Skip to main content

B. Riley optimistic about West Marine’s plans for growth

West Marine’s three-pronged growth strategy has led B. Riley & Co. to introduce the company at a “buy” rating as the investment banking and analyst firm issued its first assessment of the retail chain.

“I feel like there’s a lot of potential,” senior analyst Jimmy Baker told Trade Only Today.

West Marine’s relatively new CEO, Matthew Hyde, who most recently headed REI before joining the company in May, has said he plans to grow the company’s e-commerce arm, expand its offerings beyond traditional boating needs and continue consolidating smaller stores in major markets into larger ones, Baker said. Hyde has also made what Baker refers to as “several talent upgrades” with staff.

The company’s focus on e-commerce is the strategy that has gained the most traction thus far, Baker said, but the others offer significant growth potential, as well.

“Years ago, you could think of West Marine as an AutoZone for boats, but now it’s expanding beyond that for new opportunities,” Baker said. “As a boater myself, the way I thought of West Marine in the past — that’s where to go if I need a rope or a life jacket. West Marine is always going to capture that customer. But the opportunity here is to better monetize existing customers with incremental purchases and make it more of a shopping experience, versus just a transaction.”

The change in the shopping experience at the company’s flagship Newport Beach, Calif., store is “enormous,” Baker said.

“There are individual shopping worlds when you walk in — the apparel world, and then you go into the fishing world,” Baker said. “Even if you came in there to get a core usage product, like bottom paint, you need to walk through these shopping worlds to get to that core product, so there’s an opportunity to better monetize the existing customer with the store’s format, as well as bring in the incremental on-water lifestyle customer who doesn’t necessarily have a boat.”

The year has been “admittedly disappointing” for West Marine, Baker wrote in his analysis. “However, we believe that this is largely the function of abnormally abysmal weather throughout much of [the first half of] 2013, compounded by a [Hurricane] Sandy-related overhang in the Northeast.”

Online commerce also still has room for growth since West Marine’s online sales account for just 5 percent of total sales, Baker said, where comparable companies would see that arm making up closer to 25 percent.

“E-Commerce is a particularly attractive, underutilized weapon for West Marine, in our view, given it supplies a wide breadth of hard-to-find SKUs — roughly 75,000 SKUs online, versus 4,000 to 25,000 in any given storefront,” Baker wrote.

West Marine’s shares closed at $13.33 Tuesday, with a 52-week range of $9.30 to $13.25. B. Riley has given the company’s shares a $17 target.

Related

1_WHALESACTION

NMMA: Proposed Speed Rule an ‘Existential Threat’ to Industry

The association is calling on every marine brand, employee and boat owner to file public comment by Oct. 31 over a sweeping regulation to protect North Atlantic right whales.

1_AXOPAR

Axopar and Nimbus Renew Agreement

The boatbuilders have entered an agreement whereby Nimbus Group will retain exclusive rights to sell Axopar boats on the Swedish market.

1_IAN

Hurricane Ian Leaves Devastation in Florida

The storm left a wide swath of destruction, heavily impacting marine interests from Tampa Bay to Marco Island.

Norm

Email Is Your Ticket to Holiday Sales

Developing an effective email campaign can bolster sales and help fill winter coffers at your dealership.

1_NMRA

NMRA Presents Annual Awards

Edson CEO Will Keene and ComMar Sales president Tim Conroy were recognized for their contributions to the marine industry.

1_ PULSE.PING.2

DEALERS: Are Interest Rates Impacting Demand?

This month’s Pulse Report survey asks dealers whether interest rate increases are causing a downturn in boat sales. Take the survey here.

1_EPROPULSION

EPropulsion, Mack Boring Partner with Crest

Pontoon builder Crest will use an ePropulsion Navy 3.0 Evo electric outboard motor and an E175 battery for its 2023 Current model.

1_BENETEAU

Beneteau Reports Significant H122 Growth

The company reported that its revenue grew 8.6 percent and income increased by 30 percent during the first half of 2022.