What Happened?
Shares of pool products retailer Leslie’s (NASDAQ: LESL) fell 17.2% in the morning session after the company reported third-quarter 2025 results that featured a massive earnings miss and weak forward guidance.
While revenue of $389.2 million beat analysts' expectations, it still represented a 2.2% decline from the same quarter last year. The bigger story was the company's profitability, as its adjusted earnings per share of $0.09 missed Wall Street's consensus by a staggering 93.1%. Furthermore, guidance was disappointing, with the full-year revenue forecast coming in 4.4% below estimates and the EBITDA forecast for the upcoming financial year also missing expectations. A 6.5% drop in same-store sales underscored weakening consumer demand, painting a challenging picture for the retailer.
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What Is The Market Telling Us
Leslie’s shares are extremely volatile and have had 88 moves greater than 5% over the last year. But moves this big are rare even for Leslie's and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 12 days ago when the stock gained 7.3% on the news that comments from a key Federal Reserve official boosted investor optimism for a potential interest rate cut. New York Federal Reserve President John Williams, a voting member of the rate-setting committee, suggested he sees room for "further policy easing," which sent a strong signal to the markets. Following his remarks, the probability of a December rate cut, as measured by the CME FedWatch Tool, surged from 39% to 71%. Lower interest rates can stimulate the economy by making borrowing cheaper for both consumers and businesses, which often translates to increased consumer spending. This prospect is outweighing recent reports of lower consumer confidence, as investors bet that a more accommodative Fed policy will support retailers through the holiday season.
Leslie's is down 93.2% since the beginning of the year, and at $3.09 per share, it is trading 94.2% below its 52-week high of $53 from December 2024. Investors who bought $1,000 worth of Leslie’s shares 5 years ago would now be looking at an investment worth $7.50.
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