Leslie’s, Inc. reported fourth‑quarter and full‑year 2025 results on December 2, 2025, posting revenue of $389.2 million—$15.7 million above the $373.5 million consensus—and adjusted EBITDA of $45.2 million, $5.8 million above the $39.4 million estimate. The company’s revenue beat was driven by a 3.5% increase in residential pool sales and a 2.8% rise in professional‑service revenue, offsetting a 4.2% decline in residential hot‑tub sales. The mix shift toward higher‑margin professional services helped lift gross margin to 38.6% from 36.0% a year earlier, while operating leverage from inventory rationalization and cost‑control initiatives kept operating income at a modest $3.1 million, a 12% improvement from the $2.7 million loss in the prior year quarter.
The earnings release also announced the closure of 80 to 90 underperforming retail locations and the shutdown of one distribution center, with completion targeted for the end of fiscal 2026 Q1. These actions are part of a broader transformation plan aimed at strengthening the balance sheet, reducing debt, and improving cash flow. Management highlighted a 10% year‑over‑year inventory reduction—$26 million in rationalization for Q4 versus $20 million in Q3—and a projected $7–12 million in direct cost savings from the distribution center shutdown. The company’s debt load of over $1 billion remains a concern, but the restructuring is expected to free up cash for future growth initiatives.
CEO Jason McDonald emphasized that the operational changes would generate immediate EBITDA improvement in fiscal 2026 and support long‑term profitability. He noted that the company’s focus on inventory optimization, SKU rationalization, and targeted marketing is designed to recapture lost customers and improve margin stability. CFO Jeff White added that the company is targeting continued inventory rationalization of $20–40 million in fiscal 2026, with the Denver warehouse shutdown expected to cut annual costs by $800,000.
The market reacted strongly to the earnings beat and restructuring plan, with analysts noting that the revenue and EBITDA outperformance, combined with the decisive store and distribution center closures, signaled a turning point for Leslie’s. The company’s gross margin expansion and inventory reduction demonstrate effective cost discipline, while the announced debt‑reduction strategy addresses a key headwind. Investors are likely to view the earnings beat as evidence of improved execution, even as the company continues to navigate competitive pricing pressures and a challenging weather‑driven sales environment.
The announcement underscores Leslie’s ongoing transformation, with the company aiming to return to free‑cash‑flow positivity and a stronger balance sheet. The combination of revenue growth in high‑margin segments, inventory rationalization, and strategic store closures positions Leslie’s to better weather industry headwinds and pursue sustainable long‑term profitability.
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