West Marine reports strong last quarter, year

Santa Cruz Sentinel

Matt Hyde, WMAR CEO
Matt Hyde, WMAR CEO

WATSONVILLE — An improving economy and ongoing investments in online and store optimization strategies helped boost year-end earnings, according to West Marine which announced larger revenues for the year and a smaller fourth quarter loss Thursday.

“We’re pleased that our 2012 results reflect the continuing success of our key growth strategies,” said Matt Hyde, chief executive officer and president of West Marine. “In the area of e-commerce we’ve delivered accelerating sales growth on the back half of last year.”

The company reported fourth quarter revenues of $118.4 million and a net loss of about $11 million, or a loss of 47 cents per share compared to revenues of $113.4 million and a net loss of almost $14 million, or a loss of 61 cents per share, a year ago.

For fiscal year 2012, the company reported net revenues of $675.25 million, and net income of $15.53 million, compared to $643.44 million and net income of $29.66 million in 2011. Earnings per diluted share were 67 cents compared to $1.27 in 2011.

Last year, the company integrated several retail operations and its online sales strategy. After flat e-commerce sales for the first two quarters of the year, the company reported a pick up of 9.1 percent in the third quarter and 12.8 percent last quarter.

“We’re focused on strengthening our position as an omni-channel retailer by offering exceptional service and convenience to our customers,” Hyde said Thursday during a webcast conference call with investors and analysts.

Company sales overall improved 4.9 percent for the year. The company grew pre-tax earnings by 14.6 percent and comparable store sales increased by 3.3 percent during the year, marking 12 quarters of comparable store increases.

Hyde said the mood last week at the country’s largest annual boat show in Miami was “upbeat.”

“It feels as though we’re slowly recovering from the deep dip that we’ve experienced the past five years,” he said.

According to Thom Dammrich, president of the Chicago-based National Marine Manufacturers Association, the boating industry experienced double-digit growth in 2012 for the first time since the recession. Four of every 10 boat dealers in the U.S. went out of business during the recession, according to the NMMA, but last year, new power boat sales were up 10 percent in 2012 and are expected to climb again this year.

Boating participation was also up for the year. Last month, Dammrich wrote a report saying the economic recovery is broad based and he expects to see the momentum continue into 2013.

Earlier this month, West Marine stock hit a 52-week high of $13.20.

Shares, which had dropped since that high, slipped 13 cents Thursday to close at $12.78.

The company is debt-free and reported cash on hand of $56.5 million.

Hyde said, however, the company expected to make significant capital expenditures of $25 million to $29 million during the year to push forward with online efforts, infrastructure improvements and an ongoing “store optimization” program.

E-commerce will continue to be a key focus in 2013, Hyde said, noting that represents the company’s largest medium to long-term growth, he said.

“E-commerce is going to enable us to better leverage our full 75,000-item assortment making it quickly available to our customers,” Hyde said.

After years of rapid growth during which store numbers grew to more than 400, in recent years, the company has closed underperforming stores and consolidated local markets with larger format stores. The company has 299 company operated stores — 18 fewer than it had last year — plus five franchise stores in Turkey.

The local head count has remained steady, but the company employs about 120 fewer people globally than this time last year.

Despite the rosy Q4 and year-end report, the company forecast a loss for the current quarter, saying sales are expected to be flat or lower than in 2012 when sunny weather boosted sales. Administrative expenses are also expected for the quarter.

The company also introduced a new financial metric: Return on Invested Capital, which is defined as adjusted net income divided by average total capital. It reflects both the generation of earnings and the responsible management of assets and closely correlates with creating shareholder value, the company said.

For fiscal year 2012, ROIC was 7.9 percent compare to 7.6 percent in 2011 and 6.9 percent two years ago.



West Marine Inc.

WHAT: West Marine is a retailer and wholesaler of boating supplies with 299 company-operated stores in 38 states, Puerto Rico and Canada and five 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.
LEADERSHIP: Matt Hyde, president and chief executive officer.
EMPLOYEES: The company employs about 3,880, about 380 of whom are local.
STOCK: West Marine shares on the Nasdaq closed down 13 cents Thursday to close at $12.78. The 52-week range is $9.30-$13.20.


This article first appeared here.

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