Watsonville—Despite progress in several key strategies, the road ahead is going to be bumpy, according to the chief executive of publicly owned West Marine, which reported a drop in first quarter sales and net income and saw stock prices fall more than 20 cents Friday.
Company executives blamed poor boating weather, especially in the northern and eastern U.S., and an expected slowdown in ecommerce sales due to a transition to a new Internet platform. Where the weather was good such as in California and Florida, sales were strong, executives said.
The company reported first quarter revenues of $113.34 million, about $900,000 down from the same quarter in 2013, and a net loss of $11 million. Last year’s revenues were also down from the previous year.
Matt Hyde, company chief executive officer, however, pointed at a more formidable economic reality with challenges ahead and said boating and the marine industry is being impacted by changes in demographics, society and retailing.
“The customer is just more empowered than they ever have been before and the world of growing Internet sales in practically every sale of retail is over-stored,” Hyde said on a conference call with investors and analysts Thursday. “Additionally we believe that the economic recovery continues to require us to operate in a choppy environment. All this gives us even more fortitude to move ahead with our strategies that continue to reposition West Marine as a broader water-life retailer.”
The nation’s largest boating supply retailer is several years into a plan to reposition itself to appeal to a broader customer base through a channel of fewer, bigger regional stores that appeal to customers beyond the boating hobbyist.
Merchandise expansions — new footwear, apparel, clothing, fishing and paddle sports lines — drew increasing sales, but sales of the company’s core products, which make up more than 80 percent of overall sales, dropped in the year. Revenues from a redesigned ecommerce site were soft, but Hyde said e-sales were beginning to recover from a tough initial transition. The wholesale business grew.
At A Glance
West Marine Inc.
What: West Marine is a retailer and wholesaler of boating supplies and services with 283 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: About 4,140 employees, including 415 who work locally.
Stock: West Marine shares on the Nasdaq closed down 32 cents Friday to close at $10.79. The 52-week range is $10.29-$14.48.
Financials: First quarter net revenues were about $113.34 million compared to about $114.24 a year ago in the first quarter. The net loss was $11 million, or a loss of 46 cents per share, compared to net loss of $9.7 million, or a loss of 41 cents per share, a year ago first quarter. The company remained debt-free.
Guidance: Despite the first quarter results, the company reaffirmed its 2014 full-year pre-tax guidance of $16 million to $18.5 million in revenues and diluted earnings per share of 39-45 cents. Total revenues for the year are expected to be $695 million to $710 million.