Leslie's Inc. experienced a remarkable surge in its stock price on Thursday, with shares climbing as much as 160% to $3.72 in midday trading. The dramatic rally came after the pool-supplies retailer reported its fiscal second-quarter results, which showed a rebound in sales and an increase in customer traffic, offering a glimmer of hope for its ongoing turnaround efforts.
For the quarter ended March 28, 2026, Leslie's posted net sales of $184.7 million, a 4.3% increase compared to the same period last year. Comparable sales rose 6.6%, and the company noted an 8% rise in customer count. These figures mark the first significant look at the impact of the company's lower-price strategy, which was introduced in March. Chief Executive Jason McDonell attributed the positive results to strong transaction growth and customer engagement, driven by the early success of the 'Price Drop' initiative.
Despite the top-line improvement, Leslie's reported a net loss of $52.5 million, wider than the $51.3 million loss in the year-ago period. The company's adjusted EBITDA loss improved to $26.8 million from $36.1 million a year earlier, indicating some progress in operational efficiency. Gross margin climbed to 28.9% from 24.8%, supported by higher sales volume, lower occupancy and distribution costs, and adjustments to inventory reserves.
During the earnings call, McDonell highlighted a more than 25% increase in reactivated customers—those who did not shop at Leslie's last year but made purchases between 2021 and 2024. He also noted that price reductions led to a double-digit surge in store transactions, while the conversion rate improved by over 350 basis points. The company's store closure program, which is now complete for fiscal 2026, is expected to reduce annual sales by $25 million to $35 million but boost net EBITDA by $4 million to $10 million each year.
Leslie's maintained its full-year fiscal 2026 outlook, projecting sales between $1.10 billion and $1.25 billion and adjusted EBITDA in the range of $55 million to $75 million. Capital expenditures remain pegged at $20 million to $25 million. As of the end of the quarter, the company held $16.9 million in cash, inventory of $262.4 million, and total liquidity of $97.1 million, including available credit.
The competitive landscape for pool supplies has eased somewhat compared to last year, but challenges persist. Pool Corp., a major player in the industry, reported that maintenance demand remains solid, though discretionary product buyers are returning slowly. Hayward Holdings, which manufactures pool equipment, posted 12% sales growth in the first quarter and raised its forecast, citing stronger pricing and higher volume.
Analysts on the earnings call focused on the sustainability of Leslie's margin improvement and whether the price cuts would extend beyond core chemicals. Jefferies' Jonathan Matuszewski pointed to a 'comp inflection' in the quarter, while Mizuho's David Bellinger inquired about the potential for increased price investment. McDonell pushed back on discounting equipment, citing vendor-enforced minimum advertised pricing on much of that inventory.
Despite the impressive stock rally, Leslie's faces significant headwinds. The company carries substantial debt, continues to post losses, and flagged in its filing that its shares could face delisting from the Nasdaq if it does not meet public-float market-value requirements by August 10, 2026. The company also noted that factors such as weather, tariffs, price-sensitive shoppers, elevated interest rates, and the success of its pricing strategy could influence its performance.