West Marine Press Release
|West Marine Reports Third Quarter 2013 Results and Reaffirms 2013 Pre-Tax Earnings Guidance|
Watsonville, CA (October 24, 2013)
West Marine, (Nasdaq:WMAR)the largest specialty retailer of boating supplies and accessories in the United States, today reported financial results for the third quarter ended September 28, 2013.
Net revenues for the 13 weeks ended September 28, 2013 were $193.4 million, an increase of 0.7% compared to net revenues of $191.9 million for the 13 weeks ended September 29, 2012.
In line with our omni-channel focus, beginning in the first quarter, we changed the definition of comparable store sales to now include sales from our Direct-to-Consumer and wholesale channels. As before, store sales are included in comparable store sales in the fiscal period in which they commence their 14th full month of operations. Stores that were closed or substantially remodeled (i.e., resulting in an increase or decrease of 40% or more of selling square footage) are excluded. Using this new definition, comparable store sales for our third quarter increased by 0.9% over the same period last year. For the third quarter last year, we reported a 4.9% increase in comparable store sales. Using the new definition, our third quarter 2012 comparable store sales also increased by 4.9%.
Matt Hyde, West Marine’s CEO, commented: “Sales showed modest improvement, driven primarily by higher growth from our strategies. 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 eCommerce business. These results reinforce our belief that we need to continue to invest in West Marine to deliver steady, profitable growth.”
Net income for the third quarter was $6.3 million, or $0.26 per diluted share, compared to net income of $10.3 million, or $0.43 per diluted share, for the third quarter last year. Excluding the impact of the $1.5 million valuation allowance recorded during the third quarter of this year, which resulted from a California tax law change, net income for the third quarter would have been $7.9 million, or $0.32 per diluted share.
Net revenues for the 39 weeks ended September 28, 2013 were $544.4 million, a decrease of 2.3% compared to net revenues of $557.0 million for the 39 weeks ended September 29, 2012. Comparable store sales decreased by 2.3% for the first nine months of 2013 versus the same period last year. For the first nine months last year, we reported a 3.5% increase in comparable store sales. However, using the new definition, our first nine months 2012 comparable store sales would have increased by 3.2%.
Net income for the first nine months was $19.7 million, or $0.80 per diluted share, compared to net income of $26.6 million, or $1.12 per diluted share for the first nine months last year.
Total inventory at the end of the third quarter was $222.2 million, a $9.1 million, or 4.3%, increase versus the balance at September 29, 2012, and a 3.3% increase on an inventory per square foot basis. Inventory turns for 2013 were down 0.6% versus the first nine months of last year.
We are reaffirming our expectation for pre-tax income to be in a range of $15.5 million to $17.5 million. Excluding the impact of a California tax law change that required us to record a valuation allowance of $1.5 million, our diluted earnings per share is expected to be in the range of approximately $0.37 to $0.42. Our GAAP diluted earnings per share is expected to be in the range of $0.31 to $0.36. Comparable store sales for full-year 2013 are anticipated to be down 2.0% to 4.0% (using our new definition for comparable store sales outlined above), with total revenues expected to be in the range of $650 million to $660 million. We anticipate capital expenditures for fiscal 2013 to be in the range of $25 million to $29 million.
Share Repurchase Program
Under our previously-announced share repurchase program, we repurchased 48,859 shares of our common stock in open-market transactions for $0.5 million during the third quarter, at an average price of $11.21 per share. As of September 28, 2013, we had $9.5 million remaining under our current share repurchase authorization.
Investor Conference Call
West Marine will hold a conference call and webcast on Thursday, October 24, 2013, at 1:00 p.m. Eastern Time (EDT) to discuss its third quarter 2013 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 (888) 756-1546 in the United States and Canada and (706) 634-1041 for international calls. Please be prepared to give the conference ID number 78669146.
An audio replay of the call will be available October 24, 2013 at 4:00 p.m. EDT through October 31, 2013 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 78669146.
About West Marine
West Marine, Inc. is the largest specialty retailer of boating supplies and accessories in the United States, with 289 company-operated stores located in 38 states, Puerto Rico, Canada and five franchised stores located in Turkey. Founded in 1968 by a sailor, West Marine has grown to become a leading omni-channel retailer for boaters – from power cruisers and sailors to anglers and paddle sports enthusiasts – and offers gear, apparel and footwear for anyone who enjoys recreational time on or around the water. The company’s wholesale channel is one of the largest distributors of marine equipment serving boat manufacturers, marine services, commercial vessel operators and government agencies. For more information on West Marine, Inc. its products and store locations, visit westmarine.com or call 1-800-BOATING (1-800-262-8464). West Marine’s stock is traded on NASDAQ under the symbol WMAR.
Special Note Regarding Forward-Looking Statements
This press release includes “forward-looking” information (as defined in the Private Securities Litigation Reform Act of 1995), including statements that are predictive or express expectations that depend on future events or conditions that involve risks and uncertainties. These risks and uncertainties include, among other things, expectations related to our earnings and profitability, expectations and projections with respect to our ability to appropriately invest in, and execute on, our strategic growth strategies, expectations related to our ability to manage our assets, and our expectations for full-year 2013 results, as well as facts and assumptions underlying these expectations and projections. In addition, the results presented in this release are preliminary and unaudited, and may change as we finalize our financial statements. Actual results for the third quarter of 2013 and the current fiscal year may differ materially from the preliminary expectations expressed or implied in this release due to various risks, uncertainties or other factors, including the risk factors set forth in West Marine’s annual report on Form 10-K for the fiscal year ended December 29, 2012, as well as the discussion of critical accounting policies in our Form 10-K for the year ended December 29, 2012. Except as required by applicable law, West Marine assumes no responsibility to update any forward-looking statements as a result of new information, future events or otherwise.
Non-GAAP Financial Information
This release references certain financial information not calculated in accordance with GAAP, including adjusted net income and Return on Invested Capital (“ROIC”). We believe adjusted net income provides meaningful supplemental information for our investors regarding the performance of our business and facilitates comparisons with prior periods by removing the impact of the valuation allowance that resulted from a recent change in tax law. We believe that Return on Invested Capital (“ROIC”), as presented in the accompanying financial tables, is a meaningful measure of our efficient and effective use of capital. ROIC is not a measure of financial performance under GAAP and may not be defined and calculated by other companies in the same manner. These non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Management has reconciled both non-GAAP financial measures to the most directly comparable GAAP financial measure in the tables set forth below.