West Marine Q3 Income Drops on Store Closing Costs

West Marine, Inc. reported net sales of $195.6 million for the third quarter, an increase of 3.7% from net sales of $188.6 million for the same period last year. In addition, comparable store sales increased 2.4% for the quarter. Net income was down 80.0% for the quarter to $0.4 million or 2 cents per share from $2.0 million or 9 cents per share last year due in part to a $1.5 million pre-tax, or 4 cents per share after-tax, charge for store closing costs.

Net sales for the thirty-nine weeks ended September 30, 2006 were $592.8 million, an increase of 4.5% from net sales of $567.5 million for the same period a year ago. Comparable store sales increased 2.8% for the thirty-nine weeks ended September 30, 2006. Net income for the thirty-nine weeks ended September 30, 2006 was $5.0 million, or 24 cents per share, including a $5.1 million pre-tax, or 15 cents per share after-tax, charge for store closing costs, compared to net income of $19.3 million, or 90 cents per share, for the same period last year.

Peter Harris, CEO of West Marine, commented, “During our third quarter, we experienced positive results from a series of changes we are making in our business. Our store sales in most areas benefited from new selling and merchandising initiatives, especially in the boating lifestyle categories, and our gross margin, excluding capitalized indirect costs, showed improvement. In addition, our store closing program is proceeding on track and our cost structure has been reduced.”

Mr. Harris continued, “We remain cautious with regard to the boating supply retail environment. However, offering improved assortments of merchandise to our customers and providing them with better than expected service are the foundation of our growth strategy as we prepare for the upcoming year.”

West Marine, Inc.
Condensed Consolidated Statements of Income
For the 13 Weeks Ended September 30, 2006 and October 1, 2005
(Unaudited and in thousands, except per share amounts)

                                      13 Weeks Ended   13 Weeks Ended
                                    September 30, 2006 October 1, 2005
                                    ------------------ ---------------
Net sales                           $  195,605  100.0% $188,574 100.0%
Cost of goods sold, including
 buying and occupancy                  140,832   72.0%  133,177  70.6%
                                    ------------------ ---------------
   Gross profit                         54,773   28.0%   55,397  29.4%
Selling, general and administrative
 expense                                50,982   26.0%   50,872  27.0%
Store closure costs                      1,528    0.8%        -     -
                                    ------------------ ---------------
   Income from operations                2,263    1.2%    4,525   2.4%
Interest expense, net                    1,211    0.7%    1,321   0.7%
                                    ------------------ ---------------
   Income before income taxes            1,052    0.5%    3,204   1.7%
Income taxes                               676    0.3%    1,182   0.6%
                                    ------------------ ---------------
   Net income                       $      376    0.2% $  2,022   1.1%
                                    ================== ===============

Net income per common and common
 equivalent share:
   Basic                            $     0.02         $   0.10
   Diluted                          $     0.02         $   0.09

Weighted average common and common
 equivalent shares outstanding:
   Basic                                21,420           21,126
   Diluted                              21,549           21,421