West Marine, Inc. said net revenues for the fourteen weeks ended Jan. 3, 2009 were $111.1 million, a decrease of $7.2 million, or 6.1%, from net revenues of $118.3 million for the thirteen weeks ended Dec. 29, 2007.


Comparable store sales for the fourth quarter decreased 5.1%. As compared to the corresponding fourteen-week period ended Jan. 5, 2008, comparable store sales decreased 9.9%.

 

Net loss for the fourth quarter ended January 3, 2009 was $29.0 million, or $1.31 per share. This compares to a net loss of $65.6 million, or $3.00 per share, for the fourth quarter last year. 

 

2008 RESULTS

 

West Marine, Inc. said net revenues for the fiscal year ended Jan. 3 were $631.3 million, down 7.1% from last year.

 

Comparable store sales for the fifty-three weeks ended Jan. 3 decreased 6.8%. As compared to the corresponding fifty-three weeks ended Jan. 5, 2008, comparable store sales decreased 7.6%.

 

Net revenues for the fifty-three weeks ended Jan. 3, were $631.3 million, a decrease of $48.3 million, or 7.1%, from net revenues of $679.6 million for the fifty-two weeks ended December 29, 2007. Comparable store sales for the fifty-three weeks ended January 3, 2009 decreased 6.8%. As compared to the corresponding fifty-three week period ended January 5, 2008, comparable store sales decreased 7.6%.


Gross profit for the fifty-three weeks ended January 3, 2009 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%, a decline of 220 basis points compared to 28.7% last year. This decline 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, 2009 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. 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 our 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.

 

Cash flow from operating activities was $20.6 million.

Debt is down 10.2%, or $5.3 million, as compared to last year.
Available borrowings under our credit facility as of year-end were approximately $68.8 million.

Restructuring efforts during 2008 were completed as planned.
Adjusted net loss was 35 cents per share, which excludes the impact of certain significant items that impacted results and are discussed below.

 

Reported net loss was $1.76 per share, which compares favorably to the estimated range of a net loss of $1.84 to $1.90 per share communicated in January.

Adjusted net loss (excluding the impact of the significant items in both years) for fiscal 2008 was $7.8 million, or 35 cents per share, compared to adjusted net income of $1.7 million, or 8 cents per share last year.


Reported net loss (including the impact of the significant items in both years) was $38.8 million, or $1.76 per share, compared to reported net loss of $50.0 million or $2.30 per share, last year.

The following describes each of the significant items impacting results in fiscal 2008 and fiscal 2007.


2009 OUTLOOK


In communicating West Marine’s expectations for 2009, Mr. Eisenberg explained, “We’re following the lead of many public companies and substituting this ‘outlook’ for the specific financial ‘guidance’ we’ve communicated in the past.


“We assume that this year will continue to be quite challenging for our industry. With all the weakness observed in the economy, we expect sales to decline at roughly the same pace we experienced in recent quarters. Our operating plans for 2009 reflect this weak environment, and we believe that carefully controlling expenses and managing our working capital will allow us to again generate positive cash flow and further reduce debt.


“During 2009, we expect that our investments will be conservative, that we will continue to focus on productivity gains, and that we will successfully improve our offerings to customers.”


Eisenberg concluded his outlook by noting: “Despite the economic gloom and doom that is impacting so many, we at West Marine believe that the love of boats and boating will remain a truly significant part of life for millions. We remain confident that our long-term strategies, which range from the roll out of our new Flagship prototype stores, to our renewed commitment to product development, to our focus on Associate development, will position us well for the future.”


 



































































































































































































































































































































West Marine, Inc.
Condensed Consolidated Statements of Operations
(Unaudited and in thousands, except share data)
       
14 Weeks Ended
January 3, 2009
13 Weeks Ended
December 29, 2007
Net revenues $ 111,065 100.0 % $ 118,296 100.0 %
Cost of goods sold   94,246     84.9 %   94,323     79.7 %
Gross profit 16,819 15.1 % 23,973 20.3 %
Selling, general and administrative expense 37,284 33.6 % 45,556 38.5 %
Goodwill impairment 0.0 % 56,905 48.1 %
Store closures and other restructuring costs 9,027 8.1 % 558 0.5 %
Impairment of long lived assets   438     0.3 %   862     0.7 %
Loss from operations (29,930 ) -26.9 % (79,908 ) -67.5 %
Interest expense   403     0.4 %   751     0.7 %
Loss before taxes (30,333 ) -27.3 % (80,659 ) -68.2 %
Income taxes   (1,332 )   -1.2 %   (15,073 )   -12.8 %
Net loss $ (29,001 )   -26.1 % $ (65,586 )   -55.4 %
 

Net loss per common and common equivalent share –

Basic and diluted $ (1.31 ) $ (3.00 )
 

Weighted average common and common equivalent shares outstanding –

Basic and diluted 22,082 21,874
 
 
53 Weeks Ended
January 3, 2009
52 Weeks Ended
December 29, 2007
Net revenues $ 631,258 100.0 % $ 679,561 100.0