West Marine sales beat retail trend

WATSONVILLE, Calif. – Boating retailer West Marine, Inc. today reported record earnings of $1.17 per share for the second quarter, ended July 3, marking the first time since going public in 1993 the company has achieved quarterly earnings exceeding $1.00 per share, according to a West Marine press release.

The company said its net income was $25.2 million in the second quarter, compared to net income of $19.8 million, or $0.98 per share, a year ago – the first time it has achieved quarterly net income as a percent of sales in the double digits. Net sales for the second quarter were $252.6 million, an increase of 8.4 percent over sales of $233.0 million last year. Comparable store net sales for the second quarter increased 4.6 percent compared to the same period a year ago.

Those numbers show West Marine to be doing better than much of the retailing sector, as a recently released report by the U.S. Commerce Dept. said retail sales across the country had declined by 1.1 percent in June, the biggest drop since February 2003, according to a story in USA Today.

Auto dealers, clothing and department stores posted big declines, though building supply and home furnishing stores showed gains, USA Today reported.

“June’s weakness may just reflect the noisiness of economic data. … Consequently, it is too soon to be worried about the economic outlook,” said Steven Wood of Insight Economics, who called the data a “June swoon” and was quoted in the story. But he said “concern will turn to worry if the economy does not rebound in July and August.”

And West Marine CEO John Edmondson said his company had also seen tightened consumer spending in recent weeks, and he said the company predicts its July sales will not meet earlier expectations.

“We are pleased to report record second quarter earnings,” Edmondson said. “Despite wet, cool weather and delayed shipments from some vendors in June, we were still able to achieve earnings per share nearly 20-percent higher than last year.

“As many other retailers are experiencing, our customers appear to have tightened their wallets recently. As a result, we anticipate that July sales will fall short of plan. For the third quarter, we now expect sales ranging from $195 million to $197 million and earnings per share ranging from $0.43 to $0.44. For the full year 2004, we currently expect to report sales ranging from $702 million to $706 million and earnings per share ranging from $1.36 to $1.40.”

The first six months

West Marine said its net income for the 26 weeks ended July 3 was $22.1 million, or $1.04 per share, compared to net income of $13.7 million, or $0.68 per share, for the same period a year ago. Net sales for the first six months of 2004 were $381.8 million, an increase of 11 percent over sales of $344.1 million last year. Comparable store net sales for the 26 weeks ended July 3 increased 6.2 percent compared to the same period in 2003.

Comparable store sales by region for the first six months of 2004 were: Northeast 7.9 percent, Southeast 3.5 percent and West Coast 7.3 percent. Comparable store sales are defined as sales from stores that have been open at least 13 months and where selling square footage did not change by more than 40 percent in the previous 13 months.

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