I feel compelled to respond to the letter by Philip Leslie published June 21. His letter referenced your June 7 article on Leslie's Poolmart, a company purchased from Phil and his partner in 1988. In his letter, Mr. Leslie has mischaracterized, whether knowingly or unwittingly, the performance, status and expressed goals of Leslie's Poolmart. To clarify:
1. Our growth plan does not call for 63 new stores each year. It instead calls for a yearly unit growth rate of 15% to 20%--numbers we have actually met or exceeded over the last four years. At a 20% increase per year, assuming we open 40 stores for 1995, we would have 554 stores open for the year 2000 season.
2. Due to our success and rapid growth, Forbes Magazine recently published an article on Leslie's. Apparently, Phil misread the article. We have not stated to Forbes, or anyone else, that our 500 stores will gross $500 million. We have two sizable non-store businesses, which we have expanded and for which we have substantial additional growth goals. We believe that these will be significant contributors to our overall sales growth.
3. The stated figures on our new store sales are simply inaccurate, which is perhaps not surprising, since these numbers have not been made available to the public. Further, Mr. Leslie's attempted comparison of sales at older, mature stores to brand-new ones is inappropriate and misleading at best. I can tell you that our new store sales each of the last two years have actually exceeded the average performance of new stores over the life of the company!
4. With regard to our earnings and Montgomery Securities' projections thereof, though the company is highly profitable, I am not aware of any Montgomery projection as high as $0.80 to $0.85 at any point in time. The fact is, even after service of very reasonable levels of debt and other acquisition-related costs, we have substantially increased the company's profitability. In fact, it is the high profitability of our stores that led us to our rapid-growth strategy.
5. Finally, Mr. Leslie has been saying since 1988 (and especially during 1989-91, a period of time when he was losing substantial amounts of money trying to compete with us) that we are "overextended" or are in other ways not viable. With long-term debt of $12.8 million, or less than 38% of capital at year-end 1993, Leslie's Poolmart is not "overextended" by any reasonable measure, even after four years of rapid growth and two acquisitions. Leslie's is clearly positioned as the "category killer" in its industry, and we firmly believe that it is capable of continued extraordinary growth in both sales and earnings.
BRIAN P. McDERMOTT
President and CEO