West Marine reports 2Q results

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West Marine today reported an increase in second-quarter profits and raised its guidance for the fiscal year.

Net income for the second quarter was $44.7 million, or $1.92 a fully diluted share, compared with $35.1 million, or $1.52 a fully diluted share, a 26.3 percent increase from the same period last year. Income before taxes for the second quarter was $40 million, an increase of $4 million, or 11 percent, compared with the same period last year.

Income before taxes for the first six months was $27.7 million, an increase of $1.2 million, or 4.4 percent, from the same period last year. Net income for the first six months was $32.4 million, or $1.39 a fully diluted share, a 24.1 percent increase from $25.6 million, or $1.12 a fully diluted share, in the same period last year.

West Marine is raising its previously issued 2011 full-year pretax earnings guidance to a range of $18.5 million to $20 million. Earnings per share guidance is increasing to a range of $1.05 to $1.16 a share.

“After a much later beginning to the boating season because of difficult weather in many markets, customer activity finally kicked in during the last month of the quarter,” CEO Geoff Eisenberg said in a statement. “We experienced stronger year-over-year sales after Memorial Day while continuing to manage expenses and gross margin. Based on our current outlook, combined with positive customer response to many of our sales initiatives, we have increased our full-year guidance for both revenues and earnings.”

Net revenue for the 13 weeks that ended July 2 was $236 million, compared with net revenue of $233.4 million for the 13 weeks that ended July 3, 2010.

Revenue in the stores segment was $214.8 million, up $2.2 million, or 1 percent, from the same period last year. Revenue from stores that opened in 2010 and the first two quarters of this year contributed $15.8 million to the increase. However, the effect of stores that closed during those periods effectively reduced revenue by $13.2 million.

The majority of the closings occurred in connection with West Marine’s real estate optimization program. The company is shifting to fewer, larger stores.

Comparable store sales were flat year-to-year.

The company’s port supply segment revenue from its distribution centers for the second quarter was $8.4 million, a decrease of $800,000, or 8.8 percent, compared with the same period last year. As West Marine opens larger stores and hub locations in its stores, it said it continues to see sales through the distribution centers move from the port supply segment to the stores segment.

Net revenue in the direct sales segment for second quarter was $12.7 million, an increase of $1.2 million, or 10.5 percent, from the same period last year.

Gross profit for the second quarter was $84.8 million, an increase of $2.3 million from the 2010 quarter.

Net revenue for the 26 weeks that ended July 2 was $349.8 million, a 2 percent increase from $342.9 million for the same period in 2010. Comparable store sales increased 0.9 percent from the same period a year earlier.

Gross profit for the 26-week period was $109.5 million, an increase of $2.0 million from the same period in 2010.

Total inventory at the end of the second fiscal quarter was $242 million, an increase of $1.9 million, or 0.8 percent, compared with the second fiscal quarter of last year, and a 0.5 percent decrease on a per-square-footage basis. Inventory turns for the second quarter of 2011 were flat, compared with the same period last year.

At the end of the quarter the company had no debt, compared with $2.5 million at the end of the second quarter last year.

West Marine stock closed at $9.68 a share on Wednesday. Its 52-week high and low are $13.48 and $8.37.

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