Leslie's (LESL) Stock Forecast & Price Target

Leslie’s Inc. demonstrated strong financial performance in 4QF25, with adjusted EBITDA dollars increasing by 5.1% year-over-year to $45.2 million, outperforming initial projections, alongside a 257 basis point improvement in gross margin driven by favorable vendor rebates and freight costs. The company has also successfully reduced inventory by $26 million while enhancing in-stock levels for top-selling SKUs by over 400 basis points, indicating an efficient inventory management strategy. Additionally, Leslie’s continues to implement strategic initiatives such as the rollout of local fulfillment centers and the relaunch of its loyalty program, which are expected to enhance customer engagement and operational efficiency, further supporting a positive outlook for the company's future growth.

Leslies Inc. is facing significant headwinds, with a projected high-single-digit sales decline in 4QF25 and anticipated margin contraction due to adverse market conditions and a cold, wet weather pattern that has negatively impacted demand. The company's profitability is under pressure, evidenced by an expected adjusted EBITDA margin decrease to 10.7% and a projected adjusted EBITDA of approximately $39.2 million, reflecting a continued trend of reduced revenue across all product categories. Additionally, FY25 guidance indicates a total sales decrease of 7.2% to 9.0% year-over-year, alongside a net loss of 160,000 customers and declining overall market traffic, exacerbating the challenging operational environment.