After 80 stores close, 63-year-old chain gives Chapter 11 warning

When a retailer sells a product people no longer want or need at the same level they once did, it becomes challenging for that retailer to operate.

Yes, you can cut expenses and close stores, but if customers aren’t buying, no amount of frugality will keep the doors open.

That’s a challenge facing any chain serving the luxury market, as Americans have cut back on discretionary spending. Luxury shoppers’ optimism about the economy continues to decline, driven by global financial uncertainty and market volatility, according to the latest Saks Global Luxury Pulse survey.

“The survey, conducted between April 24 and April 28, found that only 28% of respondents reported feeling optimistic about the economy. That represents a 13 percentage point decline since the prior survey fielded in January, and a decline of 17 percentage points compared to last year,” according to the report.

It’s bad news for Leslie’s Pool Supply. The company closed 80 locations in March, but it hasn’t been enough to stem the bleeding. Now, the retailer faces a possible Chapter 11 filing, according to a report from Bloomberg.

Leslie’s Pool Supply reported positive Q2 results

When Leslie’s reported second-quarter earnings in May, the company seemed to have turned the corner.

“Compared to last year, in the second quarter, we delivered overall revenue growth of 4.3%, a comparable sales increase of 6.6%, improved year-over-year adjusted EBITDA by 26% and registered total customer count growth of 8%,” shared CEO Jason McDonell.

Those numbers followed the chain making a number of cuts during the first quarter.

Leslie’s announced the closure of approximately 80 underperforming stores as part of a cost-reduction and operational restructuring plan during Q1 fiscal 2026, according to its Q1 earnings release.

The company also closed one distribution center (Illinois) to streamline its supply chain and reduce expenses, which it also included in its Q1 filings.

Leslie’s recorded approximately $10.1 million in non-cash impairment charges related to store and asset closures, the company reported.

For Q1 fiscal 2026, Leslie’s reported a net loss of about $83 million and sales down roughly 16% year over year, citing weak demand and margin pressure, it shared in SEC filings.

The chain, which has moved more of its sales to a digital model after closing the stores mentioned above, also cut its loss from the first quarter.

“Net loss for the second quarter was $52.5 million compared with a net loss of $51.3 million in the second quarter of the prior year. Adjusted net loss in the second quarter was $50 million compared with an adjusted net loss of $48.3 million in the second quarter of the prior year,” according to CFO Jeffrey White.

Leslie’s Pool Supply faces bankruptcy

Leslie’s executives did not mention a potential Chapter 11 filing during the earnings call.

Bloomberg’s report, which cites unnamed “people familiar with the matter,” said Leslie’s is looking at “a range of strategic options” to address its debt load, including restructuring its debt through Chapter 11.

In addition, Bloomberg reported, Leslie’s has a $756 million term loan due in 2028 that is being quoted at about 39 cents on the dollar.

While Leslie’s is reportedly talking about Chapter 11, Bloomberg’s sources stated that the discussions are “ongoing” and that “no final decision has been made.”

“Leslie’s reportedly brought on Centerview Partners LLC and Simpson Thacher & Bartlett to advise the company through the debt negotiations. A group of creditors hired Houlihan Lokey and Akin Gump Strauss Hauer & Feld,” according to Phoenix Business Journal.

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Leslie’s Pools has struggled financially

Leslie’s Pools has faced recent financial challenges with its stock listing.

“The company’s stock performance has been under pressure throughout 2025, culminating in its removal from the S&P SmallCap 600 index earlier this year,” Pool Magazine, a leading publication covering the pool industry, shared.

This isn’t the only sign that investors have lost confidence in the company.

“Being part of the S&P SmallCap 600 gives a company visibility, provides passive fund support, and signals investor confidence. Losing that standing means Leslie’s no longer met benchmarks for market cap and liquidity — a clear sign the stock has struggled to maintain momentum,” the magazine added.

S&P Global Ratings has downgraded the issuer credit rating of U.S. specialty pool supply retailer Leslie’s Poolmart Inc. from “B” to “B-” due to weaker-than-expected business prospects for fiscal 2025, according to Investing.com.

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This story was originally published by TheStreet on Jul 26, 2026, where it first appeared in the Retail section. Add TheStreet as a Preferred Source by clicking here.