West Marine CEO calls 2013 earnings ‘disappointing,’ but says company is making progress

Santa Cruz Sentinel

WATSONVILLE — West Marine, the Watsonville-based international boating supply company, reported disappointing numbers for the December quarter and a significant drop in net income for 2013.

Net revenues for the fourth quarter increased by $600,000 or a half percent, compared the same quarter in 2012. Comparable store sales increased by a half percent and the net loss for the quarter was $11.2 million compared to a net loss of $11.7 million for the fourth quarter 2012.

For the full year, net revenues were $663.2 million, a decrease of 1.8 percent compared to 2012 and net income was about $7.8 million, a drop of almost 47 percent from 2012.

“I would characterize 2013 as challenging due to the unusually cold, rainy and windy weather in many of the markets during the first half of the year,” said Matt Hyde, West Marine CEO. Hyde noted the company’s “great progress” on growth initiatives such as ecommerce, store optimization and product diversification, but said it hasn’t been enough. He announced plans to accelerate the company’s ongoing transformation to an ecommerce-savvy, general water lifestyle company.

“Our growth strategies continue to evolve West Marine into a waterlife outfitter by offering broader product selections, a more appealing in-store experience and the ease of omni-channel retailing,” Hyde said. The shift is essential for the company, he said, given changing demographics of society and changes in how people shop.

“We’re seeing the aging of our core customers, boat sales remaining under pre-recession levels and the compression of people’s time.”

There were some positive numbers including a 15.7 percent jump during the year in direct-to-consumer sales, which was largely driven by a push in eCommerce sales. And, the company, which has been pushing its lifestyle items, reported a 6.1 percent jump in several merchandise expansion categories. The company says it’s the largest retailer of stand-up paddleboards in the country and will be pushing a new “paddle world” to many stores this year.

“Our strategies are working,” Hyde said. But, in a year like 2013, he said, “it really provides us evidence that our growth strategies are just not large enough to make up for a poor boating season so we’re accelerating our efforts.”

The company plans to invest $30 million to $34 million in a three- to five-year diversification plan. West Marine customers will see a new website this weekend as part of the company’s improved online experience. The company plans to grow its eCommerce business to 15 percent of total sales and to have the sales from newly consolidated and revitalized stores grow to 50 percent of total sales. The company plans to close and consolidate 10-12 stores this year.

Follow Sentinel correspondent Jennifer Pittman at Twitter.com/jenniferpittman

West Marine Inc.

WHAT: West Marine is a retailer and wholesaler of boating supplies and services with 287 company-operated stores located 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 sailor Randy Repass in 1968 as a mail order business. First store opened in 1975. The company became publicly owned in 1993.
LEADERSHIP: Matt Hyde, president and chief executive officer.
EMPLOYEES: The company employs about 3,800 people, about 400 of them work locally.
STOCK: West Marine shares on the Nasdaq closed up 7 cents Friday to close at $12.48. The 52-week range is from $10.29 to $14.48.


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