West Marine reports first quarter 2013 results and lowers full-year guidance

West Marine, Inc.
April 25, 2013
Filed under News

WATSONVILLE, Calif., April 25, 2013 (GLOBE NEWSWIRE) -- West Marine, Inc. (Nasdaq:WMAR), the largest specialty retailer of boating supplies and accessories, today reported financial results for the first quarter ended March 30, 2013.

  • Net revenues were $114.2 million, a decrease of 5.9% compared to last year.
  • Comparable store sales decreased by 6.6% compared to last year.
  • Direct-to-Consumer channel sales were up 15.8%, driven by our strategic investments in eCommerce.
  • Sales of product in our Merchandise Expansion categories were up 0.5%, with Core product sales down 7.3% compared to last year.
  • Pre-tax loss was $15.0 million, compared to a pre-tax loss of $10.6 million last year.
  • The company is lowering 2013 full-year guidance, with pre-tax income now expected to be in the range of $24.0 million to $27.0 million, compared to pre-tax income of $24.3 million for 2012.
  • Net loss per share was ($0.38), as compared to net loss per share of ($0.27) last year.
  • First quarter liquidity improved substantially versus last year, with cash increasing from $2.2 million last year to $22.5 million.
  • The company remained debt-free with $114.5 million available on its revolving credit line at the end of the period.

Net revenues for the 13 weeks ended March 30, 2013 were $114.2 million, a decrease of 5.9% compared to net revenues of$121.5 million for the 13 weeks ended March 31, 2012.

In line with our omni-channel focus, we also have changed the definition of comparable store sales by now including sales from our Direct-to-Consumer and Port Supply divisions. As before, store sales are included in comparable store sales in the fiscal period in which they commence their 14th full month of operations. Stores that were closed or substantially remodeled (i.e., resulting in an increase or decrease of 40% or more of selling square footage) are still excluded. Using this new definition, comparable store sales for our first quarter decreased by 6.6% over the same period last year. For the first quarter last year, we reported a 4.3% increase in comparable store sales. However, using the new definition, our first quarter 2012 comparable store sales increased by 3.4%.

Matt Hyde, West Marine's CEO, commented: "We are disappointed in our first quarter sales results which were impacted by a much colder spring hitting many parts of the country compared to last year. With boats remaining under snow in the northeast and wind conditions stalling usage in the southeast, the launch of our season is starting much later than expected. On the other hand, I am pleased to report that we were able to partially offset these weak results by solid growth in the regions where spring weather has been more typical. Additionally, our ongoing success in executing our eCommerce, merchandise expansion and store optimization strategies continues to drive strong growth above our base business. We remain cautiously optimistic for the upcoming months, and we stand ready to serve our customers once the weather breaks and the season kicks into high gear."

Net loss for the first quarter was $9.0 million, or ($0.38) per share, compared to net loss of $6.2 million, or ($0.27) per share for the first quarter last year.

Total inventory at March 30, 2013 was $243.9 million, a $3.1 million, or 1.3%, increase versus the balance at March 31, 2012, and a 3.9% increase on an inventory per square foot basis. Inventory turns for 2013 were down 3.8% versus the first three months of last year.

Return on Invested Capital ("ROIC") for the 52-week period ended March 30, 2013 was 6.9%, which compares to 7.2% adjusted ROIC for the 52-week period ended March 31, 2012. ROIC based on GAAP net income was 17.4% for the 52-week period endedMarch 31, 2012.

Segment Reporting Change

Historically, we have reported three segments — Stores, Port Supply (wholesale) and Direct-to-Consumer (eCommerce, catalog and call center transactions). With our new CEO, we have changed the way in which we view and manage our business by making organizational changes, integrating systems and concentrating our strategic focus on omni-channel retailing. As a result of these changes, beginning in this fiscal year, we have one reportable segment.

2013 Guidance

As a result of the lower than expected sales results in the first quarter, we are lowering our previously-issued earnings guidance for fiscal year 2013. We now expect pre-tax income in a range of $24.0 million to $27.0 million, approximately $1.5 million lower than our previously-communicated pre-tax income guidance. This will result in diluted earnings per share of approximately $0.60 to $0.67. Comparable store sales for full-year 2013 are now anticipated to be flat to up 2.0% (using our new definition for comparable store sales outlined above), with total revenues now expected to be in the range of $675 million to $690 million, $25 million lower than our previously-communicated guidance. We anticipate capital expenditures for fiscal 2013 to be in the range of $25 million to $29 million unchanged from our prior guidance.

Share Repurchase Program

As previously disclosed, our Board of Directors authorized a $10 million repurchase program with the primary purpose of mitigating the dilutive impact of shares issued under the company's omnibus equity incentive plan and its employee stock purchase plan. Accordingly, in the second quarter of 2013, we expect to implement repurchases to offset shares issued under those plans during the first quarter of 2013.


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