Pool products retailer Leslie’s (NASDAQ: LESL) fell short of the market’s revenue expectations in Q2 CY2026, with sales falling 8.4% year on year to $458.5 million. Its non-GAAP profit of $3.96 per share was 21.8% below analysts’ consensus estimates.
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Leslie's (LESL) Q2 CY2026 Highlights:
- Revenue: $458.5 million vs analyst estimates of $520.4 million (8.4% year-on-year decline, 11.9% miss)
- Adjusted EPS: $3.96 vs analyst expectations of $5.06 (21.8% miss)
- Adjusted EBITDA: $55.7 million vs analyst estimates of $82.45 million (12.1% margin, 32.4% miss)
- Operating Margin: 13.4%, in line with the same quarter last year
- Free Cash Flow Margin: 21.4%, similar to the same quarter last year
- Locations: 900 at quarter end, down from 1,023 in the same quarter last year
- Same-Store Sales fell 6.2% year on year (-12.4% in the same quarter last year)
- Market Capitalization: $12.45 million
"We continued to advance our strategic transformation in the third quarter, taking decisive action to right-size our cost structure and supply chain, realign our pricing strategy, and invest in omnichannel capabilities. Despite this progress, the macroenvironment remains challenging. We have begun exploring strategic alternatives with certain of our financial stakeholders to provide the incremental financial flexibility needed to continue to deliver on our strategic priorities and drive sustainable growth. Such strategic alternatives may include but are not limited to a deleveraging transaction, potentially combined with one or more financing transactions," said Jason McDonell, Chief Executive Officer.
Company Overview
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.
Revenue Growth
A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.
With $1.18 billion in revenue over the past 12 months, Leslie's is a small retailer, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage with suppliers.
As you can see below, Leslie’s demand was weak over the last three years. Its sales fell by 7.6% annually as it closed stores and observed lower sales at existing, established locations.
This quarter, Leslie's missed Wall Street’s estimates and reported a rather uninspiring 8.4% year-on-year revenue decline, generating $458.5 million of revenue.
Looking ahead, sell-side analysts expect revenue to grow 5.4% over the next 12 months, an acceleration versus the last three years. This projection is healthy and implies its newer products will catalyze better top-line performance.
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Store Performance
Number of Stores
A retailer’s store count influences how much it can sell and how quickly revenue can grow.
Leslie's listed 900 locations in the latest quarter and has generally closed its stores over the last two years, averaging 2.8% annual declines.
When a retailer shutters stores, it usually means that brick-and-mortar demand is less than supply, and it is responding by closing underperforming locations to improve profitability.
Same-Store Sales
The change in a company’s store base only tells one side of the story. The other is the performance of its existing locations and e-commerce sales, which informs management teams whether they should expand or downsize their physical footprints. Same-store sales is an industry measure of whether revenue is growing at those existing stores and is driven by customer visits (often called traffic) and the average spending per customer (ticket).
Leslie’s demand has been shrinking over the last two years as its same-store sales have averaged 6.1% annual declines. This performance isn’t ideal, and Leslie's is attempting to boost same-store sales by closing stores (fewer locations sometimes lead to higher same-store sales).
In the latest quarter, Leslie’s same-store sales fell by 6.2% year on year. This performance was more or less in line with its historical levels.
Key Takeaways from Leslie’s Q2 Results
We struggled to find many positives in these results. Its revenue missed and its EBITDA fell short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock traded down 42.9% to $0.75 immediately following the results.
The latest quarter from Leslie’s wasn’t that good. One earnings report doesn’t define a company’s quality, though, so let’s explore whether the stock is a buy at the current price. If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here (it’s free).
