West Marine reports smaller Q4 loss than last year

WATSONVILLE, Calif. – West Marine’s net loss for the fourth quarter ended Jan. 3 was $29 million, or $1.31 per share, compared to a net loss of $65.6 million, or $3.00 per share, for the fourth quarter last year, the company reported Thursday. Boating Industry reported on West Marine’s preliminary 2008 results in January.

For the year, the company reported an adjusted net loss of $0.35 per share, which excludes various restructuring costs, the impact of a non-cash deferred tax valuation allowance and expenses from an SEC investigation, among other factors.

With those factors included, the company’s reported net loss was $1.76 per share, which is better than the estimated net loss of $1.84 to $1.90 per share the company reported in January.

“West Marine’s performance during 2008 withstood the challenges confronting the industry. From our perspective, we dealt with a very difficult market environment and are reporting financial results a bit better than the preliminary numbers we communicated in January,” said Geoff Eisenberg, president and chief executive officer of West Marine, in the company’s report. “We managed our business conservatively, improved our liquidity, and reduced our debt levels.”

The company reported debt was down 10.2 percent, or $5.3 million, as compared to last year. In addition, available borrowings as of year-end were approximately $68.8 million, and restructuring efforts during 2008 were completed as planned, the company said.

Gross profit for the fifty-three weeks ended Jan. 3 was $167.4 million, a decrease of $27.4 million compared to last year. For fiscal year 2008, gross profit as a percentage of net revenues was 26.5 percent, a decline of 220 basis points compared to 28.7 percent last year. This decline, according to West Marine, was due to the de-leveraging of occupancy expense because of lower revenues, as well as reduced vendor allowances resulting from lower purchase volume that was in line with lower sales.

Selling, general and administrative expense for the fifty-three weeks ended Jan. 3 was $176.8 million, a decrease of $10.4 million compared to last year. The impact of expense controls implemented in 2008, combined with lower variable expenses driven by lower revenues, resulted in a $7.8 million decrease in selling, general and administrative expenses, the company said.

Decreased expenses associated with stores closed in 2008 drove a further $3.4 million reduction. Expenses also reflected lower management bonuses with a year-over-year reduction of $1.9 million in fiscal 2008, as well as the impact of $1.3 million paid to the company’s former chief executive officer as severance compensation in fiscal 2007. Partially offsetting these reductions was a $4.4 million unfavorable impact of foreign currency translation year-over-year.

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