LESL - Earnings call 1 2024

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Operator

Good afternoon, and welcome to the First Quarter of fiscal 2024 Conference Call for Leslie's, Inc. [Operator Instructions] As a reminder, this conference call is being recorded and will be available for replay later today on the company's website.

I will now turn the call over to Caitlin Churchill, Investor Relations.

Caitlin Churchill

Thank you, and good afternoon. I would like to remind everyone that comments made today may include forward-looking statements, which are subject to significant risks and uncertainties that could cause the company's actual results to differ materially from management's current expectations. of if will circumstances as in be speak future the change. statements today not and updated These Please review filings the in the cautionary statements and earnings release risk press and recent with SEC. company's the factors contained

of today call Investor release A between website can which to measures. Lesley's be was the non-GAAP financial the Relations in SEC and reconciliation today, to furnished the refer During certain and will ir.lesliespool.com. company's the financial found non-GAAP section GAAP posted to measures management at earnings the press

On today Officer; call Financial from the Egeck, Leslie's Chief and Officer. are Executive Chief Mike Scott Bowman,

With that, Mike? the over to I Mike. will turn call

Michael Egeck

Caitlin, Thanks, website, that I'd believe the full during year, referring of posted first you our quarter have our remind is us which joining quarter season. incur QX during to to we in our to and XXXX certain call. and this we page our ] to upcoming for the that IR afternoon. peak [ and earnings for deck investments note Lesley's the we thank Please that costs deck like ed everyone all smallest historically company make the position

in our normalized traffic through to the fiscal versus expectations start our QX a played a with we And quarter sales quarter. which noncomp were Both the out financial and fiscal start anticipated. and X% of digits prior Hot sales tailwind the down down and weather line saw million XXXX with was in were comp in high results quarter year-over-year, Total digits mid-single QX. as for or in more line performance down in first soft Tub quarter and $XXX the The million, single sales contributed in after sales improved was our sales in down quarter was in down ahead of expectations. XX% year our year-over-year. year recover Residential XX% Pool Residential Pool the October. Weather down XX%. sequentially was XXXX, down $X XX%, X% PRO were for for Comp sales

soft, and down hot value of we improved be Equipment was were product transactions to down decline. of quarter's the In total versus and product in of Total come Discretionary QX high-ticket Tub our X/X year-over-year. X%, total, up including was chemical from down to XX% increase during products, chemical affected product XX%. improvement year-over-year order month ago. X% XXXX. about were Total XX% ]% down continues Approximately which against sales nondiscretionary quarter. were sales saw a continued down Average the average to discretionary business, of by tubs. sales equipment down be sales discretionary value order volume sales Residential and XX sales sales year X% unit [ sequential a in XX% each and a contributed Hot our sales

by faced quarters. encouraged renewed are tubs seeing over we interest are hot the next X easier We comparisons the in and

is the changes. attributable analysis June indicates basis chemical sales XXX Our points XXX credit the industry points quarter, underperformed by which to our price card of that data in basis of approximately our XXXX

our As smallest to quarter, numbers. these QX believe it historically conclusions draw is is from too early we

expensing messaging point lower primarily match value the program traffic capitalized improve at, similar around management we to margin our consumers' we basis not of are XXX and In occupancy Regardless and look of price chemicals lag driven we addition, data performance industry. Pool quarter. discussions further including which timing, With DC actions, profitability, increasing guarantee showcasing at price benefits and specialty smaller capabilities. stores, of month that omnichannel an of which perception gross our of implementing the messaging item discussed deleverage, points sizes last costs points, increasing discussions, our the and taking our respect other several decreased loyalty previously relationship, each of of vendor data front products price strategy, and web the of indicating by include store are Perks to rebate

Gross expectations. $XX Adjusted adjusted was in was EBITDA share our earnings negative was with for margin quarter negative line diluted and the $X.XX. per million,

encouraged industry seasonality chains to are We that have operating industry retail consistent pricing activity supply to appears promotional be are with that well. the appears stabilized, and

expect retailer continue we opportunity. Leslie's secular with underpin demand tailwinds our that to intact, awareness. long-term the these and addition, and capabilities scale, believe the remains unmatched leading pool to brand and that industry we spa In remain drive growth tailwinds direct-to-consumer

on abnormal is advantages. our of year that initiatives strategic a industry executing team underpin conditions, focused After the competitive energized and those

are our As delivering executing Leslie's we growth continue to industry profitability. to return to growth initiatives sustainable and strategic top normalize, line conditions

those initiatives. to Turning

First, primarily was traffic. our customer X% down file the quarter, in driven by

and was in quarter, in Second, hot heaters X% by average revenue the big above-ground down specifically pools. customer per tubs, driven ticket items, primarily decreases

to quarter versus sales PRO the X,XXX place quarter quarter. the PRO for offset of in our store With to and were X% ended were channel reinforcing PROs by This first the PRO confident declined but sales, and remains store and contracts have down opportunities. the non-partner in year. distributor remain very with pricing the double and in stabilized. PRO our PRO digits for our to Leslie's, growth XX new contracts last appears long-term we locations regard program. competitive, Chemical PRO important we expansion XX initiative, Partners compares locations. are sales up in which PRO M&A X,XXX PRO partner value digits, remain double seeing initiatives

to continues standpoint, open resonate Home innovation with remain member on smart stars. an continues device we per XX to $X,XXX rising new member continue out For our of Member average base. fiscal and X.X spend tech AccuBlue to increasingly our stores. From X average to year track XXXX, reviews

and the early launch expect its after proposition. curve While May, realize last continue value to growth a in the customers we still days strong as benefits

our device inventory device for production currently track up the ramping XXXX season, to are season is we partner vendor pool and plan. Our achieve on

leadership. remain we on executing initiatives, of opportunities to prudently our and capture our long-term strategic the focused industry extend in front us While

number take and drive to Number inventory track one, are to near-term relative are respectively. our million on performance; at our actions approximately to by price and year-end two, and pricing XXXX. are expect for continue reduce we to million, We position XXXX $XXX $XX hold managing position inventory this historical and we peak

inventory surveys organization; the our utilizing conjunction to to four, still but Accordingly, to was we QX market Moyo understanding we the people driving and number five, expect behavior, talent, this made new the number levels improve quarter notably inventory with evolving develop be in to in later service we are to P&L. our was our are SG&A the LaBode high the year discuss since purchasing decision we versus Scott abate our further three, consumer in-stock X% managing strong processes prior this costs while and down invite our evaluate, office. benefits we [indiscernible] in and supply The of systems preseason the have Merchandising month. most continue Officer, consumer down leadership metrics; will XX% investments the improve a $XX our pool and survey call, million are or in ago; put across supply chain year, and chain maintained Chief in and number we under throughout

outlook over hand it our results Scott Scott? detail. in and to discuss more now to I'll

Scott Bowman

thank you, everyone, afternoon, Mike. Good and

XX I over is our that discuss Investor would career I [ of Scale Investor our years. a ]. to Vice Relations, Before with Matt seasoned spanned finance has like President introduce professional and results, Matt new a Relations

We efforts. are excited to and have board Investor look Relations them his to forward our on of leadership

first Turning quarter to results.

Our of to improving we in progressed. the were expectations, results trends line with or the see quarter as quarter for were ahead and pleased

XX% to quarter. XXXX. a million, Comparable comp basis X-year each the throughout first sales a decreased decrease Comparable increased sales improvement We a of XX% quarter but sales X-year fiscal compared basis. we decreased month X% reported stack sales the saw of total and $XXX XX%, on stack on sequential of

declines a cost-conscious and in basis quarter, and Residential in declined for declined million for period. the for fiscal Noncomparable million Hot with a line XX%, by pool XX% basis, With XX%, in and Pool XX% Pool, declined environment margin to store consumer in the points XX% impaired respect compared line group, the $XX declined to compared million gross Pool and expectation. XXX prior Gross sales was for X-year Residential growth. driven declined stack Residential These Tub in with were $X X% declined profit Hot our the which Tub. year PRO by consumer. macroeconomic sales rate PRO acquisitions expectations first to of our new current XXXX declined contributed XX% $XX was to quarter Residential comparable sales given On trends

[ QX our detail. Page supplemental rate XX in gross our illustrates more bridge deck of ] margin

fiscal factors, affected gross During which quarter anticipated and we highlighted during main the was as quarter, our XXXX puts fourth margin call. X by takes

margin XX gross deleverage comparable declined basis expensing of points, basis points product XXX costs driven DC of capitalized by deleveraged sales. due primarily point basis comprised the in First, rate rebates; mainly from by basis of third, points, the costs headwind XXX basis were on second, the occupancy previously costs decline timing points sales; XXX DC XXX to and lower of comparable

million lower fiscal The was to million of to reduction impact and adjustments million of of Adjusted positive first EBITDA a and SG&A inventory X% the M&A the management. $XX in loss million $XX quarter costs basis headcount in inventory reduction was of negative XXXX $XX merchant points of compared $XX compared a a was due quarter fiscal executive was improved $X.X negative primarily Finally, of million net declines fees, transition costs. we in first first the resulted XXX compared adjusted and XXXX. quarter lower to XXXX. as loss in million, to or $XX

to the to compared quarter interest of rate primarily rates earnings of $XX due tax the increased $X.XX the increased XX.X% XXXX. during per our to was $X.XX higher million to XXXX. XX% million in expense in first Interest fiscal the in compared quarter first fiscal first of diluted share effective to from XXXX negative and negative Adjusted $XX quarter quarter

$XXX Diluted weighted average million. shares outstanding were

and balance $XXX the million on the end to to million the sheet. the had quarter with for last cash Moving and same on of the year $XX quarter. million $XX was year. compared revolver at equivalents outstanding revolver cash of last the the at same million the $X compared million time We to $X Availability ended period

quarter a $XX year the position, Scores in-stock remain compared ended million at or million, Net Promoter and metrics prior our $XXX service while decrease of strong. to XX% the quarter, Inventory very

interest our million loan ratio leverage secured the level, facility of first we at term prior million debt quarter effective on rate points our and basis $XXX prior to outstanding compared [ term our the our loan the the rate on Applicable in in X.X% to XXX was compared X.Xx. was the in end had quarter, quarter. Plus was year Regarding $XXX year our quarter first X.X% ] SOFR and

our to Turning outlook. XXXX fiscal

maintaining our guidance. are We year full

was quarter to our in comes guidance. categories with quarter first expect in to the second discretionary accounted consumer, which be expectations, pressure and we is on consistent affected for The more cost by a continue

weather the weather although We have X some seen spring challenging favorable are key a in for first second providers quarter, of of our our forecasting the weeks markets.

expect with to action. last in the chemical easier remain And we June pricing certain year of comparables benefit fiscal XXXX tailwinds the from as as and back quarter, discussed we the anniversary track we half on to

with adjusted million for reminder, per in adjusted million, $XX full billion, season. net adjusted is share of the $XXX second earnings $X.XX billion to all commentary which sales expect As we $X.XX ] and in to our to $X.XX. million a than income and year, Consistent to half diluted during of $XX million [ our expect of to EBITDA of trends, of fiscal $XXX November more we peak $X.XX profitability historical of deliver the XXXX,

prior see to lower better approximately improved XXX by management inventory the points and expect basis margin compared supply gross chain DC We costs, of driven to improvement efficiency. year,

occur expect As benefit of the in a reminder, we fourth this most will quarter.

and in inventory Additionally, approximately levels reduce fiscal we $XX million $XX expect million. year-end by spend to CapEx to $XX million to

Xx of the X.X ] to existing goal fiscal Regarding our ratio longer-term to of of XXXX capital the less. X.Xx leverage a of continues priority of achieving reaching goal leverage first debt be pay in allocation, and a the ratio our or with [

majority fiscal growth are prior of XX the a Memorial to pool ahead these outlined, in perspective, as Day open of with new openings Mike expected From stores the we season. key to store XXXX planning

to guidance. Thank stores to including this our plan also back Mike. X any not residential We to activity over At convert time, are you. I format. And our that, will M&A in fiscal PRO with it hand we year

Michael Egeck

Thank Scott. you,

to cover ESG In X across want third our hop improvement the annual published the resource A formation AA. report rating up, few of corporate Before we to highlighted ] ESG disclosures, MSCI that of a our initiatives. recent and we the with groups ESG [ expanded membership I environmental our employee developments organization from in September, our

reelection that addition, to announce James the CEO traded Meeting stand their as Lesley's the next Hospital Annual appointment In Children's from that recognized to we Independent partner had position Board we the pleased Ray that of given and had as our recent Jude's and company. year. Ortega Director In St. Chairman were Lead at his publicly December, as not his new was Jr. by announced as decided corporate for another Steve resigned

to and like Steve former partnership thank members I well for and in Leslie's. associates, would James future leadership of endeavors. their the as service his On would current X behalf nearly Board. Steve I wish for like to James and to also We both of Leslie's decades of thank Steve their and

We XX-year and Annual technology Meeting. e-commerce to Strain], of space elect are our in independent and of Chairman appoint lead also John advance member veteran [ pleased Director as current a XXXX board retail and

expectations. we still felt were that lingering our results of XXXX, headwinds from conclude, while or ahead line in effects delivered we with To the of

will gains With the market we season, capabilities to to value. back As prepare of model it our durability for I business our we shareholder that, the confident advantages scale, ability long-term remain leverage strategic from operator growth, the and to hand the for Q&A. competitive our XXXX the and team advantaged pool initiatives drive share of and in

Operator

[Operator Instructions]

Merkel with first Blair. question Ryan is William from Our

Ryan Merkel

progress Mike, I your you hit and for inventory off looks made Can It you've wanted you like confident to management inventory. to start progress going the with year? you're targets some why talk nice with there. the made about just you're

Michael Egeck

we made, specifically. start, I chain of with supply and I'll speak to question. also then want general in the really, of of But of -- April pleased results. hires additional inventory yes, really And and for of are planning last March have thanks more which emphasize talent Moyo's of that the I'll the with we've all leadership along in to the kind Scott time, pleased Ryan, go-live that our been and it systems, year. we've infusion how some new with the happened since with

Scott Bowman

think movement we've significantly, for and our just the has million. to that. add nice quarter, fourth on about in I'll Ryan, Yes. And I then by this $XX where inventory us. improved another inventory reduced starting quarter reduction

but good And so as it which we to Boulanger reduce inventory, it's mainly to X things. ordering good is that It's having ], on tool, more and stores. precise it delivered team product a a be us getting having also behind [ enables

there. it's great team so whole really just And by work the

stock And are important. us, levels no metrics is for also important, service inventory in and very also reducing but extremely

And look high. so has that's roll the we other been extremely that guard at, which

less about confident the happy finish April. overall indicated as $XXX at million with $XX prior really be and we're of early And that million inventory should last late year, year we And that So in we're can our the March, than about still we happens we've earlier, year. performance. the kind below peak

Ryan Merkel

it. Got

that Okay. compare is down That's to quarter? guidance Mike, And to then chemical how question about second were great talk I you prices on for you Trichlor And then just Can said in how 'XX. my you've does hear. much seen think the stabilization. the prices.

Michael Egeck

Yes.

'XX year, June headwind headwind. the about in was and be about think of versus they'll last to been actions that's predominantly they've And I'll sales. prior quarter, and XX-XX was those, pricing a total, I'll in when point year, Trichlor both -- about in price But stable. price. which for pricing to that XXX we anniversary and continue we basis industry took at the chemical June I a chemical split. about in look yes, But since prices down our a in you until from It talk was the the very volume actions, those talk

Operator

Our Jonathan with next question Jefferies. is from Matuszewski

Jonathan Matuszewski

is PRO, there. right? to Matt. traction with My efforts question your been first some welcome, on able the And You've build

tripled over of think, in has years. the terms I penetration sales

on more first PRO partner viewing versus convenient just PRO you've an a the you Leslie's wallet a right? PRO and customers the helping with PRO to stop frequency and purchases if fill-in us give Obviously, Could more onboarded drive converting customers of share sense. is customers, update as makes stop that program

Michael Egeck

initiating sales locations. talked good what number had consistent price, inventory reliability them, No. it's we the particularly their locations Absolutely, not necessarily any they of PRO the mentioned, script, Jonathan. don't And distinction, very Thanks X,XXX-plus a you PROs the making a tripled. they're have the given our and have a said our the in our partner was as pleased And van. with of work truck then give X,XXX-plus very to between And us customer, in a there. smaller emphasis for We've the extremely those question. as to believe When And operators who sharp important our customers. PRO group we're advantage advantage convenience we of supply, their And and we below were progress price. to out we program pretty launched carrying convenience. there's other been almost focus program, the we and of the wanting on prior PRO structural in

into of of intend really, and growth. last partners non-PRO wallet about the And is the wallet in difference Xx. the PRO is them pace considerable. partner by and the in between And the And share built partners keep share year the the that over had growth It's to we contracts. getting that PRO good

and locations PRO being partners most we on program, is structural the really performed closest of very consistently. once on to to going the emphasis in because be they really our up down get pools the doubling to then advantage So signing using

Jonathan Matuszewski

And That's may for why historically, the are any of right, maybe Great. the not XX% there split or nuance half has the sales just year of fiscal revenue a year just walk it of for split right. through this kind helpful. hold split All can If Scott. -- follow-up you will. in been that year? that then Scott, second this if to

Scott Bowman

bit call very have this or to split the half, we on believe half quarter be it should was split. indicated the that the first prior will year second mirrors that I by It close XXXX terms I that in in seasonality year mirrors but of very little half. anomaly, that probably closely what a of will was I comparison the XXXX. this think an saw we XXXX by best is

Operator

Our next question Stanley. Simeon Morgan from is with Gutman

Simeon Gutman

sure Mike, that the share it. But do back read the it. industry, that's it, want at mentioned, you're as not You think at the think, loss that's it's be, the ask enough way we share, you you number, to get the peak that, there's talk some need pricing, sounds -- think, think, win to how obscured, especially being I to potential market where you to way you that I season, do another you is if sharper guess, be it losing like indeed if about maybe since to in moment. I you Can than

Michael Egeck

market for Yes. we this headwind home priced at above price to Good time we're To be though, we'll needed we data a it now, just -- wouldn't or priced expecting market your have We're our question the react be the if specialty. believe obviously based worked credit see would card changes. would us to mass question, don't below at goes where It and lower. do and the chemical on were we're historical market and position, us Look, something share, in on on lead. I say Simeon. I the to But reaction. the to we're I from at time That's appropriately, right?

than the As from point rate. more differential you quarter, bridged remember, basis that the headwind in sales last chemicals

out We line way. the data gap those other measures discussions performance are the our play of doesn't frankly with vendors, chemical that, that this explained explain and indicate it rest. traffic checks. use with up store soft, quarter XX% with the is about doesn't surprised for with digital our in discussions price our all The web I current line qualitative we didn't it of by And that and same kind industry. quantitative And our action of our some similar managers, the mean

first So we're we're is quarter by The a is way little our about it the thinking surprised quarter. smallest that.

know XXX take gain versus trends. XXX the basis And we from think taking out not I the chemical -- of that we'll it's year. in take don't pay QX often year a first seriously. of play we're mentioned We read a it last that feel premium the as It data as very We of from of up result Regardless fair We a of we quarter some for We and out little the good points this is think to long-term been actions necessarily price didn't up whack. a at quite that, the perceived well, extrapolate representative script. idea 'XX, and year, smallest in important ended data price, to industry got the basis this we we've the 'XX, it's qualities attention but before actions, fiscal like that it. year share it confident year points. fiscal year

also guarantee on free messaging our increasing to down with also pool to or And smaller We're consumers. item sizes for the bringing the of omnichannel doing and doubling other shipping quite as first store. value the be improve very things. head into and that the you specific of the lower-cost perception continue price perception we're we rewards And value store be we price value with some match come of X% our products, chemicals And capabilities. drivers analyzing found effective. business, how our we're down and which an around to from of perks month And strategy,

-- did second the month all the quarter, started see really all to started performance. initiatives, really emphasize them improved we we and of of we Those in

and current value a So with compelling price we that of driving with positioning, we're with going focus to the our believe good consumers very are value. continue we because

Simeon Gutman

backdrop. competitive thinking sounds It we're the more Something about stable. else

chemical the Is think we any pricing, there about of you you how pricing. do then shape you're season. the spring judge get seeing last up a about couple today spring? and way for the peak can't or talked -- what about precursor like and we months how the as your selling will once talked gauging Or You

Michael Egeck

Yes.

our think month. I is quarter, the January again smallest it's smallest and then

really March get our into can least need at So sunbelt February the some we when and to going to that look markets velocity first the we at see start of into season. percolate the

the encouraged that March, of weather the forecasting we're different our favorable use, to May, core pleased if kickoff our markets. seeing everything from least WTI we months the April, see the we're provider. for to we're weather all act the But into farmers by is to normal, of all [ Planalytics, not want which to across and ] to at June, key really And NOA season most of

So think it's pool for the a good season. I pretty setup

about The last other stockpiling we year, people thing talked to our take into survey, account we quarter. latest is, evidence last which of saw

they're indicating that. not doing are Consumers

going improving. we survey to with where some are scores We this and pleased month the and our a weather But We're significantly in-stock all setup. see are good stockpiling another levels think have our of NPS we We that. very see I less. out pricing with confirm or

around lot your pretty not April. good setup about feel become I -- a would March, it that. say to to until point, we there's So of clarity doesn't but these -- the

Operator

is Our Steven next from Guggenheim Forbes question with Securities.

Steven Forbes

sort get non-oil sort stabilization? on are expand on early customer sort on of file read it Or I'd expect the your starting you just too for is to your you just was when stability. right? year? on most a good outlook can both point and of the see I maybe this hear that trends, Mike, love anything file, on loyal thoughts customer the Like of support and stabilization of if would you recent to at thesis thinking to wondering some

Michael Egeck

Yes.

was we've to and pandemic. then unwinding I as as much customer of to grow half, second up down expect And business the picked onetime would be which is not quarter. still quarter's this think that it both overall. our as files I quarter the kind we next some of of We core think And some, reflective flat I'd time, again, get typically say, back Trichlor structural the would of customers final should I buyers, frankly. some file in think we that second we which some the unwinding down the one down, the customer been really this during quite in of by to start year, got of and then headwinds there's has one that the file of first and healthy. of quarter were time

think need file other tub I to members with overall. loyalty places. our pressure and our than seen the was file. file, was equipment transactions that in line what discretionary very in of also hot the high about some quarter, are we that's really in when customers we're kind the items really thinking that of of They on And and a And of the bit much saw positive, Loyalty And but lack core company we across more the ticket which continue hit. AOV, customers. a the better to down our grow. see quite were Transactions X% in positive the for guidance to we've the

Steven Forbes

a just And quick follow-up.

X%. there? of changing of is PRO comps, or were similar Where and I think equivalent anything residential it sales or trending thinking the PRO still Is right, -- you year? down for about versus sort PRO sort

Michael Egeck

Yes.

well. that our I traffic very and similar. traffic Feedback is from and as to our representativity break wholesale has traffic in. right? that our counters We history from Customers specifically, residential The can't think traffic, been pretty similar stores coming in stores, the PRO PRO out be PRO would

members. big a X%. We a are number loyalty mid-single customers the file. who saw were have, you And do down for on view nicely. wrap digits and with down and continuing kind we our have of partners the benefits the sales was loyalty we regular quarter them of I contract -- PRO the to the Partners, focused good of that grow job between they We similarly Traffic of explaining difference a partners number our the -- PRO them in contracts around also to arms PRO of Again, program. we're very pretty

Operator

next Our Loop Shmois from with is question Garik Capital Markets.

Garik Shmois

ask the in around wanted just that I to just ended. quarter trends

they mentioned don't the was a sequentially weather improved role. month. underlying in driving to parse trends? I played each weather maybe versus how improvement out any You improvement much Certainly, you're know in able if

Michael Egeck

a It's was of I tough. Yes. -- in gets was And question, smaller was in mean October challenge for QX each is month. volume. that good that a quarter Garik. us month the the it tough

month year. January month, the our biggest that the quarter more smallest -- extrapolate than the because of November to is hard December, January XX% even is the QX October in month quarter. So is smallest of year of the smaller, to March any entire and the smaller happens January, really reverse.

not with weather the about as October, as And just December half as favorable was saw and favorable. lower we November conversion. about traffic it So in was similar

So happened I'm that and from everything pleased but was we a -- month, and it improve explain challenging December in it see there not sure November we more. October, very a was improved can are to

Garik Shmois

is given sales, hot there the for in pullback the big-ticket about spending. quarters just weakness given Understood. hub just [indiscernible] question several discretionary

you comps are mentioned fiscal as move easing 'XX. through You

narrowing think about should the progresses? of in of hub how maybe the year rate hot kind or wondering the as we declines the Just growth

Michael Egeck

Yes.

about down the midpoint about XX% and the the calls. have discussed earlier And the that are discretionary at tubs what's into some our of -- that's year business of we've We planned hot And for The discretionary sales. XX%. guide. built of

from order that What that to was book. business comments So us confidence we better that XX% a tubs see turn. sparked quarter, year. the have or we in of us and And script for down is is gives to the the where at of XX% book tub my we hut the order forward to improvement business one need at end kind flat basically down And get need flat. the than hot

order the of for So about we results. of encouraged in for that's tub by why for terms balance QX year. of the but -- hot the not was It's shipped, formation being the what talk encouraged the and book delivered results the

Operator

with Andrew Our next from Carter is question Stifel.

W. Andrew Carter

I say was the basis regarding to wanted volume was is of the to wrong the margin points, I what it XXX in entirely the number, product related So drill that said if -- rebates. you almost down timing on and

of know that you and that you've Are from of actually the some goes you a of out. price product margin expansion with the parse significant kind as me cost reductions within you're Trichlor. neutral the price decrease, year So pretty therefore, help Just that, vendors kind on I like-for-like, by? took actually recovered the cost saying

Michael Egeck

cost bridge about Andrew, different actions from the chem It's other in not chemicals mitigate points. to in and Yes, effectively assortments price the -- the merchandising changes XXX just not we the product were is the headwind able our across price in that with because basis categories.

June So we with results. them we price them. But out an We we're pretty pleased those those in effectively were the because going be lap to to you're correct. into QX until majority call didn't and mitigate ongoing challenge It's yes, of able changes.

W. Andrew Carter

season. an second have, year, question mean, out you didn't I then on adjustment late the your last until skis And make I pricing, got over

the chemical had sitting people had garage. in also added You their with content factor of

unwinded. that's think You

So the the like there? I twice us out is to help message season? Leslie's, out, how long a it of help messaging Just does a a is kind you And of could the core week? into the to come anything us that can mean, out Is consumer get often once it regarding kind with process there, customers? getting if back is you how

Michael Egeck

the On season. about Yes. it's average, Xx

look, not So value. those have we drumbeat also then -- a by it time needs most we of reinforcing our be And should lap it's should account pricing steady our be just -- price changes, all but messaging, our the seen just we base. of to

I in. seeing on always it get and X the what price We'd based And on viewed and position be Promoter one, a we also that for importantly, the we competitive actions been started started to overpriced. to those but that premium decided fair chemicals price a premium think Net at thing we reasons: were to quality is pricing, most driver price. take was the was perception. product to Scores dip not we as That's want feedback encouraging our

good specific on pricing NPS in is the every news been scores month minds, The improving metric our since. that have

pricing when and one think the the talking in it's of from Simeon. we're we we're -- earlier So question reasons about

so in to out to we're feel of digital before, we're a a phrase, the paying intend in get again. definitely we're the your as constantly we've scraping shoppers reasons One about talked -- of good market spot there. across it. we not lot attention got We've skis But We our sites. use of

Operator

next question Our is from with Justin Kleber Baird.

Justin Kleber

It's Justin Kleber.

the just Mike, one, to clarify, comments. First traffic

versus Or the and is that decel which you actual at looking the piece conversion numbers not improvement the bit guess, worse bad, Can figure you something down I a a showed have with me mid-singles. in got missing an transaction there? -- less but number the deck, I just Is if traffic mentioned missing to You transactions, sequentially. am reincile apples-to-apples? help

Michael Egeck

that that at down into traffic for QX September of comparison conversion do comparison. to kind little it of sequential And shopper looking is correctly. starting QX, I it's rate less of into historically. down X% year-over-year a think wind put you're a a in you're have pool out flat. On in. and the And kind same basically peak range, we a On and year-over-year you're conversion I'd coming different bit overall has basis, are the with the basis, down was little to transactions sequential No, to it to -- just season. tend right,

but year-over-year was in conversion that, absolutely a QX, QX, surprised by higher -- or flat. conversion excuse over not -- quarter little So you me, a out what pointed quarter for lower little is but conversion Higher in correct. conversion X, quarter

Justin Kleber

it. Got

then, Scott, And on for a Okay. margin. maybe question you gross

I that XXX XQ. going Just point start through basis positive clawing to weren't adjustment. we thought divot walk inventory really wanted back to until that

any So just color there. additional

envision any color various XQ, XQ, it's buckets to even commentary As we out just on margin relative just about be how playing think if helpful. directional you the that very would

Steven Forbes

a adjustments inventory in We've placed just general. focus very high on

we're at it. so think And getting better I

little So that's it a I why reason bit one better. think was

the had sure we making in spent that time a QX just other I -- lot thing of did think we we is things cleaned up.

lot And the bringing work of done, so inventory there all especially with in-house. was of a

first I in the as think so we quarter. And off had here is well little for bit that a in paying QX rigor us that

look DC of better have than cost slightly see QX costs still when because in compared QX kind with we'll Now margin just QX more I and QX, at on I better large sales. to leverage occupancy part

So with little will I sequentially We have that even year did will be quarter. I than think QX. the some of help that, that. a price still to temper expect increases better that January QX in last But

Operator

conference I today's Mike closing back to turn conclude to session. like remarks. over would will question-and-answer for the This

Michael Egeck

Thank operator, today you and thank interest in your joining you, continued all us for and Leslie's.

Operator

This will conclude today's you. Thank conference.

You may your at participation. lines your you disconnect this and for thank time,

Leslie's (LESL) 1 Feb 242024 Q1 Earnings call transcript