07:20 AM EDT, 06/25/2024 (MT Newswires) -- Pool (POOL) slashed its full-year earnings outlook and expects declining sales to impact second-quarter results as the company sees "persistently weak demand" and sluggish consumer spending.

The swimming pool supplies and equipment distributor now expects per-share earnings to come in the range of $11.04 and $11.44 for 2024 versus prior projections of $13.19 to $14.19, it said late Monday. The consensus on Capital IQ is for GAAP EPS of $11.17. The stock fell 8.6% in premarket activity.

New pool construction is estimated to potentially decline by 15% to 20% for the year after weakness in the second quarter, which passes over the traditional peak of the swimming pool season from late May to early June, Chief Executive Peter Arvan said in a statement. Remodeling activity could fall by as much as 15%, compared with Pool's previous guidance range of flat to a 10% decrease.

Year-to-date sales are trending down 6.5%, compared with the same period last year, with full-year 2024 revenue now expected to be in a similar range, according to the company. Sales of building materials have slid 11% on a yearly basis due to cautious consumer spending on big ticket items, like pools and outdoor living projects. Pool predicted in April for sales and gross margin trends to improve with a return to seasonal buying patterns, as it prepared to enter the swimming pool season.

"With more than 60% of our business derived from recurring revenues and generally not impacted by macroeconomic conditions, we are heavily focused on managing controllable expenses and generating free cash flow," Arvan said. "We remain committed to our ongoing improvements in operational initiatives, increasing productivity and growing share through organic growth."

A decline in sales driven by slowing discretionary spending affecting pool construction and remodeling activities will impact the company's second-quarter results "more significantly," Pool said. The company anticipates EPS of $4.85 to $4.95 for the three-month period ending June 30. The Street is looking for GAAP earnings of $4.90 a share.

"Despite the recent trends dampening discretionary spending, we continue to believe that the desire for swimming pools and outdoor living projects remains strong," Arvan said. "We are confident that the strategic investments in our business position us for growth coming out of this economic cycle."

Price: 303.00, Change: -34.91, Percent Change: -10.33