It’s never a good day when your company’s stock loses almost a third of its value in one day. That’s just what happened to Leslie’s (NASDAQ:LESL) after a disastrous guidance session that left investors not so much disappointed as panicked. The appearance of a new chief financial officer (CFO) did little to ameliorate any concerns from investors.
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Leslie brought out a hefty serving of disaster, featuring third quarter sales projections of $611 million, which meant a comparable sales drop of 12%. Gross profit is now projected between $249 million and $251 million, and net income is expected between $70 and $73 million. All of these, according to CEO Mike Egeck, were well below expectations. Egeck went on to explain that Leslie’s saw “low double digit traffic declines” for residential and professional business, which was one of the biggest drivers of the decline. Several other factors played in as well, including issues of weather and customers who had chemicals left over from last year.
Meanwhile, current CFO Steve Weddell was to be replaced by Scott Bowman. Formerly of True Food Kitchen, Bowman comes on board in the midst of a calamity. William Blair analysts noted that the results that emerged were “…much worse than the whispers we had heard.” Piper Sandler analysts, meanwhile, cut Leslie’s rating from “overweight” to “neutral” and dropped the price target over 50%, taking it down from $16 to just $7.
However, there’s hope, at least as far as analysts are considered. Leslie’s is still considered a Moderate Buy, backed up by three Buy ratings and eight Hold. Plus, with an average price target of $10.83, Leslie’s stock can still offer investors a 63.84% upside potential.
