WATSONVILLE — Slower first-quarter sales due to a cold and windy spring in key boating regions in the U.S. caused West Marine to lower its earnings forecast for the year, executives announced Thursday.
“None of us are satisfied with the results of the first quarter. However, we’re taking a cautious view knowing that most of the season is still ahead of us and there are a number of key indicators that give us confidence that our underlying business is healthy,” said Matt Hyde, West Marine chief executive officer and president of the country’s largest boating supplier.
All districts that had more typical spring weather performed well, Hyde said during a quarterly conference call with investors and analysts. The unseasonably cold Northeast, however, had a drop of about 18 percent in sales. West Coast regions saw sales climb an average of 4 percent. The company also delayed a marketing push, a cost-savings effort that might have contributed to the overall drop in sales, Hyde said.
The company reported net revenues for the first quarter of $114.24 million compared to $121.47 million a year ago. The winter quarter, which is typically slower than in the rest of the year, had a net loss of $8.98 million, or a loss of 38 cents per share, compared to a net loss a year ago of $6.25 million, or a loss of 27 cents per share.
The drop will impact earnings for the year, Hyde said.
The company lowered its guidance for the year from a projected $700 million to $715 million in net revenues to a projected $675 million to $690 million. Pre-tax net income is forecast to be in the range of $24 million to $27 million, $1.5 million lower than previously stated.
Although every retailer is impacted by weather, Hyde said West Marine’s tight tie to outdoor recreation is particularly susceptible and it gives the company a strong impetus to continue diversification plans from its core boating customer to a broader “life on the water” lifestyle retail customer.
In addition to boating supplies, accessories and services, the company now sells water-related gear, apparel and footwear.
First-quarter decreases were partially offset by the company’s ongoing initiatives to drive growth through a push in the online market and expansion beyond its traditional line of merchandise, such as clothing lines, the company said.
Hyde said the company would continue with its effort to close underperforming stores, consolidate smaller locations and replace with larger format stores.
In other company news, Hyde welcomed a new head of marketing, Debra Radcliff, formerly a senior marketing executive at Home Depot and Sports Authority.
AT A GLANCE
West Marine Inc.
HEADQUARTERS: 500 Westridge Drive, Watsonville
DETAILS: 831-728-2700; www.westmarine.com
EMPLOYEES: About 4,360; 390 locally
STOCK: Shares on the Nasdaq closed down 36 cents Thursday to close at $11.90. The 52-week range is $9.30-$13.20.
This article on West Marine Q1 earnings first appeared here.