West Marine, the largest specialty retailer of boating supplies and accessories, said comparable-store sales slid 2.7 percent in the second quarter as continued unfavorable weather reduced recreational boating usage.

Revenues decreased 2.8 percent in its second quarter ended June 29, to $236.8 million. Direct-to-Consumer sales were up 12.0 percent, driven by our strategic investments in eCommerce. Sales in its merchandise expansion categories (which include footwear, apparel, clothing accessories, fishing products and paddle sports equipment) were up 4.3 percent, with core usage-related product sales down 3.5 percent, compared to last year.

Pre-tax income was $37.7 million, down 1.1 percent compared to pre-tax income of $38.1 million last year.

The company is lowering 2013 full-year guidance, with pre-tax income now expected to be in the range of $15.5 million to $17.5 million, compared to pre-tax income of $24.3 million for 2012.

Net income per diluted share was 91 cents for the second quarter, compared to net income per share of 95 cents last year. Second quarter liquidity continued to improve, with cash increasing from $37.1 million last year to $45.8 million.

Total inventory at the end of the second quarter was $243.1 million, a 2.3 percent decline versus last year.

The company remained debt-free at quarter-end with $115.8 million available on its revolving credit line at the end of the period.

Net revenues for the 13 weeks ended June 29, 2013 were $236.8 million, a decrease of 2.8 percent compared to net revenues of $243.6 million for the 13 weeks ended June 30, 2012.

In line with our omni-channel focus, beginning in the first quarter, we changed the definition of comparable store sales to now include sales from our 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.

Using this new definition, comparable store sales for our second quarter decreased by 2.7 percent over the same period last year. For the second quarter last year, we reported a 2.1 percent increase in comparable store sales. However, using the new definition, our second quarter 2012 comparable store sales would have increased by 1.8 percent.

Matt Hyde, West Marine's CEO, commented: “The quarter came in much weaker than expected due to reduced recreational boating usage as a consequence of the continued unfavorable weather. We have been able to partially offset these results with our growth strategies and by sales in areas experiencing a more typical boating season. Our teams are responding by managing our expenses and controlling inventories, while we continue to invest in our future growth strategies with a focus on strengthening West Marine.”

Net income for the second quarter was $22.3 million, or $0.91 per diluted share, compared to net income of $22.6 million, or $0.95 per diluted share, for the second quarter last year.

Net revenues for the 26 weeks ended June 29, 2013 were $351.0 million, a decrease of 3.8 percent compared to net revenues of $365.0 million for the 26 weeks ended June 30, 2012. Comparable store sales decreased by 4.0 percent for the first six months of 2013 versus the same period last year. For the first six months last year, we reported a 2.8 percent increase in comparable store sales. However, using the new definition, our first six months 2012 comparable store sales would have increased by 2.3 percent.

Net income for the first six months was $13.3 million, or $0.54 per diluted share, compared to net income of $16.4 million, or $0.69 per diluted share for the first six months last year.

Total inventory at the end of the second quarter was $243.1 million, a $5.8 million, or 2.3 percent, decrease versus the balance at June 30, 2012, and a 0.5 percent decrease on an inventory per square foot basis. Inventory turns for 2013 were down 2.2 percent versus the first six months of last year.

2013 Guidance

During the first half of 2013, our sales results were lower than expected, driven primarily by unusually cold, rainy and windy weather in many of our markets, which in turn resulted in a reduction in boat usage. Consequently, we are lowering our previously-issued sales and earnings guidance for fiscal year 2013. We now expect pre-tax income in a range of $15.5 million to $17.5 million, approximately $9.0 million lower than our previously-communicated pre-tax income guidance. This will result in diluted earnings per share of approximately $0.37 to $0.42. Comparable store sales for full-year 2013 are now anticipated to be down 2.0 percent to 4.0 percent (using our new definition for comparable store sales outlined above), with total revenues now expected to be in the range of $650 million to $660 million, $27.5 million lower than our previously-communicated guidance. We anticipate capital expenditures for fiscal 2013 to be in the range of $25 million to $29 million, unchanged from our prior guidance.

Share Repurchase Program

As previously disclosed, our Board of Directors authorized a $10 million stock repurchase program with the primary purpose of mitigating the dilutive impact of shares issued under the company's omnibus equity incentive plan and its employee stock purchase plan. No shares were repurchased during the second quarter of 2013.

West Marine has 294 company-operated stores located in 38 states, Puerto Rico, Canada and five franchised stores located in Turkey.