West Marine increases earnings, lowers debt

WATSONVILLE, Calif. — West Marine posted earnings per share of $1.46 in the second quarter, significantly more than the $0.20 it earned for the same period last year, according to unaudited operating results released Thursday by the company. Last year’s earnings included $0.72 per share of non-recurring, non-cash charges, the company said.

The company’s net revenues were down 5 percent to $215.4 million, with comparable store sales down 1 percent.

Income before taxes, however, was up $5.5 million to $32.3 million. The company also cut into its long-term debt, which at quarter-end was $18.0 million, a decrease of $33.0 million compared to the same period last year.

Selling, general and administrative expense decreased $8.4 million, or 17.2 percent, compared to last year. Also, at the quarter’s end, credit facility availability was more than $115.0 million.

Geoff Eisenberg, West Marine’s CEO, said he was pleased with the results.

“Our profitability and cash flow increased significantly, and we dramatically lowered debt,” he said in a statement accompanying the results. “While the boating industry overall has continued to struggle, we believe we’ve benefited from an uptick in boat usage in many markets, a movement towards more ‘do-it-yourself’ projects, and very good customer acceptance of our product line expansions. We’ve also been positively impacted by the demise of a large competitor.”

Year-to-date net revenues, which include the twenty-six weeks ended July 4, were $316.3 million, a 6.9 percent decrease compared to net revenues of $339.9 million for the twenty-six weeks ended June 28, 2008.

Gross profit for the year to date was $95.0 million, a decrease of $5.9 million compared to 2008.

Cash generated by operating activities during the first six months of the year was $45.3 million, which was 178 percent higher than the corresponding period last year due to increased net income and efficient inventory management.

“New boat manufacturing and sales have been soft, and that has had an adverse effect on our Port Supply (wholesale) division. But the relative strength in retail, which has been better than we anticipated, positively impacted our results,” Eisenberg said. “All of our key strategies (from optimizing real estate with larger, more dominant stores to expanding our West Marine brand merchandise) are multi-year initiatives, but the initial results give us confidence that we’re on the right course.”

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