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West Marine reports 33.9% increase in third quarter 2012 pre-tax earnings

West Marine
October 25, 2012
Filed under News

Press Release

WATSONVILLE, Calif., Oct. 25, 2012 (GLOBE NEWSWIRE) — West Marine, Inc. (Nasdaq:WMAR) the largest specialty retailer of boating supplies and accessories today reported financial results for the third quarter ended September 29, 2012.

  • Net revenues were $191.9 million, an increase of 6.5% over last year.
  • Comparable store sales increased by 4.9% over last year.
  • Income before taxes was $17.0 million, up $4.3 million, or 33.9%, compared to last year.
  • Diluted earnings per share (“EPS”) were $0.43, as compared to diluted EPS of $0.33 adjusted to exclude the tax benefit recorded during the second quarter of 2011. Reported diluted EPS for the third quarter of 2011 was $0.48.
  • Third quarter liquidity improved substantially versus last year, with cash increasing 55% to $68.3 million.
  • The company remained debt-free with $102.5 million in available credit on its revolving line.

Net revenues for the 13 weeks ended September 29, 2012 were $191.9 million, an increase of 6.5% compared to net revenues of $180.3 million for the 13 weeks ended October 1, 2011. Revenues in the Stores segment were $175.0 million, up $11.2 million, or 6.8%, compared to the same period last year. Comparable store sales grew by 4.9% over the same period last year. Third quarter Port Supply revenues, representing sales to our wholesale customers through our distribution centers, were $6.7 million, a decrease of $0.4 million, or 5.0%, compared to the same period last year. Net revenues in our Direct-to-Customer segment for the quarter were $10.3 million, an increase of $0.9 million, or 9.1%, compared to the same period last year.

Net income for the third quarter was $10.3 million, or $0.43 per diluted share, compared to net income of $7.7 million, or $0.33per diluted share, adjusted to exclude the tax benefit of the valuation allowance release last year. Reported diluted EPS for the third quarter of 2011 was $0.48. For more details on adjusted EPS, see “Non-GAAP Financial Information” below.

Net revenues for the 39 weeks ended September 29, 2012 were $557.0 million, up 5.1% compared to net revenues of $530.0 million for the 39 weeks ended October 1, 2011. Comparable store sales grew by 3.5% for the first nine months of 2012 versus the same period last year.

Diluted EPS for the first nine months was $1.12 compared to diluted EPS of $1.05, adjusted to exclude the large tax benefit recorded during the first nine months of 2011. Reported diluted EPS for the first nine months of 2011 was $1.88. For more details on adjusted EPS, see “Non-GAAP Financial Information” below.

Total inventory at September 29, 2012 was $213.1 million, a $1.6 million, or 0.8%, increase versus the balance at October 1, 2011, and a 1.5% increase on an inventory per square foot basis. Inventory turns for 2012 were up 5.0% versus the first nine months of last year.

We are re-affirming our previously-issued earnings guidance for fiscal year 2012, which calls for pre-tax income in a range of$23 million to $26 million, an increase of 8% to 23% versus the prior year. Total sales are expected to be in the range of $670 million to $680 million, with comparable store sales growth of 2.0% to 3.5%. We anticipate capital expenditures for fiscal 2012 to be approximately $19 million.

Looking ahead to 2013, we remain focused on three of our previously discussed strategies that are expected to drive future sales and profitability growth. First, our store optimization strategy of moving to fewer, larger stores that provide us with an environment to execute our second strategy of offering expanded merchandise assortments to a broader group of customers. This includes core product categories, such as watersports and fishing, as well as the soft goods categories, such as footwear, apparel and accessories. Our third strategy centers on maximizing our eCommerce website to provide our customers with an improved shopping experience. The company will be investing significant resources in support of these strategies, including a 40% to 50% increase in our capital investment over 2012 to support sales growth and to upgrade our infrastructure. These strategies and investments support our shift to an omni-channel retail model designed to provide a seamless customer experience and to better position us to deliver incremental sales and operating margin improvement over time.

Matt Hyde, West Marine’s CEO, commented: “Our store teams did a great job driving a comparable store sales increase of 4.9% and we were effective at delivering these dollars to the bottom line. Looking a little deeper into the numbers, we enjoyed a healthy core business with impressive contributions from our growth strategies. As we turn towards the end of the year, we are focused on inspiring our customers during the gift-giving season and we are excited about our strategies propelling us forward.”

Investor Conference Call

West Marine will hold a conference call and webcast on Thursday, October 25, 2012, at 1:00 p.m. Eastern Time (EDT) to discuss its third quarter 2012 results. The live call will be webcast and available in real time on the Internet at westmarine.com under “Investor Relations.” Participants may also dial (800) 341-6235 in the United States and Canada and (706) 634-1041 for international calls. Please be prepared to give the conference ID number 39374763.

An audio replay of the call will be available October 25, 2012 at 4:00 p.m. EDT through November 1, 2012 at 11:59 p.m. EDT. The replay number is (855) 859-2056 in the United States and Canada and (404) 537-3406 for international calls. The access code is 39374763.

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