West Marine recoups from slow start to Q2, new SC store opens in August

West Marine opens expanded store next to existing Santa Cruz store.
West Marine opens expanded store next to existing Santa Cruz store.

WATSONVILLE—Although poor sailing weather had a negative impact on second quarter sales for West Marine, a national boating and water lifestyle company, executives said Thursday they were continuing to see progress from an ongoing product diversification and store optimization strategy.

The latest chapter of revitalization comes home next month with the grand opening of a new Santa Cruz testing store.

“There’s probably no market that’s going through a bigger shift than the (San Francisco and Monterey) Bay Area right here in our support center’s backyard,” said Matt Hyde, chief executive officer.

On a conference call with investors Thursday, Hyde said the five older-style stores between Sausalito and Santa Cruz have been consolidated to three, including two larger, better-positioned ones and a revitalized store in San Carlos.

It’s a customer experience that is “dramatically better and our customers are responding,” he said.

At 2400 17th Ave., the new Santa Cruz store is a stone’s throw from the previous store location, which was at the corner of 17th and Soquel avenues. The grand opening on Aug. 26-28 will feature a fundraiser for local nonprofit organizations.

“This store is positioned to better serve one of the most water-centric communities on the West Coast along with acting as our newly designated test store,” Hyde said. It will be a place to test, learn and roll out innovations for the retail store business.

The financial report for the second quarter showed that revenues dropped 0.6 percent to $251.6 million compared to a year ago. Earnings per share for the quarter were 86 cents compared to 85 cents last year. Comparable store sales climbed 1.1 percent

“Revenue growth strengthened throughout the three-month period after a challenging start in April,” Hyde said.

For the last three and a half years, the company’s been pushing forward with its strategy to shift identities from a boating supplier to a broader water lifestyle company. At the same time it has sharply reduced the number of stores nationally through consolidation and improved customer experiences. Last year at this time the company had 279 stores. Now the company has 250. The company’s also been focusing on online sales and efficiencies and working to even out seasonal sales fluctuations.

“Our store revitalization strategy has proven to be an efficient and effective way to grow our customer base,” Hyde said. Optimization continues to be a primary driver for revenue growth, but he said water life and ecommerce business is now about 60 percent of the company’s sales increase. Ecommerce sales alone grew 27 percent from a year ago.

“Our customers are embracing the changes we’re making in our business to enable them to buy products whenever or wherever they choose to shop,” Hyde said.

West Marine Inc.

WHAT: West Marine is a retailer and wholesaler of boating supplies and water-related products. The publicly held company has 250 stores in 38 states, Puerto Rico and Canada and operates full-service distribution centers in Hollister and Rock Hill, SC.

HEADQUARTERS: 500 Westridge Drive, Watsonville.

INFORMATION: 728-2700; westmarine.com.

HISTORY: Founded by Randy Repass in 1968 as a mail order business. The first store opened in 1975. The company went public in 1993.

LEADERSHIP: Matt Hyde, president and chief executive officer.

STOCK: West Marine shares on the Nasdaq closed up 17 cents Thursday to close at $9.11. The 52-week range is $7.65 to $10.39.

FINANCIALS: Revenues for the second quarter were $251.6 million, compared to $253.18 a year ago in the same quarter. Net income was $21.58 million, or 86 cents per diluted share, compared to $20.9 million, or 85 cents per share last year. The company has $89.55 million of cash and cash equivalent.

GUIDANCE: the company predicted revenue growth for 2016 would be in the low end of 1 to 4 percent, due to the poor Q2 weather.

 

This article was published in the Santa Cruz Sentinel.

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