West Marine’s sales climb, but consumer spending may be slowing

WATSONVILLE, Calif. – West Marine, Inc., the nation’s largest boating retailer, said today that its net sales for the five weeks ended July 3, were $102.7 million, a 4.3-percent increase over net sales of $98.4 million for the same five-week period one year ago.

But West Marine CEO John Edmonson said in the press release that slower sales near the end of the month may be a sign consumer spending is starting to slow.

“We have been impacted by several factors during the month of June,” Edmondson said. “Firstly, we experienced unseasonably cool and wet weather in key markets throughout the country. Secondly, we received late product shipments from a few key vendors. Lastly, we were somewhat disappointed with the sales in the last week of June (which includes the Fourth of July weekend).

“We think this may indicate some slowing in consumer spending. As previously stated, we are estimating our second quarter earnings to be in the $1.16 to $1.18 per share range.”

Sales slacken across the U.S.

Edmonson’s outlook was bolstered by reports from other major U.S. retailers, which also experienced disappointing June sales.

A Reuters story Thursday reported that Wal-Mart Stores Inc. generated its smallest monthly sales gain in more than a year and that Kohl’s Corp., Target Corp., Sears, Roebuck and Co., Gap Inc. and Federated Department Stores Inc., all reported weaker-than-expected sales at stores open at least a year — a key retail measure known as same-store sales.

“Obviously it was a very weak month,” said Bill Dreher, a retail analyst with Deutsche Bank, who was quoted in the story. “The weakness accelerated dramatically in the last week of the month, and is likely to dampen the start of July sales.”

Analysts have said it is too soon to determine whether the weak June sales meant a slowdown in consumer spending, according to Reuters, but believe if demand does not pick up with warmer weather in July, earnings forecasts could be in jeopardy.

West Marine’s numbers

West Marine said its comparable store net sales for June 2004 increased 1.8 percent compared to the same period a year ago.

The company’s net sales for the 13 weeks ended July 3 were $252.6 million, an increase of 8.4 percent from net sales of $233.0 million for the same period in 2003. Comparable store net sales for the latest 13 weeks increased 4.6 percent compared to the same period a year ago.

West Marine said its net sales for the 26 weeks ended July 3, were $381.8 million, an increase of 11.0 percent from net sales of $344.1 million for the same period a year ago. Comparable store net sales for the latest 26 weeks increased 6.2 percent compared to the same period a year ago.

Comparable store sales by region for June were as follows: Northeast 2.1 percent; Southeast 1.7 percent; and West Coast 1.5 percent, according to the company.

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