We consider the nonlinear stability of spectrally stable periodic waves in the Lugiato-Lefever equation (LLE), a damped nonlinear Schrödinger equation with forcing that arises in nonlinear optics. So far, nonlinear stability of such solutions has only been established against co-periodic perturbations by exploiting the existence of a spectral gap. In this paper, we consider perturbations which are localized, i.e., integrable on the line. Such localized perturbations naturally yield the absence of a spectral gap, so we must rely on a substantially different method with origins in the stability analysis of periodic waves in reaction-diffusion systems. The relevant linear estimates have been obtained in recent work by the first three authors through a delicate decomposition of the associated linearized solution operator. Since its most critical part just decays diffusively, the nonlinear iteration can only be closed if one allows for a spatio-temporal phase modulation. However, the modulated perturbation satisfies a quasilinear equation yielding an inherent loss of regularity which, due to the low-order damping in the LLE, cannot be regained using standard methods. Therefore, in contrast to the case of reaction-diffusion systems, the nonlinear iteration cannot be closed for the modulated perturbation. In this work, we present a new nonlinear iteration scheme incorporating tame estimates on the unmodulated perturbation, which satisfies a semilinear equation in which no derivatives are lost, yet where decay is too slow to close an independent iteration scheme. We obtain nonlinear stability of periodic steady waves in the LLE against localized perturbations with precisely the same decay rates as predicted by the linear theory.