Lauren Englund

Lauren Englund asked for an assessment of the competitive dynamics observed in Q4 and Leslie's competitive positioning for fiscal year 2026. She also sought an overall evaluation of the strategic pillar framework, including key learnings, successes, and areas for improvement, and its implications for fiscal year 2026.

Answer

CEO Jason McDonell described high competitive pricing in Q3 and Q4 due to excess supply, to which Leslie's reacted aggressively, seeing sequential performance improvements. He emphasized the commitment to sharper pricing on key value items for future share gains. Regarding the strategic pillar framework, Jason McDonell highlighted its success in unifying the team, with the biggest opportunity being to win back residential business and build traffic through improved price value.

Lauren Englund, on behalf of Simeon Gutman, asked about the competitive dynamics observed in Q4 and Leslie's competitive positioning for 2026. She also requested an overall assessment of the strategic pillar framework, including key learnings, successes, challenges, and its implications for 2026.

Answer

CEO Jason McDonell described Q4 competitive dynamics as aggressive pricing, carrying over from Q3 due to excess supply, to which Leslie's reacted. He emphasized the need to be sharper on key value items. Regarding the strategic pillar framework, Jason highlighted its unifying effect and the focus on becoming America's one-stop shop for pool care, identifying the biggest opportunity as winning back residential business and building traffic through value investment.

Lauren Englund asked about the company's confidence in achieving the longer-term EBIT dollar growth target of 3-5% as Fuel for Growth initiatives wind down. She also posed a shorter-term question regarding the Sally segment's soft transaction trends, asking how the company is thinking about traffic versus ticket for 2026 and how initiatives are positioned to reignite growth for both.

Answer

Marlo Cormier, Chief Financial Officer, expressed confidence in the longer-term algorithm, attributing it to top-line growth drivers, continued opportunities within the Fuel for Growth program (supply chain optimization, vendor negotiations), and increasing own brand penetration. Denise Paulonis, President and CEO, addressed the Sally segment's transaction trends, noting that Q4 transactions were flat, an improvement from prior pressure on lower-income consumers. She expects all metrics to improve in 2026, with performance marketing, personalization, and LCOD driving transactions, and cross-category shopping, new innovation, and digital strategy fueling basket growth.

Lauren Englund, on behalf of Simeon Goodman, asked about the confidence in achieving the longer-term EBIT dollar growth target of 3-5% after the Fuel for Growth initiatives wind down. She also inquired about the shorter-term outlook for Sally's transactions and traffic in 2026, and the initiatives planned to reignite growth for both metrics.

Answer

Marlo Cormier, CFO, stated that the long-term algorithm is supported by top-line growth and continued opportunities within the Fuel for Growth program, including supply chain optimization, vendor negotiations, and increased own brand penetration, which will become 'muscle memory' for the organization. Denise Paulonis, President and CEO, noted that Sally's Q4 transactions were flat, with sales growth driven by average unit retail (AUR) and ticket, an improvement from prior pressure. For 2026, she expects all metrics to improve, with transaction growth driven by performance marketing, new customer acquisition, personalization, and customer frequency. Basket growth will be fueled by cross-category shopping, new innovation, and the digital strategy.