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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

For the Quarterly Period Ended April 3, 2010

or

For the transition period from             to            

Commission File Number 0-18741

LESLIE’S POOLMART, INC.

(Exact name of registrant as specified in its charter)

3925 E. Broadway Road

Phoenix, Arizona 85040

(Address of principal executive offices)

Registrant’s telephone number, including area code: (602) 366-3999

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ¨    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller business reporting company. See definition of “accelerated filer”, “large accelerated filer,” and “smaller business reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)    Yes  ¨    No  x

The number of shares of common stock outstanding as of May 11, 2010 was 100.

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LESLIE’S POOLMART, INC.

AND SUBSIDIARIES

(A Wholly-Owned Subsidiary of Leslie’s Holdings, Inc.)

FORM 10-Q

For the Quarterly Period Ended April 3, 2010

INDEX

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PART I. FINANCIAL INFORMATION

Leslie’s Poolmart, Inc.

(A Wholly-Owned Subsidiary of Leslie’s Holdings, Inc.)

Consolidated Balance Sheets

(Amounts in thousands, except share information)

See accompanying notes to consolidated financial statements.

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Leslie’s Poolmart, Inc.

Consolidated Statements of Operations (unaudited)

(A Wholly-Owned Subsidiary of Leslie’s Holdings, Inc.)

(Amounts in thousands)

See accompanying notes to consolidated financial statements

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Leslie’s Poolmart, Inc.

Consolidated Statements of Cash Flows (unaudited)

(A Wholly-Owned Subsidiary of Leslie’s Holdings, Inc.)

(Amounts in thousands)

See accompanying notes to consolidated financial statements.

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Leslie’s Poolmart, Inc.

(A Wholly-Owned Subsidiary of Leslie’s Holdings, Inc.)

Notes to Consolidated Financial Statements (unaudited)

(1) Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in conformity with United States generally accepted accounting principles applicable to interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the 13-week and 26-week period ended April 3, 2010 are not necessarily indicative of the results that may be expected for the 52-week year ending October 2, 2010.

The balance sheet at October 3, 2009 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

For further information, refer to the Consolidated Financial Statements and Notes thereto included in Leslie’s Poolmart, Inc.’s Annual Report on Form 10-K for the year ended October 3, 2009.

(2) Organization and Operation

Leslie’s Poolmart, Inc., which is sometimes referred to as the “Company” or “Leslie’s” in this report, is a specialty retailer of swimming pool supplies and related products. The Company markets its products under the trade name Leslie’s Swimming Pool Supplies through 638 stores in 35 states, a nationwide mail order catalog and web store. The Company also operates five distribution facilities and repackages certain bulk chemical products for retail sale. The Company’s business is highly seasonal as the majority of its sales and all of its operating profits are generated in the third and fourth fiscal quarters.

In February 2007 the Company became a subsidiary of Leslie’s Holdings, Inc. (“Holdings”) pursuant to a tax-free reorganization in which the Company’s shareholders became shareholders of Holdings in the same proportions.

(3) Stock-based Compensation

The Company may grant stock options for a fixed number of shares of Holdings to the Company’s employees and directors with an exercise price equal to the fair market value of the shares at the date of grant. In 2007, the Company adopted the authoritative accounting guidance related to new awards and to awards modified, repurchased or cancelled after September 29, 2007. Awards granted are valued at fair value and recognized on a straight line basis over the service periods of each award. Compensation cost for the unvested portion of awards outstanding is recognized as the requisite service is rendered.

At April 3, 2010, 1.3 million options were outstanding and 239,100 of the options were vested or exercisable. 5,000 options were cancelled during the 26-week period ended April 3, 2010.

Share-based compensation expense recognized during the 13-week and 26-week periods ended April 3, 2010 was approximately $0.05 million and $0.13 million. As of April 3, 2010, total unrecognized compensation cost related to stock-based options and awards was $1.2 million and the related weighted-average period over which it is expected to be recognized is approximately 3.7 years. The weighted average fair value of stock option awards granted was $1.17 and the key weighted average assumptions used in the Black-Scholes valuation model to calculate the fair value are as follows: a risk free interest rate of 2.73%; an expected life of the options of 5 years; an expected stock price volatility of 46.0% and an expected dividend yield of 0%. The Black-Scholes option valuation model is used to estimate the fair value of traded options. In addition, option valuation models require the input of highly subjective assumptions, including the expected stock price volatility. Because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options. The risk-free interest rate is based on the U.S. Treasury security rate in effect as of the date of grant. The expected lives of options are based on historical data of the Company. The Company calculated expected volatility based on historical volatility.

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(4) Taxation of the Company and Holdings

The Company and its subsidiaries are included in the consolidated Federal income tax return and certain state income tax returns of Holdings. The Company’s financial statements recognize the current and deferred income tax consequences that result from the Company’s activities during the current and preceding periods, as if the Company were a separate taxpayer rather than a member of Holding’s consolidated income tax return group. This policy requires us to pay our tax liabilities to Holdings in cash, based upon separate return taxable income.

(5) Income Taxes

Income tax benefit was $8.5 million and $9.5 million for the 26-week periods ended April 3, 2010 and March 28, 2009. The Company’s consolidated effective tax rate for the 26-week period ended April 3, 2010 was 39.4%.

The gross amount of unrecognized tax benefits at April 3, 2010 was $0.2 million. The gross amount of unrecognized tax benefits as a result of tax positions taken during prior years did not change during the 26-weeks ended April 3, 2010. The total amount of the unrecognized tax benefits that, if recognized, would affect the effective rate is $0.2 million as of April 3, 2010. The Company had approximately $30,000 for payment of accrued interest and penalties at April 3, 2010 and March 28, 2009.

As of April 3, 2010, all of the federal income tax returns filed since 2008 are still subject to adjustment upon audit. The Company also files income tax returns in many states, and these returns remain open for adjustments to its federal income tax returns. In addition, certain state income tax returns filed within the past four years are still open for state specific adjustments.

(6) Inventories

Inventories consist of the following:

(7) Recently Issued Accounting Pronouncements

In January 2010, the FASB issued guidance that requires reporting entities to make new disclosures about recurring or nonrecurring fair-value measurements including significant transfers into and out of Level 1 and Level 2 fair value measurements and information on purchases, sales, issuances, and settlements on a gross basis in the reconciliation of Level 3 fair value measurements. The guidance is effective for interim and annual reporting periods beginning after December 15, 2009, except for Level 3 reconciliation disclosures that are effective for annual periods beginning after December 15, 2010 and for interim periods within those annual periods. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. Certain information included in this document (as well as information included in oral statements or other written statements made or to be made by the Company) contains statements that are forward-looking, such as statements relating to plans for future activities. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ from those expressed in any forward-looking statements made by or on behalf of the Company. These risks and uncertainties include, but are not limited to, those relating to domestic economic conditions, activities of competitors, seasonal effects, changes in federal or state tax laws and of the administration of such laws and the general condition of the economy.

This discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with its unaudited consolidated financial statements and disclosures included elsewhere in this report and Management’s Discussion and Analysis of Financial Condition and Results of Operations included as part of the Company’s Annual Report on Form 10-K for the year ended October 3, 2009.

General

Leslie’s Poolmart, Inc. (the “Company” or “Leslie’s”) is the leading specialty retailer of swimming pool supplies and related products in the United States. The Company markets its products through 638 Company-owned stores in 35 states; a nationwide mail order catalog; and the Internet. Leslie’s is vertically integrated, operating a chemical repackaging facility in Ontario, California and a specialty chemical repackaging facility in Hebron, Kentucky. The Company supplies its retail stores from distribution facilities located in Ontario, California; Dallas, Texas; Swedesboro, New Jersey; Hebron, Kentucky; and Orlando, Florida.

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The Company was incorporated as a Delaware corporation in 1997 and became a wholly-owned subsidiary of Leslie’s Holdings Inc. in February 2007 through a reorganization. The Company’s principal executive offices are located at 3925 E. Broadway Road, Suite 100, Phoenix, Arizona 85040, and the telephone number at that address is (602) 366-3999. Leslie’s corporate website address is www.lesliespool.com.

Seasonality and Quarterly Fluctuations

The Company’s business exhibits substantial seasonality, which the Company believes is typical of the swimming pool supply industry. In general, sales and net income are highest during the quarters that end in June and September which represent the peak months of swimming pool use. Sales are substantially lower during the quarters that end in December and March when the Company typically incurs net losses. The principal external factor affecting the Company’s business is weather. Hot weather and the higher frequency of pool usage in such weather create a need for more pool chemicals and supplies. Unseasonably early or late warming trends can increase or decrease the length of the pool season. In addition, unseasonably cool weather and/or extraordinary amounts of rainfall in the peak season will tend to decrease swimming pool use. The likelihood that unusual weather patterns will severely impact the Company’s results is lessened by the geographical diversification of the Company’s store locations.

The Company also expects that its quarterly results of operations will fluctuate depending on the timing and amount of revenue contributed by new stores and, to a lesser degree, the timing of costs associated with the opening of new stores. The Company attempts to open its new stores primarily in the quarter ending March in order to position itself for the following peak season.

Results of Operations

Net Sales. Net sales for the 13 weeks ended April 3, 2010 were $62.6 million compared to $57.0 million for the 13 weeks ended March 28, 2009. The 9.8 % increase was primarily due to sales generated from new store openings. During the quarter ended April 3, 2010, the Company opened 18 new stores and closed no stores.

Comparable store sales for the 13 weeks ended April 3, 2010 decreased 3.4% as compared to the 13 weeks ended March 28, 2009. Comparable store sales were calculated using comparable calendar weeks in both 2010 and 2009. The calendar weeks used to calculate comparable store sales did not align with the fiscal quarters in 2010 and 2009 because of the 53rd week in fiscal 2009. Accordingly, changes in comparable store sales may not be consistent with changes in net sales reported for the fiscal quarter. The comparable store sales decrease was primarily due to unfavorable weather conditions during January and February of 2010.

Net sales for the 26 weeks ended April 3, 2010 were $119.9 million compared to $117.3 million for the 26 weeks ended March 28, 2009. The 2.3% increase was primarily due to the 18 additional new stores which were operated during the 26-week period ended April 3, 2010. Comparable store sales for the 26 weeks ended April 3, 2010 were flat as compared to the 26 weeks ended March 28, 2009. Comparable store sales were calculated using comparable calendar weeks in both 2010 and 2009. The calendar weeks used to calculate comparable store sales did not align with the fiscal quarters in 2010 and 2009 because of the 53rd week in fiscal 2009. Accordingly, changes in comparable store sales may not be consistent with changes in net sales reported for the first half of the fiscal year. The comparable store sales decrease was primarily due to unfavorable weather conditions during the first two months of 2010. The Company considers a store to be comparable in the first full month after it has completed 52 weeks of sales. Closed stores become non-comparable during their last partial month of operation. Stores that are relocated are considered comparable stores at the time the relocation is completed

Comparable store sales is not a recognized measure of financial performance under accounting principles generally accepted in the United States (“GAAP”). Comparable store sales is not calculated in the same manner by all companies and accordingly is not necessarily comparable to similarly entitled measures of other companies and may not be an appropriate measure for performance relative to other companies.

Gross Profit. Gross profit for the 13 weeks ended April 3, 2010 was $19.2 million compared to $17.1 million for the 13 weeks ended March 28, 2009. As a percentage of sales, gross profit was 30.7% for the second quarter of fiscal 2010 compared to 30.0% for the second quarter of fiscal 2009. For the 26 weeks ended April 3, 2010, gross profit was $34.4 million compared to $32.7 million for the 26 weeks ended March 28, 2009. As a percentage of sales, gross profit for the 26 weeks ended April 3, 2010 was 28.7% compared to 27.8% for the 26 weeks ended March 28, 2009. Gross profit dollars improved primarily due to the recognition of vendor promotional rebates during the quarter and improved efficiencies in manufacturing and distribution.

Selling, General and Administrative Expense. Selling, general and administrative expense for the 13 weeks ended April 3, 2010, was $25.4 million compared to $23.8 million for the 13 weeks ended March 28, 2009. Operating expense dollars increased during the second quarter of 2010 due primarily to increases in occupancy and other related costs associated with the increased store count, as compared to the second quarter of 2009. For the 26 weeks ended April 3, 2010, operating expenses were $48.6 million, as compared to $47.1 million in the prior year with the increases primarily related to expenses related to the increased store count.

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Operating loss. Operating loss decreased from $6.9 million during the 13 weeks ended March 28, 2009 to $6.4 million for the 13 weeks ended April 3, 2010. The operating loss for the 26 weeks ended March 28, 2009 improved by $0.3 million, from a loss of $14.7 million during the 26 weeks ended March 28, 2009 to an operating loss of $14.4 million for the 26 weeks ended April 3, 2010.

Other Income and Expense. Net interest expense was $3.6 million for the 13 weeks ended April 3, 2010 compared to $3.5 million for the 13 weeks ended March 28, 2009. For the 26 weeks ended April 3, 2010, the net interest expense was $7.2 million versus $6.8 million in the prior year. The increase in interest expense was due to lower interest income earned during the second fiscal quarter and 26 weeks of 2010. Additionally, the 26 week results of 2009 include a $0.4 million gain on debt extinguishment related to the purchase and retirement of $3.9 million of the Company’s 7 ³/4% Senior Notes due 2013.

Income Taxes. The Company’s income tax benefit for the 13 weeks ended April 3, 2010 was $3.9 million, or an effective rate of 39.5%, as compared to a $4.1 million benefit, or an effective rate of 39.2% for the 13 weeks ended March 28, 2009. For the 26 weeks ended April 3, 2010, the income tax benefit was $8.5 million, or an effective rate of 39.4% versus $9.5 million, or an effective rate of 45.0% in the prior year. The increase in the effective rate is attributed to the $1.2 million benefit for a reduction in estimated taxes payable based upon information received during the year which indicated that the amount would not be payable.

Adjusted EBITDA. The Adjusted EBITDA loss for the 13 weeks ended April 3, 2010 was $2.7 million compared to an Adjusted EBITDA loss of $3.6 million for the 13 weeks ended March 28, 2009. For the 26 weeks ended April 3, 2010, Adjusted EBITDA loss was $7.1 million compared to an Adjusted EBITDA loss of $8.1 million for the 26 weeks ended March 28, 2009, or an improvement of $1.0 million. The improvement in Adjusted EBITDA was primarily due to the expanded gross profit achieved during the period, which more than offset higher occupancy and other expenses related to the additional store count.

Adjusted EBITDA is determined as follows (1):

Financial Condition, Liquidity and Capital Resources

Changes in Financial Condition.

During the 26 weeks between October 3, 2009 and April 3, 2010, total current assets decreased by $15.9 million, primarily due to lower cash positions related to working capital changes. Inventories increased by $31.5 million during the period, reflecting the effects of inventory purchased during the 26 weeks of 2010 as the Company accelerated its purchases of certain products for the upcoming peak-selling season and to take advantage of available discounting.

During the same period, current liabilities increased by $18.0 million due to the increase in accounts payable as a results of the increase in inventories, offset by a decease on accrued expenses and income tax payable of $8.9 million and $9.0 million, respectively.

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Liquidity and Capital Resources.

Net cash used in operating activities was $27.6 million for the 26 weeks ended April 3, 2010 compared to net cash used in operating activities of $47.1 million for the same 26 week period in the prior year, primarily due to an increase in accounts payable for certain products for the upcoming peak-selling season.

Capital expenditures for the 26 weeks ended April 3, 2010 were $7.9 million. The Company expects to incur capital expenditures between $14.0 and $16.0 million in fiscal 2010, primarily for the purpose of opening new stores. It is anticipated that the balance of 2010 capital expenditures will be funded out of cash provided by operations.

Cash used in financing activities for the 26 weeks ended April 3, 2010 was $20.5 million compared to $7.5 million cash used in financing activities in the prior year, reflecting the effect of an upstream dividend during the quarter.

The Company believes its internally generated funds, as well as its borrowing capacity, are adequate to meet its working capital needs, maturing obligations and capital expenditure requirements, including those relating to the opening of new stores, for the next twelve months.

The Company was in compliance with all debt covenants as of April 3, 2010.

Recently Issued Accounting Pronouncements

In January 2010, the FASB issued guidance that requires reporting entities to make new disclosures about recurring or nonrecurring fair-value measurements including significant transfers into and out of Level 1 and Level 2 fair value measurements and information on purchases, sales, issuances, and settlements on a gross basis in the reconciliation of Level 3 fair value measurements. The guidance is effective for interim and annual reporting periods beginning after December 15, 2009, except for Level 3 reconciliation disclosures that are effective for annual periods beginning after December 15, 2010 and for the interim periods within those annual periods. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

The Company’s Amended Loan and Security Agreement carries interest rate risk as described in the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended October 3, 2009. Borrowings under the Loan Agreement bear interest at the lender’s Base Rate (as defined in the Loan Agreement) or at the Eurodollar Rate (as defined in the Loan Agreement), in each case plus the applicable margin rate. The applicable margin rate will be adjusted quarterly based on the Company’s Leverage Ratio (as defined in the Loan Agreement). The applicable margin for the Loan Agreement is initially 2.25% with respect to Base Rate loans and 3.25% with respect to Eurodollar Rate loans. As of April 3, 2010, the Company had no borrowings outstanding under this facility.

Under the supervision and with the participation of the Company’s management, including the Company’s principal executive officer and principal financial officer, the Company conducted an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this report (the “Evaluation Date”). Based on this evaluation, the Company’s principal executive officer and principal financial officer concluded as of the Evaluation Date that the Company’s disclosure controls and procedures were effective such that the material information relating to Leslie’s, including the Company’s consolidated subsidiaries, required to be disclosed in the Company’s Securities and Exchange Commission (“SEC”) reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and was made known to the Company’s principal executive officer and principal accounting officer during the period when this report was being prepared to allow timely decisions regarding required disclosure.

In addition, there were no changes in the Company’s internal control over financial reporting during the quarter ended April 3, 2010 or in other factors that has materially affected, or is likely to materially affect the Company’s internal control over financial reporting. The Company has not identified any significant deficiencies or material weaknesses in the Company’s internal control over financial reporting, and therefore there were no corrective actions taken.

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PART II. OTHER INFORMATION

The Company is routinely involved in legal proceedings involving claims related to the ordinary course of its business. The Company is currently not party to any legal proceedings that it considers to be material.

Certain factors exist which may affect Leslie’s business and could cause actual results to differ materially from those expressed in any forward-looking statements. The Company has not experienced any material changes from those risk factors as previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended October 3, 2009.

None.

None.

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SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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