Leslie’s Reportedly Prepares for Chapter 11 Bankruptcy as Possible Nasdaq Delisting Looms

Leslie’s, Inc. (NASDAQ: LESL) is reportedly preparing to file for Chapter 11 bankruptcy protection as soon as next week, potentially handing control of the 63-year-old retailer to its lenders. The news comes as the company faces the prospect of being delisted from Nasdaq following a prolonged collapse in its share price.

According to September 24 reports from Bloomberg and The Wall Street Journal, Leslie’s is working toward a restructuring agreement that would transfer ownership to its creditors. Lenders are reportedly prepared to provide approximately $100 million in financing to keep the business operating through bankruptcy, while roughly $750 million in debt could be exchanged for equity.

For existing shareholders, the implications could be devastating. If the restructuring proceeds as reported, their investments could be substantially diluted or wiped out entirely.

Leslie’s has not formally announced a bankruptcy filing, but the possibility is hardly unexpected. In its August quarterly SEC filing, the company acknowledged substantial doubt about its ability to continue operating and warned that bankruptcy could become necessary if it was unable to restructure or refinance its debt.

The latest developments suggest that efforts to stabilize the business through store closures, lower prices and aggressive cost-cutting have not been enough to overcome its mounting financial problems.

A Second Trip to Wall Street That Could End in Bankruptcy

This isn’t Leslie’s first time as a publicly traded company.

After previously operating as a public company before being acquired by private equity, Leslie’s returned to Wall Street in October 2020, during an unprecedented boom in swimming pool construction and backyard spending.

With millions of Americans investing in pools, outdoor living and home improvements, the company appeared well positioned for continued growth.

Instead, the years that followed proved considerably more difficult.

As pandemic spending faded, inflation and higher interest rates squeezed household budgets. New-pool construction slowed, consumers became more selective about discretionary purchases, and the extraordinary demand that had fueled the industry began returning to normal.

Leslie’s was also facing growing competition from Walmart, Home Depot, Lowe’s, Amazon and numerous online pool supply retailers. Customers who once relied on their local pool store could now compare prices and purchase many of the same products without leaving home.

The company responded by closing 80 underperforming stores and one distribution center, reducing inventory and introducing lower prices to attract customers.

For a brief period, those efforts appeared to be working.

According to its second-quarter earnings report, revenue increased 4.3%, comparable sales improved 6.6%, and customer counts rose 8% compared with the previous year. Investors cautiously welcomed the improvement, hoping it signaled the beginning of a turnaround.

Unfortunately, that optimism proved short-lived.

Summer Sales Tell a Different Story

Leslie’s third-quarter earnings, released August 12, revealed that the company was still struggling during what should have been its strongest selling season.

Revenue declined 8.4% to $458.5 million, compared with $500.3 million during the same quarter a year earlier. Comparable sales fell 6.2%, while adjusted EBITDA dropped from $81.6 million to $55.7 million.

Gross margins also deteriorated, falling from 39.6% to 36.5%, illustrating the difficulty of maintaining profitability while lowering prices to compete for customers.

For the first nine months of fiscal 2026, Leslie’s reported a net loss of $87.7 million. Management subsequently withdrew its full-year financial guidance as the company explored alternatives to address its debt.

The problem wasn’t simply that Leslie’s was selling fewer pool supplies. It was that declining sales were making an already difficult financial situation considerably worse.

As of July 4, Leslie’s reported approximately $1.21 billion in total liabilities against $722.2 million in assets, including roughly $753 million in long-term debt.

Closing stores and reducing expenses can help preserve cash, but those measures alone cannot resolve a debt burden of that magnitude.

The reported restructuring would effectively exchange much of that debt for ownership of the company, giving Leslie’s an opportunity to continue operating without the same financial obligations hanging over its head.

For its existing shareholders, however, that opportunity could come at a substantial cost.

Nasdaq Delisting Could Be Next

Bankruptcy isn’t Leslie’s only immediate concern. The company also faces the prospect of being removed from Nasdaq, and the timing of its previous reverse stock split could accelerate that process.

Leslie’s completed a 1-for-20 reverse stock split in September 2025, consolidating every 20 existing shares into one in an effort to address its declining stock price. Split-adjusted trading began September 29, but the stock has since fallen back below Nasdaq’s $1 minimum bid-price requirement.

Normally, a company whose closing bid price remains below $1 for 30 consecutive business days receives 180 days to regain compliance. However, Nasdaq’s rules prohibit that grace period for companies that completed a reverse stock split within the preceding year.

Leslie’s reverse split became effective September 26, 2025, making the timing of its latest share-price decline particularly significant.

If Leslie’s has closed below $1 for 30 consecutive business days while that one-year reverse-split restriction remains in effect, it would not be eligible for Nasdaq’s ordinary compliance period. Under Nasdaq’s rules, staff would issue a Staff Delisting Determination rather than provide the usual 180-day period to regain compliance.

The company could request a hearing to appeal such a determination, although an appeal would not guarantee that its shares remain listed.

A Chapter 11 filing would create another potential obstacle. Nasdaq has discretionary authority to delist companies undergoing bankruptcy, particularly when a restructuring could eliminate existing shareholder equity.

As of September 24, a new Nasdaq delisting determination related to the company’s current share-price performance or reported bankruptcy preparations has not been publicly confirmed.

What Bankruptcy Would Mean for the Pool Industry

A Chapter 11 filing wouldn’t necessarily mean Leslie’s is going out of business.

The process allows companies to continue operating while restructuring their debts, renegotiating contracts and developing a plan to emerge from bankruptcy. The reported $100 million in financing could provide the cash necessary to pay employees, purchase inventory and keep stores open while the restructuring moves through court.

For pool owners, the immediate impact may be relatively limited. Leslie’s could continue selling chemicals, equipment and replacement parts while providing the water testing and technical advice that have long been central to its retail business.

For manufacturers and distributors, however, the implications could be considerably greater.

Leslie’s remains one of the industry’s largest retail distribution channels. A bankruptcy could force suppliers to renegotiate payment terms, reconsider credit arrangements and adjust inventory or production plans. Additional store closures could also affect manufacturers that depend heavily on the retailer to get their products in front of consumers.

Independent pool stores and competing retailers could potentially gain customers if Leslie’s reduces its footprint, particularly in markets where the company has historically maintained a strong presence. However, disruptions to supplier relationships and distribution could also create challenges for businesses throughout the industry.

The bigger question is how much of Leslie’s existing business will survive the restructuring. Its nationwide store network, established customer base and professional water testing services still have value, but those advantages haven’t been enough to offset declining sales and the company’s substantial debt.

Can Leslie’s Survive?

For Leslie’s, Chapter 11 could provide an opportunity to address financial problems that store closures and cost-cutting have been unable to resolve. Exchanging debt for equity could substantially reduce its obligations and allow the retailer to continue operating under new ownership.

That doesn’t mean the underlying challenges disappear. Leslie’s would still have to compete with big-box retailers and online sellers, rebuild customer traffic and find a way to operate profitably with a potentially smaller retail footprint.

For existing shareholders, the reported restructuring presents a different situation. If lenders take ownership in exchange for forgiving debt, there may be little or nothing left for current equity holders.

The coming days should provide a clearer picture of the company’s future. A formal bankruptcy filing would reveal the proposed restructuring terms, financing arrangements and any additional changes to its retail operations.

For the thousands of employees, manufacturers and suppliers that depend on Leslie’s, the immediate concern will be whether the company can maintain normal operations while reorganizing its finances.

For a retailer that has served American pool owners since 1963, the next chapter could look considerably different from the business that returned to Wall Street six years ago.