West Marine Inc. reported lower gas prices, better weather, a change in the retail calendar and execution of its strategic plan fueled comparable store sales growth of 7 percent in the second quarter ended July 4. 

Net revenues for the second quarter increased by $16.7 million, or 7.1 percent, to $253.2 million compared to $236.5 million for the second quarter of 2014. Excluding the calendar shift, WMAR’s comparable store sales grew 3 percent. Gross margin rose by 100 basis points to 35.8 percent, while SG&A expense increased 10 basis point to 21.0 percent of net sales, resulting in operating margins of 14.7 percent, up 100 basis points from the year earlier quarter. WMAR reported net income of $20.9 million, or 85 per diluted share, up from $18.3 million, or 75 cents in the second quarter of 2014.

CEO Matt Hyde acknowledged that lower fuel prices and more favorable weather compared with last summer drove up spending across the industry during the quarter. But he also said he is confident WMAR’s investment strategy contributed to the growth.

“We know that because we have been doing a lot of testing and learning,” Hyde said. “Probably the best view of this is through our store optimization strategy, where we have clear holdout stores, and we will go in and do work around revitalization or around adding new assortments to our core boat parts and adding some inventory levels, and we can see a clear lift between the stores that we touch and the stores that we are holding out as control.”

WMAR’s sales of core boating supplies and merchandize grew 6.3 percent during the quarter, while sales of expansion categories – such as paddles sports, fishing and apparel – increased by 20.2 percent.
“About $1 out of $5 spent at West Marine in the second quarter was on a merchandise expansion product,” Hyde noted. “Specifically, we saw a 35 percent increase in paddle sports and lifestyle accessories increased 85 percent, and fishing and clothing had nice increases in the teens.”

E-commerce sales increased by 25.8 percent to 8.4 percent of WMAR’s sales during the quarter, up from 7.2 percent a year earlier. The company aims to increase that to 15 percent in 2019. Last week, the company began fulfilling e-commerce orders from 16 of its 270 stores. The pilot program enables to westmarine.com and portsupuply.com to offer about 5,000 additional products.

 “In addition, the Friday before Fourth of July West Marine posted a record day, beating the previous single-day record, which stood for 10 years,” said Hyde. “And as of note, 10 years ago West Marine had nearly 50 percent more stores than are operating today.

WMAR ended the quarter with inventory valued at $258.1 million, up 6.0 percent from June 28, 2014, or 6.7 percent per-square foot of retail space. Inventory turns for 2015 increased to 2.7 percent versus the first six months of last year.

The company reaffirmed its full-year guidance, which assumes comparable stores sales growth of 1.0-to-4.0 perc