Leslie's (LESL) Stock Forecast & Price Target

Leslies Inc. reported a 5.1% year-over-year increase in adjusted EBITDA dollars for the fourth quarter, reaching $45.2 million, which surpassed projections and was bolstered by a gross margin improvement of 257 basis points to 38.6%, driven by favorable vendor rebates and reduced freight costs. Despite a substantial reduction of $26 million in inventory, the company successfully improved in-stock levels for top-selling SKUs by over 400 basis points, thereby enhancing inventory efficiency and customer satisfaction. Furthermore, Leslies continues to invest strategically in customer engagement initiatives, such as its revamped loyalty program and the rollout of local fulfillment centers, which have contributed to improved operational performance and customer experience.

Leslies Inc. is facing a challenging demand environment, reflected in its guidance of a high single-digit sales decline and margin deterioration for the fourth quarter of FY25, driven by adverse weather conditions and increased competition that resulted in market share losses. The company's anticipated adjusted EBITDA margin is expected to contract to approximately 10.7%, with adjusted EBITDA dropping to about $39.2 million, amid a broader industry struggle evidenced by significant declines in sales across all product categories. Furthermore, the overall financial outlook for FY25 indicates a projected total sales decrease of 7.2% to 9.0% year-over-year, alongside a reduction in capital expenditures, signaling tighter financial conditions and a focus on debt repayment as top priorities.