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Investing.com -- Moody’s Ratings has downgraded Leslie’s Poolmart, Inc.’s corporate family rating (CFR) to Caa3 from Caa1 and changed the outlook to negative from stable on Wednesday.
The rating agency also lowered the company’s probability of default rating to Caa3-PD from B3-PD and downgraded its senior secured term loan rating to Ca from Caa1, while maintaining the speculative grade liquidity rating at SGL-3.
The downgrades reflect a significant deterioration in Leslie’s financial performance, driven by declining store traffic and weak demand for pool products. For the twelve months ended June 28, 2025, the company’s funded debt to EBITDA ratio exceeded 19x, compared to 7.4x in the previous year.
In its third quarter, Leslie’s reported comparable store sales down 12% as consumers reduced spending, price competition intensified, and unfavorable weather conditions affected the start of the peak summer season. The company’s EBITDA fell to $40 million for the last twelve months ended Q3 2025, down from $90 million in fiscal 2024.
Moody’s expects Leslie’s EBIT to interest ratio to remain well below 1x and its debt levels to stay unsustainably high over the next twelve months. The negative outlook indicates that continued weakness in financial performance could lead to lower expected recoveries and a higher risk of restructuring.
Despite these challenges, Leslie’s has reduced its inventory position by 12% in Q3 2025 and expects to decrease it by over $20 million by fiscal year end. The company maintains adequate liquidity with $43 million in cash as of June 28, 2025, and an undrawn $250 million asset-based revolving credit facility.
Leslie’s maintains a solid position in the pool and spa maintenance products market, serving residential, professional, and commercial consumers, though it faces fierce price competition from larger retailers.
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