Hurricanes impact West Marine’s earnings outlook

WATSONVILLE, Calif. – As Hurricane Ivan lashed the Southeastern U.S. today, its effects – and those of its siblings Charley and Frances – are beginning to show throughout the boating industry.

While minimizing the impact of the recent storms, West Marine Inc. did cite store closures due to the hurricanes as one reason it lowered its earnings guidance for the third quarter yesterday.

In a press release Wednesday afternoon, West Marine’s CEO John Edmondson said the marine retailer currently expects its earnings per share to range from $0.33 to $0.35 and third-quarter sales to range from $184 million to $185 million. Those numbers are down from earlier estimates in which the company said it expected earnings per share in the $0.43 to $0.44 range and third-quarter sales in the $195 million to $197 million range.

“Sales in August continued the soft trend that we first observed in the latter part of June,” Edmondson said. “Sales have remained soft so far in September and, as a result, we currently expect comparable store sales for September to range from –6 percent to –3 percent, and for the third quarter to range from –7 percent to –6 percent.

“For the fourth quarter, we now expect sales ranging from $119 million to $121 million and a loss per share ranging from ($0.11) to ($0.08). For the full year 2004, we currently expect to report sales ranging from $685 million to $688 million and earnings per share ranging from $1.26 to $1.31. We currently expect comparable store sales for the fourth quarter to range from –2 percent to flat, and for the full year 2004 to range from flat to 1 percent.”

Edmondson said that hurricane activity in the Southeast had “only a minor effect on our third quarter sales,” but did say that Hurricane Charley forced West Marine to temporarily close approximately 12 stores and to close its Punta Gorda, Fla., store for the foreseeable future. The company was also forced to close nearly two-dozen stores due to Hurricane Frances, and Edmondson said that Ivan could affect an even larger number of stores.

However, West Marine believes its revised sales and earnings estimates already reflect Ivan’s potential impact.

“Due to extensive hurricane preparation and clean-up efforts, we could open fewer stores in the third quarter than previously scheduled, although we would expect to catch up in the fourth quarter,” Edmondson said.

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