WATSONVILLE, Calif. – During what many would argue has been a tough year for boating supplies retailer West Marine, Inc. (Nasdaq: WMAR), the company is feeling the impact of Hurricane Katrina.
Four of its stores were destroyed by the hurricane, and an additional nine West Marine stores and BoatU.S. Marine Centers were damaged but are currently operating, some functioning on portable generator power, the company reported in a statement yesterday.
In addition, it is expecting higher shipping costs, the trend in higher fuel prices, reduced boating activity nationwide associated with Hurricane Katrina, and the resulting decrease in sales of boating-related merchandise to impact its bottom line.
This news follows four quarters of earnings declines and a 27-percent drop in its stock value so far this year, AP reported.
The good news, though, is that all West Marine associates are believed to be safe, the company said.
"As far as we've been able to ascertain, all West Marine and BoatU.S. Marine Center teams and their families are accounted for and healthy. Our hearts and prayers go out to our associates, customers, vendor partners and others whose lives have been disrupted by this devastating tragedy," said Peter Harris, West Marine's chief executive officer.
Earnings guidance lowered
West Marine said it’s lowering its fiscal year 2005 earnings guidance to range from $0.70 to $0.75 per share.
The decrease in earnings directly attributable to the impact of Hurricane Katrina is expected to range from ($0.03) to ($0.04) per share. The trend in higher fuel prices and reduced boating activity nationwide associated with Hurricane Katrina, and the resulting decrease in sales of boating-related merchandise, as well as higher shipping costs, is expected to further reduce 2005 earnings from ($0.14) to ($0.17) per share.
In addition, West Marine's continuing long-term commitment to maintaining proper store service staffing levels is expected to reduce fiscal 2005 earnings by another ($0.03) to ($0.04) per share, it reported.
Aiding victims of the hurricane
To assist employees, West Marine has created an "Associates Helping Associates" fund. West Marine associates are voluntarily contributing to this fund, and the company is matching 100 percent of their contributions, so far raising almost $100,000 to be distributed directly to fellow associates whose lives were devastated by Hurricane Katrina. Last year, West Marine associates raised more than $70,000 to help fellow associates affected by the hurricanes in Florida.
West Marine is also donating boats and engines to the New Orleans Fire Department and other relief organizations. Fifty VHF radios are being given to the Louisiana Dept of Public Health Emergency Operations. So far, West Marine has committed over $100,000 in generators, tarps, clothing and other critical supplies to the relief effort.
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