Leslie’s Poolmart top executives (left to right) Steve Ortega, Larry Hayward and Mike Hatch.

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Leslie’s Poolmart Zodiac Pool Systems Inc.

Maintaining its position as the top specialty retailer of swimming pool supplies and related products in the United States during one of the rockiest times in the economy isn’t something that Leslie’s Poolmart Inc. takes lightly. In fact, the Phoenix-based company’s growth plan is focused on expanding into new markets and growing its store and online clientele while continuing to build and satisfy relationships with its existing and new consumers.

By sticking with a business model that helped launch the company’s success – providing a wide selection of inventory and building internal systems to better service customers – Leslie’s Poolmart has been able to achieve its goals of growing the business to be the only coast-to-coast, border-to-border full-line retailer of swimming pool related products.

“Our goal has never been to be the biggest, but rather, the best supplier,” CEO and chairman Larry Hayward says. “That comes with an underlying tone – which means we have to be the best in service and selection, and we want to offer the best value in the marketplace. People are looking for value and solutions to their problems. When they come into our stores, we make sure we are giving them the best value possible.”

Leslie’s markets its products under the trade name Leslie’s Swimming Pool Supplies through 620 company-owned retail stores in 35 states, mail order catalogs sent to selected pool owners nationwide and an online store. “We are adding about 30 new stores annually and we will continue to build and add several new commercial service centers this year,” says executive vice president and CFO Steve Ortega. “We have an ongoing capital improvement prog­ram and we recently completed 50 major remodels to keep our stores up to date.”

Historically, Leslie’s strategy has been to focus primarily on the residential in-ground and above-ground pool and spa owner, marketing its products primarily to the “do-it-yourself” market as opposed to those pool owners who hire pool services. “Because of the economic downturn, we have seen more and more customers converting from using a weekly third-party pool service to a do-it-yourself mentality,” Hayward says.

Not only is the company a retailer, it’s a knowledge center for customers to learn how to properly maintain their pool. Un­der the direction of Leslie’s certified and knowledgeable staff or through its online “how-to” section, Leslie’s gives its customers the tools to solve any pool problem. “We have worked hard to educate our customers on the programs we have in place and we have seen the dynamics of this during the past 24 months,” Hayward asserts.

In recent years, however, the firm has expanded its activities to more aggressively address the commercial and service markets, as well. Through its 20 commercial service stores, products and services are offered to commercial property managers and pool contractors, as well as to pool service companies, which maintain either residential or commercial pools. In addition, the company supplies to major hotel chains and community pool centers, such as the YMCA.

“No other retailer is positioned with brick and mortar, coast-to-coast and border-to-border in the commercial swimming pool business like we are,” Hayward maintains. “We are getting better at our commercial service business. It’s a $1.5 billion business for consumables and we really decided to make a commitment to this about five years ago. We think we have growth opportunities in all of these channels, even in a time when the retail industry is being significantly impacted by the economy. We can continue to add new stores and grow our retail store base, while adding market share from the grow­th in our commercial business and the Web. These are our fastest-growing segments in terms of percentage of sales.”

Strong Supplier
Leslie’s offers a comprehensive selection of products necessary to satisfy its clients swimming pool supply needs. Non-discretionary items, such as chemicals, equipment and cleaning accessories and parts represent about 85 percent of the company’s business, although it also sells fitness and recreational items.

Mike Hatch, the company’s president and COO adds “our retail stores stock a robust assortment of chemicals, equipment and supplies, complem­en­ted by more than 30,000 additional items available through its other channels of distribution and special order processes.”

In 2009, approximately 800 items were available in the company’s resi­dential mail order catalogs, approximately 2,400 items were offered through the company’s Web store and 1,200 items were in the commercial catalog, although special order procedures make nearly all of Leslie’s products available to these customers. Leslie’s brand-name products accounted for 53 percent of the company’s total sales last year.

Because of its size and capacity, Leslie’s can obtain favorable pricing on its purchases from outside suppliers. Most raw materials and those products not repackaged by the company are purchased directly from manufacturers. “We are writing some of the largest purchase orders in the industry, and we buy large volumes, so we can efficiently package product and ship it,” Hatch says.

The company’s principal chemical raw materials and granular chlorine compounds are purchased primarily from stable and nationally recognized suppliers. The company attributes much of its success to the strong relationships with its manufacturers and vendors.

“We work really hard to build a good rela­tionship with our vendors,” Hatch notes. “We are essentially partners, so we try to build solid long-term relationships with them, with mutual benefits.”

Vertical Integration
Leslie’s operates plants in Ontario, Calif., and Covington, Ky., where it converts dry granular chlorine into tablet form and re­packages a variety of bulk chemicals into various-sized containers for retail sales. It also formulates a variety of specialty liquids, including water clarifiers, tile cleaners, algaecides and stain preventives. Hayward believes that supplying its stores with chemicals from its own repackaging plant provides it with cost savings, as well as greater control over product availability and quality, as compared to non-integrated pool supply retailers. This also offers the company greater flexibility of product sourcing and vital information on product cost.

“We are one of the only retailers of swimming pool supplies that manufacturers and self-distributes its product,” Hayward notes. “This allows us to offer greater value to our customers.”

Along with its four modern distribution centers outside of California, Leslie’s has expanded its supply chain and control of the acquisition and distribution of products for its retail stores. It continually evaluates the cost effectiveness of third-party sourcing vs. internal distribution to minimize its cost of goods.

All pro­ducts are distributed to its retail stores and to its catalog customers through these distribution facilities in On­tario; Dallas; Swedesboro, N.J.; Coving­ton; and Orlando, Fla. Leslie’s also invested in a warehouse management system, which ensures the right product is in the right place at the right time.