By Marcelle Dibrell
Leslie’s is not going out of business. But the nation’s largest pool retailer is going through bankruptcy to become a substantially smaller company — and when it emerges, its lenders are expected to own it.
Leslie’s filed for Chapter 11 on Sept. 30 after more than a year of cost cutting, store closures, and attempts to restructure its debt outside bankruptcy. The company entered the case with approximately $787 million in funded debt and a total of about $1.21 billion in liabilities against $722 million in assets.
Under the proposed restructuring, roughly 90 percent of the company’s funded debt would be eliminated. Leslie’s would receive $150 million in new capital, and its existing lenders would become the majority owners of the reorganized company. The company expects to emerge from Chapter 11 in early 2027.
At the same time, Leslie’s announced the closure of 76 stores in the first wave of its restructuring. The stores closed Sept. 29, and the company said it expected to vacate them within two weeks. The company is continuing to evaluate its remaining real estate and has said the bankrupt-
To Pool Service Professionals, Leslie’s says any outstanding orders will continue to be processed and the PRO portal will remain in effect. cy process could ultimately result in as many as 200 fewer stores.
For professional customers, Leslie’s says the business will continue operating during the restructuring. Outstanding orders will continue to be processed, the PRO Portal will remain operational, and existing PRO pricing and account terms will remain in effect. The company also says it intends to pay vendors for authorized goods and services provided after the filing in the ordinary course.
“Leslie’s is here to stay,” CEO Jason McDonnell said when announcing the restructuring.
So how did Leslie’s get to this point?
According to a Sept. 30 declaration filed with the bankruptcy court by CFO Jeff White, Leslie’s began struggling as the extraordinary pandemic- era boom in pool and spa spending faded.
“Beginning in 2023, the U.S. pool and spa care industry experienced a pronounced contraction driven by several macroeconomic and industry- specific factors,” White wrote.
The company cited inflation in chemicals, energy, and transportation; higher interest rates and reduced discretionary spending; unfavorable weather; and stronger competition from big-box and online retailers. Those pressures reduced store traffic, limited pricing power, and squeezed profitability.
The numbers show how sharply the business changed.
Leslie’s generated approximately $1.56 billion in sales in fiscal 2022. By fiscal 2025, sales had fallen to about $1.24 billion.
Even more telling was the decline in operating profitability. EBITDA — Earnings Before Interest, Taxes, Depreciation and Amortization — fell from approximately $270 million in the third quarter of fiscal 2021 to $40 million in the first quarter of fiscal 2026.
On an annual basis, adjusted EBITDA fell from approximately $292 million in fiscal 2022 to approximately $61 million in fiscal 2025.
In other words, Leslie’s was selling less, but the bigger problem was how much less money the business was generating from those sales.
As its sales and profitability declined, the company began cutting back.
Beginning in October 2024, Leslie’s reduced its corporate workforce, closed underperforming stores, renegotiated vendor contracts, reduced inventory and capital expenditures, and changed pricing and promotional programs.
In November 2025, it announced plans to close approximately 80 stores and one distribution center. Those closures were substantially completed by January 2026.
The cuts were not enough. Leslie’s began working with its lenders and financial advisers around August 2025 to find a way to deal with its debt without filing for bankruptcy.
The company sought additional financing and more time to repay its existing loans. Those discussions continued for roughly 14 months as Leslie’s pursued an out-of-court solution.
But the company's financial performance continued to weaken, and its lenders ultimately were unwilling to provide more time on the existing debt.
By the time Leslie’s filed Chapter 11, approximately $757 million was outstanding under its term loan and another $30 million had been drawn under its asset-based lending facility.
That $787 million is the key debt figure in the bankruptcy case. It is not the same as Leslie’s total liabilities: the company owed about $1.21 billion overall, including obligations beyond those two borrowing facilities.
In May, Leslie’s reported fiscal second-quarter sales up 4.3 percent, comparable sales up 6.6 percent, and customer traffic up 8 percent. The company said its strategic initiatives were beginning to work and reiterated its full-year outlook.
Then the 2026 summer selling season failed to deliver.
For the fiscal third quarter ended July 4, sales fell 8.4 percent to $458.5 million, while comparable sales fell 6.2 percent. The company withdrew its full-year sales and adjusted EBITDA guidance and did not replace it with a new forecast.
For the first nine months of fiscal 2026, sales were $790.4 million, down 7.3 percent. Comparable sales were down 5.5 percent.
Adjusted EBITDA went from a $16.2 million profit in the comparable period a year earlier to an $11.4 million loss.
The company's actual net loss for the nine-month period was $87.7 million.
The deterioration came at an especially difficult point in the company's annual cycle.
Leslie's business is highly seasonal. The company generates its strongest sales during the pool season, but it must buy inventory and incur other costs before that season begins.
White told the bankruptcy court that the company was projected to have $81 million in negative free cash flow during the first 13 weeks of the Chapter 11 cases.
“The Debtors’ sales are at the lowest point of the year and the need to build inventory for the next pool season is greatest,” White wrote.
Leslie’s estimated that it needed approximately $30 million to $40 million in minimum cash to operate normally. White said the company entered bankruptcy with “considerably less cash than the minimum required.”
The restructuring agreement is supported by lenders holding approximately 81 percent of Leslie’s term-loan debt.
The agreement provides $90 million in new-money debtor-in-possession financing to fund the company during bankruptcy, plus $60 million in equity financing. Leslie’s also has access to a $225 million asset-based lending facility.
The new financing is intended to keep Leslie’s operating while the restructuring takes place; the debt reduction is intended to leave the company with a balance sheet it can actually support after bankruptcy.
If the plan proceeds as proposed, existing lenders will exchange much of their current debt position for ownership of the reorganized company.
The retail footprint will also be smaller.
The first wave of 76 closures includes 26 stores in California, along with locations in Florida, Texas, and 15 other states. The full list is contained in the bankruptcy filings. The company says it will continue evaluating its remaining leases, leaving open the possibility of additional closures. You can find a comprehensive list of closed stores by visiting www. serviceindustrynews.net.
For the pool industry, the implications extend well beyond the storefronts.
Leslie’s says chemicals account for approximately half of its sales, while equipment and parts account for another 40 percent. The company also operates proprietary chemical manufacturing, e-commerce businesses, Horizon Spa & Pool Parts, and a field-service operation with more than 200 technicians.
As of July 4, Leslie’s operated 943 company-owned locations in 38 states, in addition to its digital businesses.
The company that emerges from Chapter 11 will therefore still be a major force in pool and spa distribution. It will simply be carrying far less debt, operating fewer stores, and answering to a very different ownership group. Leslie’s is going bankrupt. It is not going away.
