West Marine, Inc. reported net revenues for the 13 weeks ended Sept. 28 were $193.4 million, an increase of 0.7 percent compared to net revenues of $191.9 million for the 13 weeks ended Sept. 29, 2012.
In line with its omni-channel focus, beginning in the first quarter, the company changed the definition of comparable store sales to now include sales from Direct-to-Consumer and wholesale channels. As before, store sales are included in comparable store sales in the fiscal period in which they commence their 14th full month of operations. Stores that were closed or substantially remodeled (i.e., resulting in an increase or decrease of 40 percent or more of selling square footage) are excluded.
According to this new definition, comparable store sales for the third quarter increased by 0.9 percent over the same period last year. For the third quarter last year, West Marine reported a 4.9 percent increase in comparable store sales. Using the new definition, third quarter 2012 comparable store sales also increased by 4.9 percent.
“Sales showed modest improvement, driven primarily by higher growth from our strategies,” said CEO Matt Hyde. “During the third quarter we opened three Flagship stores, we achieved stronger sales in our merchandise expansion categories, and we experienced good momentum in our e-commerce business. These results reinforce our belief that we need to continue to invest in West Marine to deliver steady, profitable growth.”
Net income for the third quarter was $6.3 million, or 26 cents per diluted share, compared to net income of $10.3 million, or 43 cents per diluted share, for the third quarter last year. Excluding the impact of the $1.5 million valuation allowance recorded during the third quarter of this year, which resulted from a California tax law change, net income for the third quarter would have been $7.9 million, or 32 cents per diluted share.
Net revenues for the 39 weeks ended Sept. 28, 2013 were $544.4 million, a decrease of 2.3 percent compared to net revenues of $557.0 million for the 39 weeks ended Sept. 29, 2012. Comparable store sales decreased by 2.3 percent for the first nine months of 2013 compared with the same period last year. For the first nine months last year, West Marine reported a 3.5 percent increase in comparable store sales. However, using the new definition, the first nine months of 2012 comparable store sales would have increased by 3.2 percent.
Net income for the first nine months was $19.7 million, or 80 cents per diluted share, compared to net income of $26.6 million, or $1.12 per diluted share for the first nine months last year.
Total inventory at the end of the third quarter was $222.2 million, a $9.1 million, or 4.3 percent, increase versus the balance at Sept. 29, 2012, and a 3.3 percent increase on an inventory per square foot basis. Inventory turns for 2013 were down 0.6 percent versus the first nine months of last year.
2013 guidance
The company affirmed it guidance for pre-tax income to be in a range of $15.5 million to $17.5 million. Excluding the impact of a California tax law change that required us to record a valuation allowance of $1.5 million, diluted earnings per share is expected to be in the range of approximately 37 to 42 cents. GAAP diluted earnings per share is expected to be in the range of 31 to 36 cents. Comparable store sales for full-year 2013 are anticipated to be down 2.0 percent to 4.0 percent (using the new definition for comparable store sales outlined above), with total revenues expected to be in the range of $650 million to $660 million. West Marine anticipates capital expenditures for fiscal 2013 to be in the range of $25 million to $29 million.
West Marine, Inc. is the largest specialty retailer of boating supplies and accessories in the United States, with 289 company-operated stores located in 38 states, Puerto Rico, Canada and five franchised stores located in Turkey. Founded in 1968 by a sailor, West Marine has grown to become a leading omni-channel retailer for boaters — from power cruisers and sailors to anglers and paddle sports enthusiasts — and offers gear, apparel and footwear for anyone who enjoys recreational time on or around the water. The company's wholesale channel is one of the largest distributors of marine equipment serving boat manufacturers, marine services, commercial vessel operators and government agencies.
