Leslie's (LESL) Stock Forecast & Price Target

Leslies Inc reported a 5.1% year-over-year increase in adjusted EBITDA for the fourth quarter of FY25, reaching $45.2 million, which exceeded previous projections, complemented by a gross margin improvement of 257 basis points to 38.6% driven by better vendor rebates and reduced freight costs. The company's strategic initiatives, including the rollout of local fulfillment centers, improvements in loyalty programs, and the introduction of convenient services like same-day delivery, have enhanced customer engagement and operational efficiency, leading to improved in-stock levels and inventory management. Additionally, despite a substantial inventory reduction of $26 million in FY25, Leslies enhanced its in-stock rates for top-selling SKUs by 400+ basis points, indicating strong demand and effective supply chain management within its core non-discretionary maintenance market.

Leslies Inc is facing significant challenges, with guidance indicating a high-single-digit sales decline in the fourth quarter of fiscal 2025 and margin deterioration driven by cost deleverage. The company anticipates an adjusted EBITDA margin contraction to approximately 10.7%, reflecting a decrease in total sales to between $1.210 billion and $1.235 billion for fiscal year 2025, a drop of 7.2% to 9.0% year-over-year. Additionally, the negative demand environment, exacerbated by adverse weather conditions and aggressive pricing strategies from competitors, has resulted in a customer loss of 160,000 and declines in sales across all major product categories.