West Marine reports 1Q results

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West Marine today reported an increase in revenue and comparable-store sales for the first quarter of 2011, but a small decrease in gross profit.

Net revenues for the 13 weeks that ended April 2 were $113.8 million, compared with net revenues of $109.6 million in the same period last year.

The company reported a net loss of $12.3 million, or 55 cents a share, for the quarter, compared with a loss of $9.5 million, or 43 cents a share, a year earlier.

Port supply segment revenues from its distribution centers were $6.5 million, a decrease of $200,000, or 3.1 percent, compared with the same period last year. Net revenues in the direct sales segment for the first quarter were $7.2 million, an increase of $700,000, or 10.4 percent, from the same period last year.

Comparable-store sales increased 2.7 percent, compared with the same period a year earlier. A driver of this growth was increased sales to wholesale customers through store locations as part of ongoing efforts to better serve this group and to leverage store facilities.

Revenues from stores opened in 2010 and the first quarter of this year contributed $6.7 million to the increase. However, the effect of stores closed during these periods effectively reduced revenues by $4.9 million. The majority of the closings occurred in connection with the company's real estate optimization program in which it is evolving into having fewer, larger stores.

Gross profit for the first quarter was $24.7 million, a decrease of $400,000 from the quarter last year. As a percentage of net revenues, gross profit decreased by 1.2 percent to 21.7 percent compared with gross profit of 22.9 percent last year.

This decline primarily resulted from lower product margins, driven by a sales mix shift toward lower-margin items, such as electronics, and away from higher-margin maintenance-related items, primarily because of the early start of the season last year, the company said.

Total inventory at the end of the first quarter was $247.7 million, a $4.9 million, or 2 percent increase, compared with the first quarter last year, and a 1.6 percent increase on a per-square-footage basis. Inventory turns for the first quarter of 2011 were up slightly, compared with the same period last year.

"Our sales results in the first quarter were better than we had planned. Last year we had historically great weather in the northern parts of the country; however, this year returned to a more typical weather pattern, with harsh wintry conditions during the first quarter," CEO Geoff Eisenberg said in a statement. "Since northern boaters did not launch and use their boats nearly as early as they did last year, sales of maintenance and other related products were not as strong in the first quarter this year as they were last year.

"Despite the weather negatively impacting the northern portions of the country, we experienced some unexpected increases that resulted in higher total revenues than we budgeted," he added. "Our sales of higher-ticket merchandise, such as electronics, were stronger than expected, and we had surprising strength in the Southeast region, the only portion of the country that had great weather and was 'in season' during the period."

Comparable-store sales for the full year are now anticipated to increase from 1 percent to 2 percent, compared with the previously communicated range of flat to up 1 percent. Total revenues are now expected to be in a range of about $634 million to $640 million, compared with a previously communicated range of $629 million to $635 million.

West Marine stock opened Thursday at $10.79 a share. Its 52-week high and low are $13.63 and $8.37.

Click here for the full report.


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