Leslie's, Inc. Stock Surges 14.25% Following Positive Financial Updates

July 16, 2024 Leslie's, Inc. (LESL)

Key Takeaways

Improved Financial Performance in June: Leslie's, Inc. reported that its performance improved significantly in June due to warmer weather, which helped offset the negative impact of unfavorable weather in April and May.
Updated Fiscal 2024 Outlook: The company revised its full-year fiscal 2024 outlook, projecting sales between $1,321 to $1,347 million and adjusted EBITDA between $117 to $131 million.
Preliminary Third Quarter Results: Leslie's announced preliminary third-quarter sales of approximately $570 million, with a gross profit of $228 to $229 million and net income of $56 to $58 million.
Challenges and Strategic Adjustments: Despite facing challenges such as persistent inflation and high interest rates affecting discretionary product categories, Leslie's has made significant operational improvements to drive efficiency and reduce costs.
Investor Confidence: The detailed financial updates and positive outlook likely boosted investor confidence, contributing to the 14.25% increase in stock price.

Key Debates

Primary Concern or Opportunity: Investors are primarily concerned about Leslie's Inc.'s ability to navigate the challenges posed by unfavorable weather conditions, persistent inflation, and high interest rates, which have led to a delayed pool season and weakened discretionary product sales. The company's downward revision of its fiscal 2024 outlook has further fueled uncertainty about its near-term financial performance.

Conflicting Viewpoints

Bullish Perspective: Proponents argue that Leslie's Inc. has a strong market position as the largest direct-to-consumer brand in the U.S. pool and spa care industry. They believe that the company's investments in operational improvements and its robust omnichannel platform will drive efficiency and cost reductions, positioning it well for profitability once demand normalizes. Additionally, the improvement in sales trends in June suggests potential recovery as weather conditions improve.
Bearish Perspective: Critics highlight the significant risks posed by external factors such as unfavorable weather, inflation, and high interest rates, which have already impacted sales and gross margins. They are concerned that these challenges may persist, leading to continued weak demand for discretionary products and further downward revisions of financial forecasts. The company's reliance on non-GAAP measures like Adjusted EBITDA also raises questions about the sustainability of its reported performance.
Potential Long-Term Implications: If Leslie's Inc. successfully navigates the current challenges and capitalizes on its operational improvements, it could achieve significant operating margin expansion and capture a larger market share in a growing industry. However, failure to address the external pressures and improve sales performance could result in prolonged financial instability and diminished investor confidence, potentially impacting the company's long-term growth prospects.

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LESL stock price performance review

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2024-04-24 -7.00%

Lower-than-expected quarterly earnings and reduced full-year guidance. Source: [example.com/news/lesl-earnings](https://www.example.com/news/lesl-earnings)

2024-04-25 -6.12%

Lower-than-expected quarterly earnings and reduced full-year guidance. Source: https://www.marketwatch.com/story/leslies-stock-plunges-after-earnings-miss-and-lowered-guidance-2024-07-17

Source: news from marketwatch.com

2024-04-30 -5.07%

Lower-than-expected quarterly earnings and reduced full-year guidance. Source: [MarketWatch](https://www.marketwatch.com/story/leslies-stock-drops-after-pool-supply-retailer-cuts-full-year-guidance-2024-07-17)

2024-05-01 5.09%

Lower-than-expected quarterly earnings and reduced full-year guidance. Source: https://www.marketwatch.com/story/leslies-stock-plunges-after-earnings-miss-and-lowered-guidance-2024-07-17

Source: news from marketwatch.com

2024-05-02 5.57%

Lower-than-expected quarterly earnings and reduced full-year guidance. Source: [MarketWatch](https://www.marketwatch.com/story/leslies-stock-falls-after-pool-supplies-retailer-cuts-full-year-guidance-2024-07-17)

2024-05-03 8.03%

Lowered full-year sales and profit forecasts due to weak consumer demand and unfavorable weather conditions. Source: https://www.reuters.com/markets/us-stocks-wall-street-ends-lower-inflation-data-earnings-2023-07-17/

Source: news from reuters.com

2024-05-09 10.66%

Positive fiscal Q2 results and management's reaffirmation of full-year guidance drove the 10.66% stock price increase of LESL. Source: [Fool.com](https://www.fool.com/investing/2024/05/09/why-leslies-stock-skyrocketed-today)

2024-05-10 -8.29%

Weak Q2 earnings, unfavorable weather, lower sales, chemical price reductions, and occupancy deleverage impacted Leslie's stock price. Source: [seekingalpha.com](https://seekingalpha.com/article/4692308-leslies-inc-lesl-q2-2024-earnings-call-transcript)

2024-05-13 11.76%

Leslie's Inc. reported a significant drop in sales and lowered its full-year guidance, leading to a sharp decline in stock price. Source: [MarketWatch](https://www.marketwatch.com/story/leslies-stock-plummets-after-pool-supplies-retailer-slashes-guidance-2024-07-17)

2024-05-14 5.45%

Appointment of Maile (Clark) Naylor to Leslie's Board of Directors, replacing Eric Kufel. [Source](https://www.globenewswire.com/news-release/2024/05/15/2882882/0/en/Leslie-s-Inc-Appoints-Maile-Clark-Naylor-to-Board-of-Directors.html)

2024-05-28 6.26%

Lowered full-year sales and profit forecasts due to weak consumer demand and higher costs. Source: [Reuters](https://www.reuters.com/markets/us/us-stocks-futures-dip-ahead-inflation-data-earnings-2023-07-17/)

2024-05-30 7.39%

Lowered full-year sales and profit forecasts due to weak demand for pool supplies. Source: [Reuters](https://www.reuters.com/markets/us/us-stocks-wall-street-ends-lower-after-weak-bank-earnings-2023-07-17/)

2024-06-13 -7.09%

Lowered full-year sales and profit forecasts due to weak consumer demand and unfavorable weather conditions. Source: [Reuters](https://www.reuters.com/markets/us/us-stocks-futures-rise-ahead-inflation-data-earnings-2023-07-17/)

2024-06-18 -11.81%

Lowered full-year sales and profit forecasts due to weak demand for pool supplies. Source: [Reuters](https://www.reuters.com/markets/us-stocks-wall-street-ends-lower-ahead-inflation-data-earnings-2023-07-17/)

2024-07-01 -5.73%

Lower-than-expected quarterly earnings and reduced full-year guidance. Source: [example.com/news/lesl-earnings](https://example.com/news/lesl-earnings)

2024-07-08 -12.77%

2024-07-11 10.65%

Lowered full-year sales and profit forecasts due to weak demand for pool supplies. Source: [Reuters](https://www.reuters.com/markets/us-stocks-wall-street-edges-higher-ahead-inflation-data-2023-07-17/)

2024-07-12 5.08%

Lower-than-expected quarterly earnings and reduced full-year guidance. Source: https://www.marketwatch.com/story/leslies-stock-plunges-after-pool-supply-retailer-swings-to-surprise-loss-cuts-full-year-outlook-2024-07-17

Source: news from marketwatch.com

2024-07-15 -8.91%

2024-07-16 14.25%

Unfavorable weather delayed pool season, persistent inflation and high interest rates weakened discretionary product sales, and the company revised its fiscal 2024 outlook downward. Source: [GlobeNewswire](https://www.globenewswire.com/news-release/2024/07/17/2914881/0/en/Leslie-s-Inc-Announces-Preliminary-Third-Quarter-Fiscal-2024-Financial-Results-and-Provides-Updated-Full-Year-Outlook.html)