West Marine Inc. reported third-quarter revenues and earnings came in below year-ago levels amid declining traffic to its brick-and-mortar stores and challenges at its wholesale business.
The California-based retailer reported revenues of $191.9 million in the quarter, a decrease of 1.3 percent compared to the same period last year. Comparable store sales increased 0.2 percent year over year. Pre-tax income was $7.4 million, compared to pre-tax income of $8.6 million last year in the same period. Earnings per diluted share decreased 5 cents to 15 cents per share.
Still, the company reiterated full-year 2016 pre-tax income guidance of $9 million to $11 million on consistent revenue levels to last year.
“We are pleased that our growth strategies are resulting in a 24 percent increase in e-commerce sales and solid top-line gains in our Waterlife stores,” said CEO Matt Hyde. “At the same time, we continue to make changes to our professional services business to improve its long-term profitability. Despite the challenging retail environment, we’ve increased comparable store sales and product margins and remain on track to achieve a double digit increase in pre-tax income for 2016.”
Further Progress On Growth Strategies
Sales from e-commerce increased by 23.7 percent compared to the third quarter of 2015 and represented 10.2 percent of total sales, compared to 8.2 percent for the same period last year, showing continued progress towards the goal of 15 percent of total sales.
Sales through Waterlife stores were 48 percent of total sales compared to 44 percent last year. This year-over-year increase demonstrates the company’s progress toward the goal to deliver 50 percent of total sales. Waterlife stores have been optimized or revitalized to offer a broader selection of merchandise than traditional stores that focus on core boating products.
Sales in merchandise expansion product lines, which include footwear, apparel, clothing accessories, fishing products and paddlesports equipment, increased 2.9 percent, while core product sales were down 2.2 percent compared to the same period last year.
Results For The Third Quarter Of 2016
Net revenues for the quarter ended October 1, 2016 decreased by $2.5 million, or 1.3 percent, to $191.9 million compared to $194.4 million for the quarter ended October 3, 2015.
Gross margin was steady at 28.9 percent of revenues, compared to the same period in 2015. Selling, general and administrative (SG&A) expense increased by $0.3 million, or 0.6 percent, compared to the same period in 2015, as higher variable selling and store depreciation expenses were partially offset by lower variable compensation.
Pre-tax income for the third quarter was $7.4 million, compared to pre-tax income of $8.6 million for the third quarter of 2015.
Net income for the third quarter was $3.9 million, or 15 cents per share, compared to net income of $4.9 million, or 20 cents per share, for the third quarter of 2015.
Inventory at the end of the third quarter was down $5.3 million compared to the same point in 2015, while accounts payable increased $17.1 million. As of October 1, 2016, the company had cash and cash equivalents totaling $93.9 million compared to $60.5 million at the same point in 2015.
