WATSONVILLE — Mild weather, strong wholesale sales and a new holiday strategy pushed winter sales for West Marine during what is typically the slowest quarter of the year. Pretax profits for the company were up more than 49 percent for the year.
“I have to say that this is an earnings call that I’ve been looking very forward to,” said Geoff Eisenberg, chief executive officer and president of the largest boat supply company in the U.S.
Eisenberg, who discussed the company’s fourth quarter financials with analysts and investors Thursday, said there were improvements on most key financial and operational measures and West Marine is building momentum.
“Our results from 2011 reflect continued progress in executing both the strategies to drive higher sales and profits at West Marine despite what was generally a nonrobust market environment,” Eisenberg said.
In addition to building wholesale sales through storefronts, the company’s effort to replace smaller and underperforming stores with larger format stores is paying off, Eisenberg said. Last year, the company closed 14 stores which averaged about 9,600 square feet and opened seven stores that averaged more than 23,000 square feet in size.
Real estate activity connected with the “real estate optimization strategy” drove a net $8.9 million increase in net revenues. The company, which opened a 25,500-square-foot store in Honolulu last week, plans to open four more flagship stores larger than 20,000 square feet and seven large format stores this year.
The company reported early success in new lines of boating lifestyle apparel line and will be focusing on high-end private label commodities and higher level merchandise.
As the economy recovers, the boating market will only improve and that will be good for West Marine, Eisenberg said. “At the same time, we are competent that the core competencies we’ve developed during the past few challenging years will allow us to continue our progress even if that recovery takes a while longer.”
Next week, the company is launching West Marine University, which will draw 500 associates together for a four-day training and development session to improve the customer experience.
Despite indications the boating industry is picking up after a long slump, the company forecast a relatively flat market and said it was remaining cautious about its guidance. Eisenberg said the company anticipates total sales of $660 million to $677 million and earnings per share of 59 cents to 67 cents.
“Even though we’re assuming a flat market, I will point out that for the first time in a long time we are seeing signs that the boating market is strengthening,” he said. “From some of our experiences at boat shows and some of our early 2012 sales experiences, there’s a level of optimism that seems greater than what we’ve witnessed in recent years. Whether this early optimism translates to an improved market remains to be seen. Thus we are remaining cautious.”
AT A GLANCE
West Marine Inc.
WHAT: West Marine is a retailer and wholesaler of boating supplies with 317 company-owned stores in 38 states, Puerto Rico and Canada and three franchised stores in Turkey.
HEADQUARTERS: 500 Westridge Drive, Watsonville.
INFORMATION: 728-2700; 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: The company employs about 4,000, about 380 of whom are local.
STOCK: West Marine shares closed unchanged Thursday at $12.15 on the Nasdaq stock market. The 52-week range is $6.97-$13.49.
FINANCIALS: Revenues for the fourth quarter ending Dec. 31, were $113.4 million compared to net revenues of $107.3 million a year ago. Net loss for the quarter was $13.95 million or a loss of 61 cents per share compared to a loss of $19.8 million or a loss of 88 cents per share.
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