Leslie’s, Inc. (Leslie’s) is a direct-to-consumer pool and spa care brand.
The company is the largest and most trusted direct-to-consumer brand in the $15 billion United States pool and spa care industry, serving residential and professional consumers.
The company offers an extensive assortment of professional-grade products, the majority of which are exclusive to Leslie’s, as well as certified installation and repair services, all of which are essential to the ongoing maintenance of pools and...
Leslie’s, Inc. (Leslie’s) is a direct-to-consumer pool and spa care brand.
The company is the largest and most trusted direct-to-consumer brand in the $15 billion United States pool and spa care industry, serving residential and professional consumers.
The company offers an extensive assortment of professional-grade products, the majority of which are exclusive to Leslie’s, as well as certified installation and repair services, all of which are essential to the ongoing maintenance of pools and spas. The company’s dedicated team of associates, pool and spa care experts, and experienced service technicians are passionate about empowering the company’s consumers with the knowledge, products, and solutions necessary to confidently maintain and enjoy their pools and spas. The considerable scale of the company’s integrated marketing and distribution ecosystem, which is powered by the company’s direct-to-consumer network, uniquely enables the company to efficiently reach and service every pool and spas in the continental United States.
The company operates primarily in the pool and spa aftermarket industry, which is one of the most fundamentally attractive consumer categories given its scale, predictability, and growth outlook. More than 80% of the company’s assortment is consisted of non-discretionary products essential to the care of residential and commercial pools and spas. The company’s assortment includes chemicals, equipment and parts, cleaning and maintenance equipment, and safety, recreational, and fitness-related products. The company also offers important essential services, such as equipment installation and repair for residential consumers and professional pool operators. The company offers complimentary, commercial-grade in-store water testing and analysis via the company’s proprietary AccuBlue system, which increases consumer engagement, conversion, basket size, and loyalty, resulting in higher lifetime value. The company’s water treatment expertise is powered by data and intelligence accumulated from the millions of water tests the company has performed over the years, positioning the company as the most trusted water treatment service provider in the industry.
Growth Strategies
The company’s strategies are to grow its consumer file, such as acquire or reactivate consumers via optimized marketing strategy and capture outsized share of new pool and spa consumers; increase share of wallet among existing consumers, such as increase loyalty membership penetration and introduce program upgrades, enhance retention marketing, and expand the company’s product and service offering; grow additional share in the professional market; utilize strategic M&A to consolidate share and further enhance capabilities; address underserved residential whitespace; and continue to introduce disruptive innovation.
Industry
The company operate in the aftermarket pool and spa care industry, which is broadly consisted of: (i) chemicals; (ii) equipment, parts, and accessories; and (iii) services.
Seasonality
The company’s business is highly seasonal. Sales and earnings are highest during the company’s third and fourth fiscal quarters, which include April through September, and represent the peak months of swimming pool use. Sales are substantially lower during the company’s first and second fiscal quarters. The company has a long track record of investing in the company’s business throughout the year, including in operating expenses, working capital, and capital expenditures related to new locations and other growth initiatives. While these investments drive performance during the primary selling season in the company’s third and fourth fiscal quarters, they have a negative impact on the company’s earnings and cash flow during the company’s first and second quarters (year ended September 2024).
The company typically experiences a build-up of inventory and accounts payable during the first and second fiscal quarters in anticipation of the peak swimming pool supply selling season. The company negotiates extended payment terms with certain of its primary suppliers as the company receives merchandise in December through March, and the company pays for merchandise in April through July.
The company generally opens new locations before its peak selling season begins and close locations after the company’s peak selling season ends.
Consumers
The company strategically serves all consumers within the aftermarket pool and spa care industry, including Residential Pool, Residential Spa, and Professional Pool consumers.
Residential Pool. The residential pool market consists of approximately 8.8 million pools representing a total aftermarket sales opportunity of approximately $8.4 billion. Within this market, the DIY aftermarket spend represents approximately 70% of total spend while DIFM services represent approximately 30% of total spend. Many of the company’s residential pool consumers visit the company’s locations on a regular basis to conduct water testing, seek expert pool advice, and purchase products as well as utilize the company’s integrated digital platforms.
Residential Spa. The residential spa market consists of approximately 5.5 million spas or hot tubs representing approximately $0.9 billion aftermarket sales opportunity for chemicals and equipment. Including the approximately $1.7 billion market for new spas, residential spa represents a total addressable market of approximately $2.6 billion.
Professional Pool. The professional pool market consists of pool service professionals and professional pool operators. Pool service professionals specialize in maintenance and equipment repair for DIFM homeowners, businesses, and government entities. Professional pool operators manage approximately 300,000 pools across hotels, motels, apartment complexes, and water parks. This market represents a total aftermarket sales opportunity of approximately $4.4 billion.
Product and Service Offering
The company offers a comprehensive assortment of more than 30,000 products across chemicals, equipment and parts, cleaning and maintenance equipment, and safety, recreational, and fitness related products. Historically, approximately 80% of the company’s assortment has been consisted of essential and non-discretionary products that are needed by residential and professional consumers to care for pools and spas. The vast majority of the company’s assortment features non-discretionary products that are shelf-stable and generally not prone to either obsolescence or shrinkage, which could occur from changing technology or consumer buying habits. As the trusted one-stop destination for all aftermarket pool and spa needs, the company provides an extensive and highly differentiated product offering. The company intends to fulfill the needs of its residential and professional consumers with the company’s comprehensive assortment, in-stock inventory, and product selection across a broad range of premium proprietary and third-party brands.
The company continues to expand its selection of exclusive offerings through innovation and product development. The company’s exclusive brands and products account for more than 55% of total sales and 80% of chemical sales. These proprietary brands and custom-formulated products are only available through the company’s integrated platform and offer professional-grade quality to the company’s consumers, while allowing the company to achieve higher gross margins relative to sales of third-party products.
In addition to the company’s comprehensive product assortment, the company offers critical services, such as complimentary, commercial grade water testing and in-store equipment repair. The company also employs a large in-field service network of pool and spa care service professionals who have the expertise to provide essential on-site equipment installation and repair services for residential consumers and professional pool operators throughout the continental United States.
Integrated Platform
The company operates an integrated platform consisting of physical locations, distribution centers, and proprietary e-commerce websites.
Residential Locations. The company serves its residential consumers through physical locations that are strategically spread across 39 states. The company offers a range of differentiated and innovative in-store and on-site service offerings including the company’s in-store water test. The company’s residential locations are supported by a team of associates, including pool and spa care experts and experienced service technicians, who are committed to educating and providing best-in-class pool care advice for consumers and performing on-site installation and repair services.
Digital Network. The company’s complementary platform of branded proprietary e-commerce websites and marketplace storefronts allows the company to seamlessly serve the needs of all digital consumers through curated pricing and targeted merchandising strategies. The company’s portfolio of proprietary e-commerce websites includes Leslie’s (lesliespool.com) and In the Swim (intheswim.com). In addition to the company’s owned e-commerce websites, the company sells through online marketplaces such as Amazon, Walmart, and eBay.
PRO Locations. The company’s PRO locations are conveniently situated along popular service routes and carry a product assortment that targets the professional consumer. The company has identified significant opportunities to expand and develop the company’s PRO network to address the growing and underserved professional consumer base. The company’s PRO locations also serve residential consumers.
Residential Hot Tub Locations. In select markets, the company also operates full service hot tub and spa locations under various banners. At these locations, the company offers an expanded assortment of merchandise and services specifically catering to current and prospective spa owners.
Vertically Integrated Model
The company operates a vertically integrated supply chain, packaging, and distribution model, which represents a significant competitive advantage.
The company’s vertically integrated supply chain enables the company to produce and package products at the company-operated packaging facilities and third-party contract packaging facilities. The company’s strategy is to identify, produce, and package high volume items that do not require sophisticated or capital-intensive production or packaging equipment, but allow the company to offer its consumers a premium product while offering the company a significant cost advantage. The company sources a variety of raw materials and chemicals directly from a diversified supplier base; and maintains strong relationships with these suppliers. As of September 28, 2024, the company had one supplier that represented more than 10% of the company’s annual purchases. Using these raw materials, the company manufactures and packages a wide selection of final products, including but not limited to, chlorine products, pH adjusters, and filter cleaners. A significant portion of the company’s total mix is consisted of products that the company manufactures or packages through vertical integration, which offers economies of scale that has resulted in higher quality products and a structurally advantaged margin profile.
The company also operates a vertically integrated distribution and delivery model. In addition to operating two manufacturing facilities, the company operates a national network of company-operated distribution centers in addition to utilizing third-party distribution centers. The company-operated distribution centers and the company’s third-party logistics partners have the capacity to carry a broad breadth of the company’s products in significant quantities and are capable of replenishing inventory throughout the company’s physical network. From these facilities, the company distributes to its physical network through a contracted fleet of tractors and trailers, which helps ensure optimal in-stock levels throughout the year. The company’s third-party distribution centers are strategically located to complement the company-operated distribution centers and primarily fulfill online orders.
Trademarks and Other Intellectual Property
The company employs various trademarks, trade names and service marks, including Leslie’s, AccuBlue, AccuBlue Home, Pool Perks, and the company’s logo, in its product packaging and advertising the company’s products. The company has registered trademarks and trade names for several of its major products on the Principal Register of the United States Patent and Trademark Office. The company distinguishes the products produced in its chemical repackaging operation or by the company’s third-party repacking partners through the use of the Leslie’s brand name and logo and the trademarks and trade names of the individual items, none of which is patented, licensed, or otherwise restricted to or by the company.
Leslie’s, AccuBlue, AccuBlue Home, Pool Perks, and other trademarks, trade names or service marks are the property of the company.
Competition
National home improvement and retailers, such as Home Depot, Lowe’s, and local and regional hardware stores, compete with the company mainly on a seasonal basis during the spring and summer months, but experience significantly higher foot traffic than the company’s retail locations. The company also faces competition from mass-market retail competitors, such as Walmart and Costco, who devote shelf space to merchandise and products targeted to the company’s consumers, as well as online mass-market retailers such as Amazon, who devote online categories to merchandise and products targeted to the company’s consumers.
History
Leslie's, Inc. was founded in 1963. The company was incorporated in 2007.
The Analyst Price Target shows the analysts’ low, high, and average target at a glance.
