Stocks in the swimming pool industry slumped Friday after pool-supplies retailer Leslie’s Inc. slashed its annual forecast following a decline in customer traffic.
(Bloomberg) — Stocks in the swimming pool industry slumped Friday after pool-supplies retailer Leslie’s Inc. slashed its annual forecast following a decline in customer traffic.
Shares in the Phoenix-based company tumbled 30% in a record drop to hit an all-time low. Among peers, Hayward Holdings Inc. slumped 7.9%, the most in nearly a year, and Pool Corp. fell 4.9%. Latham Group Inc. dropped 7%.
Leslie’s Chief Executive Officer Mike Egeck said the company’s fiscal third-quarter results trailed expectations as low double-digit traffic declines in its residential and pro businesses drove negative comparable-sales growth. While abnormal weather continued to pressure traffic levels, customers are also increasingly price sensitive, and they’re entering the season with more leftover pool chemicals than usual, he said in a statement.
“While the update does underscore a softer environment for the pool industry, we believe the issues are largely idiosyncratic to Leslie’s and independent retailers,” Stifel analyst W. Andrew Carter wrote in a note to clients, reiterating his hold rating on Leslie’s. The company generates about half of its sales from chemicals, he said.
Leslie’s also announced that chief financial officer, Steve Weddell, an eight-year veteran of the firm, was stepping down.
Three analysts tracked by Bloomberg downgraded their recommendation on Leslie’s shares after the company cut its sales and adjusted earnings per share guidance for the fiscal year.
William Blair analyst Ryan Merkel lowered the stock to market perform from outperform, saying there is limited visibility into improving sales and margins. Piper Sandler & Co. analyst Peter Keith, who also downgraded Leslie’s, added that the company’s chief financial officer transition “isn’t a good look for shares.”
Pool Corp. is expected to report quarterly results next week. Earnings reports from Hayward and Latham will follow next month.
(Updates for market close throughout.)
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