Pool products retailer Leslie’s (NASDAQ:LESL) missed analysts' expectations in Q1 CY2024, with revenue down 11.4% year on year to $188.7 million. On the other hand, the company's outlook for the full year was close to analysts' estimates with revenue guided to $1.44 billion at the midpoint. It made a non-GAAP loss of $0.17 per share, down from its loss of $0.14 per share in the same quarter last year.
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Leslie's (LESL) Q1 CY2024 Highlights:
- Revenue: $188.7 million vs analyst estimates of $200.9 million (6.1% miss)
- Adjusted EBITDA: ($24.4) million loss vs analyst estimates of ($16.8) million loss (miss)
- EPS (non-GAAP): -$0.17 vs analyst estimates of -$0.18
- The company reconfirmed its revenue guidance for the full year of $1.44 billion at the midpoint (adjusted EBITDA and EPS also reconfirmed)
- Gross Margin (GAAP): 28.8%, down from 33.4% in the same quarter last year
- Free Cash Flow was -$56.48 million compared to -$70.71 million in the same quarter last year
- Same-Store Sales were down 12.1% year on year
- Store Locations: 1,000 at quarter end, increasing by 3 over the last 12 months
- Market Capitalization: $906 million
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.
Specialty Retail
Some retailers try to sell everything under the sun, while others—appropriately called Specialty Retailers—focus on selling a narrow category and aiming to be exceptional at it. Whether it’s eyeglasses, sporting goods, or beauty and cosmetics, these stores win with depth of product in their category as well as in-store expertise and guidance for shoppers who need it. E-commerce competition exists and waning retail foot traffic impacts these retailers, but the magnitude of the headwinds depends on what they sell and what extra value they provide in their stores.
Sales Growth
Leslie's is a small retailer, which sometimes brings disadvantages compared to larger competitors that benefit from economies of scale.
As you can see below, the company's annualized revenue growth rate of 9.4% over the last five years was mediocre as it opened new stores and expanded its reach.
This quarter, Leslie's missed Wall Street's estimates and reported a rather uninspiring 11.4% year-on-year revenue decline, generating $188.7 million in revenue. Looking ahead, Wall Street expects sales to grow 3.5% over the next 12 months, an acceleration from this quarter.
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Same-Store Sales
Leslie's demand has been shrinking over the last eight quarters, and on average, its same-store sales have declined by 5.8% year on year. This performance is quite concerning and the company should reconsider its strategy before investing its precious capital into new store buildouts.
In the latest quarter, Leslie's same-store sales fell 12.1% year on year. This decrease was a further deceleration from the 13.5% year-on-year decline it posted 12 months ago. We hope the business can get back on track.
Key Takeaways from Leslie's Q1 Results
We enjoyed seeing Leslie's beat analysts' full-year earnings guidance expectations. We were also happy its EPS narrowly outperformed Wall Street's estimates. On the other hand, its revenue and adjusted EBITDA unfortunately missed analysts' expectations. Overall, the results could have been better. The company is down 1.5% on the results and currently trades at $4.61 per share.
Leslie's may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.