West Marine reports $19.8 million Q4 loss, but improvement year over year

Santa Cruz Sentinel
WATSONVILLE — Although West Marine reported a significant dive in net income during the fourth quarter, the nation’s largest boating supply company also reported Thursday that 2010 sales climbed nearly 6 percent overall and it was actually the best net income performance in a long time.

Net revenues climbed to $622.8 million during the year, a 5.8 percent increase from 2009. Net income climbed 6.9 percent during the year. Comparable store sales climbed 6.3 percent, which helped boost sales as well as the introduction of new merchandise in stores and a stronger showing in the wholesale market.

The company, however, reported that while fourth quarter revenues climbed about $3.4 million year over year, there was a net loss of $19.8 million for the quarter compared to a net loss a year earlier of about $12.8 million. Company stock dove 12.1 percent Thursday, making West Marine one of the 10 companies listed on the Nasdaq to drop the most percentage-wise for the day.

On a conference call with investors, executives said several events impacted fourth quarter comparisons including a $3.7 million income tax benefit realized in 2009, a $1.5 million difference on the store closure and other restructuring costs, a gross margin benefit of about $1.5 million in 2009 and about $700,000 in credits resulting from legal settlements.

For the year, net revenues were $622.8 million, compared to of $588.4 million in 2009. Net income was $13.2 million, or 57 cents per diluted share, compared to $12.4 million, 55 cents per diluted share, in 2009, which included a $3.7 million income tax benefit related to a change in a stimulus package tax law.

The numbers represent “the next step in our process of stabilizing, strengthening and growing profitability here at West Marine,” said Geoff Eisenberg, the company’s chief executive and president. “This performance reflects the initial success of our long-term plan to revitalize our business.”

Eisenberg, who took the helm about four years ago after a long period of company expansion, has focused West Marine on optimizing its retail geographic footprint by consolidating many of its smaller stores into fewer, larger format stores. That effort will continue, he said.

“During this rebuilding phase, we always assumed the market would remain difficult and that if we hoped to grow sales and profit, we’d have to do so by taking dramatic measures to improve ourselves internally,” Eisenberg said. “We said repeatedly that we are not going to rely on help from the external market…. As it turns out, we did get a little help from the market in 2010. There was better weather and boaters appeared to go boating a bit more.”

Last year, the company opened 10 stores and closed 18 but maintained about the same square footage. All of the newly opened stores performed above expectation last year, he said. The company, which opened two “flagship” stores of about 20,000-30,000 square feet in 2009 and two more in 2010, plans to open five more flagship stores this year, including a 50,000 square foot store replacing an existing store in Fort Lauderdale, Fla.

The company is debt-free and has cash on hand of about $22 million, nearly twice as much as it had last year.

The company expects continued softness in the market for boating supplies and related merchandise.

“In looking back at 2010, we are very proud that the actions we have taken and the strategies we are pursuing has delivered West Marine’s best net income performance in a very long time,” Eisenberg said. “As pleased as we are about that today we are very aware of the fact that there’s much more to do.”

West Marine Inc.

WHAT: West Marine is a retailer and wholesaler of boating supplies with 327 company-owned stores in 38 states, Puerto Rico and Canada and three franchised stores in Turkey.

HEADQUARTERS: 500 Westridge Drive, Watsonville

INFORMATION: 728-2700; http://www.westmarine.com

HISTORY: Founded by Randy Repass in 1968 as a mail order business. First store opened in 1975 and the company went public in 1993.

LEADERSHIP: Geoff Eisenberg, president and chief executive officer

EMPLOYEES: Last month, the company reported nearly 4,000 employees, about 370 of whom work locally.

STOCK: West Marine shares trading on the NASDAQ as WMAR dove $1.43 Thursday to close at $10.41. The 52-week range is $8.37-$13.63.

FINANCIALS: Fourth quarter net revenues were $107.3 million, compared to net revenues of $103.9 million a year earlier. The company reported a $19.8 million net loss for the fourth quarter 2010, or a loss of 88 cents per share, compared to a net loss of $12.8 million, or 57 cents per share, for the same quarter in 2009.

For the year, net revenues were $622.8 million, compared to of $588.4 million in 2009. Net income was $13.2 million, or 57 cents per diluted share, compared to $12.4 million, 55 cents per diluted share, in 2009, which included a $3.7 million income tax benefit related to a change in a stimulus package tax law.

GUIDANCE: The company expects first quarter comparable store sales to drop slightly from last year’s first quarter although, for the year, they are expected to be flat to an increase of about 1 percent. Total revenues will be $629 million to $635 million. Net income is expected to be $15 million to $17 million and earnings per share of 65-73 cents.

This article first appeared here.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s