West Marine’s 4Q sales met expectations

WATSONVILLE, Calif. – Boating supplies retailer West Marine, Inc.’s (Nasdaq: WMAR) net sales for the 13 weeks ended Dec. 30 were $122.3 million, a decrease of 2 percent from net sales of $124.8 million for the same period a year ago. Comparable store sales for the fourth quarter of 2006 decreased 0.2 percent.

Net sales for the 52 weeks ended Dec. 30 were $715.1 million, an increase of 3.3 percent from net sales of $692.3 million for the same period a year ago. Comparable store sales for the 52 week period increased 2.3 percent.

Net sales attributable to the company’s stores segment for fiscal year 2006 were $628.4 million, an increase of $27.2 million, or 4.5 percent, compared to fiscal year 2005, West Marine reported.

Port Supply (wholesale) segment sales through West Marine’s distribution centers for fiscal year 2006 were $43.5 million, a decrease of $4.6 million, or 9.6 percent, compared to fiscal year 2005, primarily due to increased sales to Port Supply customers through its store locations, which are included in stores sales, according to the company. Net sales of its Direct Sales (catalog and Internet) segment for fiscal year 2006 were $43.2 million, an increase of $0.3 million, or 0.7 percent, compared to fiscal year 2005.

“Fourth quarter sales were consistent with anticipated levels,” said Peter Harris, chief executive officer of West Marine. “While comparable store sales were slightly negative for the thirteen week period, our product margins improved with more targeted promotions. We remain cautious about the boating market cycle, but continue to be proactive in positioning the company to achieve long term financial improvement. Progress continued throughout the fourth quarter on the previously announced major adjustments in our 2007 cost structure and, in line with our expectations, 35 underperforming stores were closed during 2006.

“I thank and commend every West Marine associate as well as our vendor partners for the dedication and focused effort that was put into this challenging rebuilding year,” Harris concluded. “We are entering 2007 with a solid plan to exceed our customers’ expectations with outstanding service, improved assortments and specialized product offerings.”

In addition, West Marine is evaluating its accounting method for indirect costs included in merchandise inventories, which currently includes a portion of store occupancy costs representing the estimated area used for storing merchandise. Any adjustment in West Marine’s merchandise inventory accounting method would have no impact on cash flows, but such an adjustment would impact the balance sheet and statement of operations, the company stated.

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