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West Marine reports 3Q results

Net revenues rose 0.7 percent at West Marine in the third quarter to $193.4 million and comparable store sales increased by 0.9 percent.

E-commerce sales leaped 20.3 percent following a push by the company to ramp up its direct-to-consumer business.

CEO Matthew Hyde said in a conference call with investors and analysts that building the e-commerce business was the most important strategy at West Marine.

“Since we've been focusing investing in this area, our results have continued to improve,” Hyde said. “If you isolate domestic e-commerce sales the increase was more dramatic, at a 31.9 percent increase.”

A new website platform that’s expected to launch near the end of the year will help the company continue to drive growth, Hyde said. Part of the strategy is to incentivize smaller stores with less merchandise sell from the larger online assortment.

Net income for the quarter that ended Sept. 28 was $6.3 million, or 26 cents a diluted share, compared with $10.3 million, or 43 cents a share, in the third quarter last year. Excluding the impact of a $1.5 million valuation allowance recorded during the 2013 quarter, which resulted from a California tax law change, net income would have been $7.9 million or 32 cents a share.

“Sales showed modest improvement, driven primarily by higher growth from our strategies,” Hyde said in a statement. “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."

Addressing 2013 guidance, the company said it expects diluted earnings per share to be in the range of about 37 to 42 cents. Comparable-store sales are expected to be down 2 to 4 percent (using a revised definition of those sales) and total revenue is expected to be in the range of $650 million to $660 million, the company said. West Marine anticipates that capital expenditures for the year will be in the range of $25 million to $29 million.

“When you take a look at boat sales, we've been encouraged from a unit standpoint,” Hyde said. “[Consumers] tend to be focusing right now on smaller boats, which isn't necessarily our sweet spot, but as boat sales go up we think this is definitely positive for West Marine in the future.”

— Reagan Haynes

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