Release Date: November 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Jason, which strategic theme do you think will make the largest impact in the near to medium term? A: Asset utilization is expected to have the largest impact. It focuses on optimization and improving same-store sales. Leslie's proximity advantage and supply chain can be leveraged to deliver on customer needs. Additionally, there's an opportunity to optimize inventory through precision inventory management.
Q: Why is there relative strength in the PRO business compared to the rest of the business? A: The PRO business has seen success due to targeted promotional activities like flash sales and an increase in PRO partners, which are up 14% from last year. Competitive pricing has also been a focus, as PROs are price-sensitive and require competitive pricing to shop at Leslie's.
Q: Can you break down the negative 8.3% comps for the quarter between ticket and traffic? A: The decline was driven more by traffic. Initiatives are focused on driving top-line growth and leveraging competitive advantages in stores and other channels to improve traffic.
Q: What strategies are being considered to improve gross margins, and is there a focus on cost takeout or top-line improvement? A: The focus is more on top-line improvement. While there is room for marginal improvements in DC operations and inventory adjustments, the primary goal is to drive top-line growth to leverage fixed costs.
Q: Can you provide additional color on the $5 million contractual gross margin headwind? A: The headwind was due to a renegotiated supplier contract that involved taking on warranty responsibilities in exchange for higher volume-based rebates. The contract has been revised to eliminate this issue going forward.
Q: How do you plan to address potential reinvestment needs to build awareness and improve retail fundamentals? A: The focus is on defining key messaging and communication to drive traffic, leveraging competitive advantages, and reallocating current marketing spending to drive efficiency and performance.
Q: With the focus on debt paydown, how does this affect long-term unit growth outlook? A: The near-term priority is debt reduction, but there are still opportunities for future growth through store builds and M&A once comfortable with debt levels. The focus is on improving core profitability and top-line growth before reengaging in expansion.
Q: How do you view the opportunity in e-commerce, and is there incremental growth potential? A: The opportunity lies in taking an omnichannel approach, integrating digital and brick-and-mortar operations to best serve customers. The Leslie's proprietary site has shown positive results, and there are synergies to leverage further.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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