West Marine, Inc. recorded a 4.9% decrease in fourth quarter net sales to $117.8 million from $123.8 million for the year-ago period. The company attributed the sales decline to a $4.2 million decrease in sales attributable to closed stores and a $2.9 million decrease in comparable store sales. Comparable store sales for the fourth quarter decreased 3.0%.
 
Net sales for the full fiscal year declined 5.2% to $679.1 million from net sales of $716.6 million a year ago, primarily due to a $28.6 million sales decrease attributable to closed stores and a $11.4 million decrease in comparable store sales. Comparable store sales for fiscal year 2007 do not include net sales of $6.1 million from new stores and $6.8 million from stores remodeled or expanded during the year. Comparable store sales for 2007 decreased 1.9%.


Net sales in the Stores segment for fiscal year 2007 were $593.8 million, a decrease of $36.1 million, or 5.7%, compared to fiscal year 2006. The sales decrease primarily was due to a $23.1 million decrease attributable to closed stores and a $11.4 million decrease in comparable store sales. Port Supply (wholesale) segment sales through the distribution centers for 2007 were $41.6 million, a decrease of $2.0 million, or 4.5%, compared to 2006. Port Supply sales to wholesale customers through store locations are included in the Stores segment. Net sales in the Direct Sales segment for 2007 were $43.8 million, an increase of $0.6 million, or 1.3%, compared to 2006.


Geoff Eisenberg, CEO of West Marine, said, “Overall sales levels in the fourth quarter were modestly below our expectations. In particular, the southeast has remained soft, continuing the trends we have seen for most of the year. Weakness in several core merchandise categories was partly offset by strength in electronics, which reflected increased promotional activity as we responded to marketplace conditions.”


West Marine also reported certain significant events expected to impact fourth quarter and fiscal year 2007 results, as follows:



  • An updated assessment of goodwill in the fourth quarter, as required by Statement of Financial Accounting Standards No. 142, is expected to result in a non-cash impairment charge in the fourth quarter of approximately $56.9 million pre-tax, or $2.31 per share after-tax. The after-tax, per share equivalent of this impairment charge reflects the non-deductibility for tax purposes of certain goodwill components;
  • Continued cooperation with the previously-announced SEC informal inquiry is expected to result in expenditures that exceed the company's previous fourth quarter estimate by approximately $1.7 million pre-tax, or 5 cents per share after-tax;
  • The departure of the company's former CEO is expected to result in related severance costs in the fourth quarter of approximately $1.3 million pre-tax, or 4 cents per share after-tax;
  • Management’s on-going evaluation of individual store performance is expected to result in a non-cash asset impairment charge in the fourth quarter of approximately $0.9 million pre-tax, or 3 cents per share after-tax.

In addition to these significant events, lower sales during the fourth quarter are expected to result in operating earnings modestly lower than previous expectations for 2007.