Is Leslie’s Inc. Stock About to Go on an Upward Trajectory?

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Written By Joel Gbolade

Leslie’s is a leading provider of products and services for pools and spas. They offer a wide range of items, including chemicals, equipment, and accessories to help maintain and enjoy pools and spas.

Known for their professional services and support to both residential and commercial customers, Leslie’s plays a significant role in the direct-to-consumer retail space within this industry.

Financial Performance

Credits: DepositPhotos

Leslie’s financial performance has been under pressure. Revenue declined from $212.84 million in the quarter ending April 1, 2023, to $188.66 million in the quarter ending March 30, 2024, representing an 11.36% year-over-year decrease. Gross profit fell from $71.17 million to $54.33 million, and gross margin dropped from 33.44% to 28.80%.

This decline was primarily due to unfavorable weather conditions that reduced pool usage and sales in key markets like Texas, Southern California, Arizona, and Florida.

In June 2023, Leslie’s reduced chemical prices to remain competitive, leading to a significant 464 basis points decrease in gross margin. Despite these price adjustments, the company faced lower profits.

Operating income declined from a positive $115.81 million in the quarter ending July 1, 2023, to a negative $30.53 million by March 30, 2024. Adjusted EBITDA for the latest quarter was negative $19 million, reflecting the combined effects of reduced sales and margins.

Increasing competition from mass merchants and specialty retailers is also putting more pressure on Leslie’s future profitability.

In the Q2 2024 earnings call, Leslie’s management highlighted a 23% decrease in inventory levels compared to the previous year. While this reduction in inventory can reduce carrying costs like storage and insurance, it also suggests a cautious outlook on consumer demand and expectations of lower sales volumes due to economic uncertainties and normalizing post-pandemic spending patterns.

This strategy carries risks, as an unexpected surge in demand could leave Leslie’s struggling to meet customer needs, potentially losing sales to better-stocked competitors and straining their supply chain.


Leslie’s is launching the AccuBlue Home Smart Tech Water Testing Device and Membership Program. This service allows customers to test their pool water at home using the AccuBlue device, providing precise water quality readings.

The membership program includes the device at no cost, with a $50 monthly subscription that is offset by $50 in purchase credits.

This structure encourages regular purchases and has seen significant success, with members spending more than $1,000 per year. This indicates strong customer retention and regular revenue streams, as customers are likely to continue their subscriptions and make regular purchases to maintain their pools.

The AccuBlue program is expected to boost sales and improve customer loyalty by providing a convenient and valuable service.

Leslie’s is also expanding its PRO service locations, aiming to increase the number of PRO contracts and locations. By the end of the second quarter, they had 4,088 PRO contracts and 102 PRO locations, compared to 3,300 PRO contracts and 98 PRO locations at the end of the same quarter last year.

This initiative targets professional pool service providers, driving higher sales volumes and establishing Leslie’s as a go-to supplier for professional-grade products and services. The growth in PRO services shows a stable and growing customer base in the professional segment.

By focusing on the PRO market, Leslie’s can leverage long-term relationships with professional service providers who need consistent large-scale purchases of pool maintenance products and equipment.

This expansion helps stabilize and increase revenue streams, as the professional market often represents repeat and high-volume transactions, contributing significantly to Leslie’s overall sales and profitability.


Expanding the PRO service locations comes with obstacles, such as significant investment in infrastructure, staffing, and training. The risk of stretching resources could translate into potential declines in service quality, negatively impacting future revenue.

Additionally, these investments mean large expenditures and high expected revenue growth. However, if expectations are not met, only the expenditure remains.

Growing competition from mass merchants like Walmart and Target, as well as specialty retailers, is putting intense pressure on Leslie’s profitability. These competitors are increasing their product range in the pool and spa care market, making it easier for customers to choose from a wide range of options, including cheaper ones.

Leslie’s could lose market share and see lower profit margins if consumers turn to competitors offering similar products at better prices.


Leslie’s current valuation metrics, compared to industry medians, show several aspects of its financial performance and market expectations. Leslie’s gross margin is 38%, which is in line with the industry median. However, the company’s price-to-sales (PS) ratio is 0.72, much higher than the industry median of 0.3.

Leslie’s price-to-earnings (PE) ratio stands at 38.2, markedly higher than the industry median of 6.17. These high ratios indicate overvaluation, especially given the challenges and competitive pressures the company faces.

Despite Leslie’s projected revenue growth of 5% for the next year, above the industry median, the company’s high PS and PE ratios suggest that its stock price might adjust downward to align more closely with its actual growth prospects and competitive position.

Risks and Challenges Remain

Credits: DepositPhotos

Leslie’s innovative initiatives like the AccuBlue Home Smart Tech Water Testing Device and the expansion of PRO service locations show potential. However, the company faces significant obstacles, including weather instability, economic pressures, and increasing competition from mass merchants and specialty retailers.

These challenges create risks to profitability, which may make it difficult for Leslie’s to achieve stable growth and maintain investor confidence in the near term.



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