A specialty retailer of pool and spa supplies, Leslie's outfits backyard pools and hot tubs across the U.S., selling chemicals, parts, and accessories to homeowners and pros through its stores, website, and brands like In The Swim. Its name honors co-founder Phil Leslie, who launched the business in the Los Angeles area in 1963 with a partner and a chlorine-delivery sideline that grew into a chain of pool supply stores. A fun touch: its AccuBlue water-testing platform lets customers check their pool chemistry at home.
Leslie’s Q3 sales fell 8.4% and the company disclosed substantial doubt about its ability to continue as a going concern.
Leslie’s disclosed it may not survive. fell 8.4% to $458.5 million and contracted 3.1 points to 36.5% as a slower pool season and store closures cut traffic, though a $17.5 million legal settlement gain pushed to $47.8 million. The company is racing to restructure $753.4 million in debt before it runs out of cash.
Key takeaways
fell 6.2% in Q3, driven by lower store traffic, a slower summer season, and the closure of underperforming locations.
contracted 3.1 percentage points to 36.5%, pressured by unfavorable product mix, lower high-margin volume, and higher distribution and manufacturing costs.
SG&A fell 17.9% to $105.8 million, largely because of a $17.5 million gain from a credit card interchange fee litigation settlement, along with lower store operating expenses and labor costs.
Section summaries
Management's Discussion and Analysis
Sales fell 8.4% in Q3 FY2026 on softer pool season demand and store closures, while a $17.5M legal settlement gain boosted net income.
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Sales decreased 8.4% to $458.5M in Q3 and 7.3% to $790.4M YTD, driven by lower store traffic, a slower summer season, and the closure of underperforming locations.
rose to $47.8 million from a $162.8 million loss a year ago, a swing driven by the absence of the prior year's $180.7 million and the litigation settlement gain.
Management withdrew its full-year FY2026 outlook and expressed substantial doubt about the company's ability to continue as a , citing the need to refinance its Term Loan maturing in March 2028.
The company is actively exploring strategic alternatives, including a potential , but warns any such action could be highly to or eliminate the value of existing common stock.
What changed
The growth of 6.6% reported in Q2 did not carry into the peak season; Q3 comparable sales fell 6.2%, confirming the Q2 increase was aided by a calendar shift and store-closure transfers rather than a demand recovery.
The occupancy and distribution cost savings that drove the Q2 expansion reversed in Q3, as higher distribution and manufacturing costs and unfavorable product mix pushed gross margin down 3.1 points to 36.5%.
The going-concern warning and withdrawal of full-year represent a sharp escalation from the prior quarter's watch items, which focused on Nasdaq compliance and margin trajectory rather than solvency.
What to watch
Whether the company can refinance or restructure its $753.4 million in before the March 2028 Term Loan maturity, and on what terms.
The outcome of the strategic alternatives review, including any , and the extent of or value elimination for existing common stockholders.
Whether the company maintains its Nasdaq listing, given the ongoing non-compliance with the minimum market value of publicly held shares rule.
The pace and cost of the 80–90 planned store closures, and whether they transfer enough sales to remaining locations to slow the decline.
declined 6.2% in Q3 and 5.5% YTD, reflecting broad-based softness in the retail business.
contracted 310 to 36.5% in Q3 and 265 bps to 31.3% YTD, pressured by unfavorable product mix, lower high-margin volume, and higher distribution and manufacturing costs.
SG&A fell 17.9% in Q3, largely due to a $17.5M gain from a credit card interchange fee litigation settlement, along with lower store operating expenses and labor costs.
The company withdrew its full-year FY2026 outlook and disclosed substantial doubt about its ability to continue as a , citing macroeconomic softness and the need to refinance its Term Loan maturing in March 2028.
Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk There have been no material changes in our primary risk exposures or management of market risks from those disclosed in our Annual Report on Form 10-K for the fiscal year ended October 4, 2025. Impact of Inflation and Deflation There have been no material chan…
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Interest Rate Risk
There have been no material changes in our primary risk exposures or management of market risks from those disclosed in our Annual Report on Form 10-K for the fiscal year ended October 4, 2025.
Impact of Inflation and Deflation
There have been no material changes in our exposure to inflation or deflation from those disclosed in our Annual Report on Form 10-K for the fiscal year ended October 4, 2025.
We are subject to litigation, claims, and other proceedings that arise from time-to-time in the ordinary course of business. We believe these actions are routine and incidental to the business. As of July 4, 2026, we had established reserves for claims that were probable and est…
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We are subject to litigation, claims, and other proceedings that arise from time-to-time in the ordinary course of business. We believe these actions are routine and incidental to the business. As of July 4, 2026, we had established reserves for claims that were probable and estimable and such reserves were not significant. While we cannot feasibly predict the outcome of these matters with certainty, we believe, based on examination of these matters, experience to date and discussions with counsel, that the ultimate liability, individually or in the aggregate, will not have a material adverse effect on our business, financial position, results of operations, or cash flows.
Except as set forth in Note 12—Commitments & Contingencies to our consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, there have been no material changes to the legal proceedings described in Part I, Item 3 “Legal Proceedings” of our Annual Report on Form 10-K for the fiscal year ended October 4, 2025.
The company warns that its declining revenue and inability to generate sufficient cash flow raise substantial doubt about its ability to continue as a going concern.
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Management has expressed substantial doubt about the company's ability to continue as a due to declining sales, insufficient cash flow, and a need to restructure or refinance its $786.7 million in debt.
The company is actively exploring strategic alternatives, including a potential , but warns that any such action could be highly to or eliminate the value of existing common stock.
A plan to close 80 to 90 underperforming U.S. locations is underway, but failure to execute these closures effectively or manage associated and costs could further harm financial results.
A recent to CCC from CCC+ may increase borrowing costs, limit financing options, and trigger more stringent debt covenants, intensifying liquidity risks.
The company's common stock faces a risk of delisting from the Nasdaq Global Select Market if it fails to maintain the required minimum market value of publicly held shares, which would further impair liquidity and financing ability.