West Marine Restates Earnings

West Marine incorporated a change in its method of reporting certain indirect inventory-related expenses and capitalization. This resulted in a restatement of earnings. These adjustments are the result of the previously announced Company-initiated review of indirect inventory cost capitalization practices, and are expected to provide greater transparency and clarity. There is no cash flow impact and only a nominal cumulative net income impact in the most recent seven quarters. The primary impact is to fiscal years 2003 and 2004.

“We examined changes in our business model, including refinements the Company has made, and will continue to make, in our supply chain practices and inventory management. We re-evaluated our approach to capitalizing indirect inventory costs and concluded that a portion of store occupancy and certain other indirect costs should be excluded,” said Tom Moran, West Marine's Chief Financial Officer.

During the course of its examination, the Company determined that it had incorrectly capitalized a portion of these indirect costs in its inventory value, and further determined that in its adoption in 2003 of a new accounting pronouncement, Emerging Issues Task Force Issue No. 02-16 (“EITF 02-16”), “Accounting by a Customer (Including a Reseller) for Certain Consideration Received from a Vendor,” it did not appropriately report the cumulative effect of such adoption, requiring correction of the previously issued financial statements. These corrections require restating West Marine's audited financial statements for fiscal years 2002 through 2005, and its quarterly financial statements for fiscal years 2005 and the first three quarters of 2006.

“Our outlook for 2007 and beyond, which we believe will be marked by continued growth and improving profitability, is unaffected by these changes in accounting treatment,” said Peter Harris, West Marine's Chief Executive Officer. “These changes bear no reflection on the quality of our assets, nor do they have any impact on our strong reported cash flow. We look forward to continuing our focus on servicing our boating customers beyond their expectations with knowledgeable, caring and passionate associates in this and future years to increase value for our shareholders.”

The effect of these changes on previously reported net income is as follows:

                  Net Income Effect (after tax) (a)
                        (dollars in thousands)

----------------------------------------------------------------------
                                                          39 Weeks
                                                            Ended
                                                          September
                                                             30,
               2002       2003       2004       2005        2006
 ------------ --------   --------   --------   --------   ---------

 Previously
  Reported
  Net Income
  (Loss)      $18,908    $20,090    $25,534    $(2,179)     $5,042
              --------   --------   --------   --------   ---------

 Corrections
  to
  Previously
  Reported
  Net Income
  (Loss)         (922)(1) (6,478)(2) (3,357)(1)   (135)(1)     144 (1)

 Cumulative
  Effect of
  Change in
  Accounting
  Principle         -     (7,978)         -          -           -
              --------   --------   --------   --------   ---------

 Total Impact
  of
  Corrections
  Including
  Cumulative
  Effect         (922)   (14,456)    (3,357)      (135)        144
              --------   --------   --------   --------   ---------


 Restated Net
  Income
  (Loss)
  After
  Cumulative
  Effect      $17,986     $5,634    $22,177    $(2,314)     $5,186
 ------------ --------   --------   --------   --------   ---------