expect margin improvement in the second half of the year due to better inventory management and timing of rebates, which should normalize costs. Q: What drove the 9% growth in the pro segment, and how will you serve both DIY and pro customers? A: The growth was mainly due to increased transactions. Leslie's plans to leverage its entire store network to serve pro customers, focusing on inventory availability and operational hours. They expect these initiatives to benefit the business in the third and fourth quarters. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Sign in to access your portfolio
Yahoo
29-01-2025
- Business
- Yahoo
Leslie's (LESL) Fell Due to Disappointing Results
Ariel Investments, an investment management company, released its 'Ariel Fund' fourth-quarter 2024 investor letter. A copy of the letter can be downloaded here. Global markets in 2024 exceeded forecasts, primarily due to the overwhelming success of the "magnificent seven," or mega-cap technology stocks. Despite the concentration of gains, the optimism was fueled by the U.S. election results, solid earnings growth, and a healthy labor market. The fund returned -0.66% in the quarter trailing both the Russell 2500 Value and Russell 2500 Indices, which returned -0.26% and +0.62%, respectively. Ariel Fund increased +11.80%, outpacing the Russell 2500 Value Index's +10.98% return and just short of the Russell 2500 Index +12.00% gain, over the trailing one-year period. For more information on the fund's top picks in 2024, please check its top five holdings. Ariel Fund highlighted stocks like Leslie's, Inc. (NASDAQ:LESL), in the fourth quarter 2024 investor letter. Leslie's, Inc. (NASDAQ:LESL) is a direct-to-consumer pool and spa care brand. The one-month return of Leslie's, Inc. (NASDAQ:LESL) was -8.52%, and its shares lost 69.60% of their value over the last 52 weeks. On January 28, 2024, Leslie's, Inc. (NASDAQ:LESL) stock closed at $2.04 per share with a market capitalization of $377.82 million. Ariel Fund stated the following regarding Leslie's, Inc. (NASDAQ:LESL) in its Q4 2024 investor letter: "U.S. direct-to-consumer pool and spa care services company, Leslie's, Inc. (NASDAQ:LESL) also traded lower following another consecutive quarter of disappointing financial and operating results. Soft consumer demand driven by weather-related headwinds and continued price sensitivity on large discretionary purchases weighed on the top-line. Product margins also remained under pressure as the company struggled to unwind its higher-cost inventory. In response, LESL's new executive leadership team introduced three key strategic initiatives focused on personalizing communication and product offerings by leveraging local consumer information and data across different markets while improving existing-store sales and productivity. Although we have been deeply disappointed with this investment, we are optimistic the new efforts will drive meaningful improvements to the business and position the company for long-term success. At today's valuation, LESL appears to have more upside than downside and the company's loyal client base, vertically integrated supply chain, scale advantage and seamless customer experience remain differentiators." A close-up of a pool with freshly applied chemicals, showing the efficacy of the company's products. Leslie's, Inc. (NASDAQ:LESL) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 25 hedge fund portfolios held Leslie's, Inc. (NASDAQ:LESL) at the end of the third quarter which was 21 in the previous quarter. Leslie's, Inc. (NASDAQ:LESL) reported sales of $398 million for the fiscal fourth quarter, a decrease of 8%, which aligned with the company's guidance. While we acknowledge the potential of Leslie's, Inc. (NASDAQ:LESL) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock. In another article, we discussed Leslie's, Inc. (NASDAQ:LESL) and shared the list of best all-time low stocks to buy. Leslie's, Inc. (NASDAQ:LESL) was the greatest detractor from Ariel Fund's performance during Q3 2024. In addition, please check out our hedge fund investor letters Q3 2024 page for more investor letters from hedge funds and other leading investors. READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks. Disclosure: None. This article is originally published at Insider Monkey.
