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.
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.
Available borrowings under our credit facility as of year-end were approximately $68.8 million.
Adjusted net loss was 35 cents per share, which excludes the impact of certain significant items that impacted results and are discussed below.
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.
The following describes each of the significant items impacting results in fiscal 2008 and fiscal 2007.
2009 OUTLOOK
In communicating West Marines expectations for 2009, Mr. Eisenberg explained, “Were following the lead of many public companies and substituting this outlook for the specific financial guidance weve 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 |