Key Highlights

  • Leslie's announced a prepackaged Chapter 11 plan on September 30, 2026.
  • Existing common shares are expected to be canceled without consideration on the plan's effective date.
  • About $685 million of funded debt, roughly 90%, would be eliminated.
  • The company will close 76 stores and targets emergence in early 2027.

Leslie's, Inc. (OTC:LESLQ) has told investors that its existing common shares are expected to be canceled without consideration when its prepackaged Chapter 11 plan takes effect. The pool-supplies retailer announced the plan on September 30, 2026 after a restructuring support agreement with lenders, and Nasdaq trading in the shares was scheduled to be suspended at the opening on October 6. The sequence shows how quickly a leveraged retailer can move from withdrawn guidance to court protection.

Business and latest results

Leslie's sells pool supplies through stores and online. In the results for the fiscal third quarter ended July 4, 2026, released on August 12, 2026, net sales were $458.5 million, down 8.4% from $500.3 million, and comparable sales fell 6.2%. Gross margin slipped to 36.5% from 39.6%, and adjusted EBITDA was $55.7 million, against $81.6 million.

Net income was $47.8 million, helped by a $17.5 million legal settlement gain and against $21.7 million a year earlier; for the nine months the net loss was $87.7 million, and nine-month sales were down 7.3%. Adjusted net income was $37.8 million.

The balance sheet explains the pressure. At the quarter end, long-term debt (net) was $753.4 million, the revolving credit facility balance was $30.0 million and the stockholders' deficit was $492.7 million. Total liquidity was $207.1 million, including $45.9 million of cash. In May the company had reiterated fiscal 2026 guidance of $1,100 million to $1,250 million in sales and $55 million to $75 million in adjusted EBITDA; in August it withdrew that outlook. Chief executive Jason McDonell said the company had begun exploring strategic alternatives with certain financial stakeholders, which might include a deleveraging transaction, and that it had meaningful liquidity.

The restructuring terms

The restructuring terms were reported on September 30. Under the prearranged plan, backed by more than 80% of existing lenders, about $685 million of funded debt, roughly 90%, would be eliminated. The financing includes $90 million of new-money debtor-in-possession funding and $60 million of equity financing that supporting parties backstop, plus a $225 million asset-based DIP facility that needs court approval. Leslie's will close 76 stores, expects the remaining stores and digital channels to operate normally, and is targeting emergence in early 2027. Existing lenders are expected to become majority owners.

The equity position is the sharpest point. A market report on the Nasdaq action says shares are expected to be canceled without consideration on the plan's effective date. It also says Nasdaq notified the company on September 25 that its shares faced delisting after the closing bid price stayed below $1.00 for 30 consecutive business days. The company said it would not appeal and expects its shares to move to an over-the-counter market, with no assurance of an active or liquid market.

Court Approvals, Plan Timetable and the Road to Early 2027

The going-concern language differs between documents. One summary of the August 10-Q describes going-concern doubt, whereas the earnings release lists the ability to continue as a going concern only among forward-looking risks.

Court dockets should show approval of the DIP financing and the plan confirmation timetable, along with any change to the plan's treatment of shareholders. Company filings should confirm where, and under what ticker, the shares trade after the Nasdaq suspension. Management has pointed to early 2027 for exit; delays, creditor objections, weak demand and store-closure costs are the main risks.