West Marine, Inc. Tuesday reported financial results for the third quarter ended October 1, 2016.
The company reported net revenues of $191.9 million in the quarter, a decrease of 1.3 percent compared to the same period last year. Comparable store sales increased 0.2 percent year-over-year. Pre-tax income was $7.4 million, compared to pre-tax income of $8.6 million last year in the same period. Earnings per diluted share decreased 5 cents to 15 cents per share.
Matt Hyde, CEO of West Marine, commented: “We are pleased that our growth strategies are resulting in a 24 percentincrease in eCommerce sales and solid top-line gains in our Waterlife stores. At the same time, we continue to make changes to our professional services business to improve its long-term profitability. Despite the challenging retail environment, we’ve increased comparable store sales and product margins and remain on track to achieve a double digit increase in pre-tax income for 2016.”
Further Progress on Growth Strategies
- Sales from eCommerce increased by 23.7 percent compared to the third quarter of 2015 and represented 10.2 percent of total sales, compared to 8.2 percent for the same period last year, showing continued progress towards the goal of 15 percent of total sales.
- Sales through Waterlife stores were 48.0 percent of total sales compared to 44.0 percent last year.
- Sales in merchandise expansion product lines, which include footwear, apparel, clothing accessories, fishing products and paddlesports equipment, increased 2.9 percent, while core product sales were down 2.2 percent compared to the same period last year.
Results for the Third Quarter of 2016
Net revenues for the quarter ended October 1, 2016 decreased by $2.5 million, or 1.3 percent, to $191.9 million compared to $194.4 million for the quarter ended October 3, 2015.
Gross margin was steady at 28.9 percent of revenues, compared to the same period in 2015. Selling, general and administrative (“SG&A”) expense increased by $0.3 million, or 0.6 percent, compared to the same period in 2015, as higher variable selling and store depreciation expenses, were partially offset by lower variable compensation.
Pre-tax income for the third quarter was $7.4 million, compared to pre-tax income of $8.6 million, for the third quarter of 2015.
Net income for the third quarter was $3.9 million, or $0.15 per share, compared to net income of $4.9 million, or $0.20 per share, for the third quarter of 2015.
Inventory at the end of the third quarter was down $5.3 million compared to the same point in 2015, while accounts payable increased $17.1 million. As of October 1, 2016, the company had cash and cash equivalents totaling $93.9 million compared to $60.5 million at the same point in 2015.
Results for the First Nine Months of 2016
Net revenues for the nine months ended October 1, 2016 decreased by $0.7 million, or 0.1 percent, to $573.9 million compared to $574.6 million for the nine months ended October 3, 2015. Comparable store sales for the period increased 1.2 percent compared to the first nine months of 2015.
Gross margin expanded to 30.9 percent of net revenues, compared to 30.3 percent during the same period in 2015. SG&A expense increased year-over-year by $2.6 million, primarily as a result of the company’s biennial training meeting and higher benefit expenses. These increases were partially offset by lower payroll expense and a partial settlement received from the Deepwater Horizon Settlement program.
Pre-tax income for the first nine months ended October 1, 2016 was $28.5 million, compared to $27.6 million, for the quarter ended October 3, 2015.
Net income for the first nine months was $16.3 million, or $0.65 per share, compared to net income of $15.6 million, or $0.63 per share, for the first nine months of 2015.
Based on information available as of Tuesday, the company reiterated full-year 2016 pre-tax income guidance of $9 to $11 million on consistent revenue levels to last year.