West Marine Sales down for 3rd quarter

[jackdaniels]

Sales were down for 3rd quarter

WATSONVILLE, Calif., Oct 29, 2009 (BUSINESS WIRE) - West Marine, Inc. (WMAR) today released unaudited operating results for the third quarter of 2009.

2009 third quarter highlights:

- Earnings per share for the third quarter were $0.38, compared to $0.16 for the same period last year, an increase of 137%. The prior year included $0.07 per share of charges related to significant events.

- Earnings per share year-to-date were $1.13, compared to a loss of $0.45 for the same period last year. The prior year included $0.85 per share of charges related to significant events.

- The company had zero debt and a cash balance of $22.3 million at the end of the third quarter, compared to long-term debt of $29.3 million and a cash balance of $6.0 million at the end of the third quarter last year.

- Income before taxes was $9.0 million, a $5.3 million, or 143%, increase compared to the same period last year.

- Cash flow generated from operating activities year-to-date was $71.0 million, compared to $33.9 million in the same period last year, an increase of 109%.

- Approximately $91.9 million was available for borrowings under the company's credit facility at quarter-end.

Geoff Eisenberg, West Marine's CEO, commented:

"During the third quarter, the West Marine team of over 4,000 Associates continued to make excellent progress in all of our key long-term strategies, most notably store optimization, inventory management and product line expansions. We not only generated solid earnings growth, we also managed assets and cash flow to become debt-free at the end of the third quarter for the first time in our long history. We've evolved the culture and inner-workings of West Marine, strengthened our financial foundation, improved our operational execution, increased our abilities to serve a broader array of Customers, and find ourselves better positioned for the future."

2009 third quarter results

West Marine's net revenues for the thirteen weeks ended October 3, 2009 were $168.2 million, a decrease of $12.1 million, or 6.7%, from net revenues of $180.2 million for the 2008 fiscal third quarter, with comparable store sales decreasing by $6.3 million, or 4.3%, from last year. Adjusted for the impact of a fiscal calendar shift from the 53-week 2008 fiscal year, 2009 fiscal third quarter net revenues would have increased by $0.3 million, or 0.2%, and comparable store sales would have increased by $5.1 million, or 3.7%, over last year.

2009 year-to-date results

Net revenues for the thirty-nine weeks ended October 3, 2009 were $484.5 million, a 6.9% decrease compared to net revenues of $520.2 million for the thirty-nine weeks ended September 27, 2008. Comparable store sales declined 3.4% versus the same period a year ago. Revenues for the first nine months of 2009 were not impacted materially by the fiscal calendar shift described above.

Gross profit for the thirty-nine weeks ended October 3, 2009 was $142.5 million, a decrease of $8.2 million compared to the same period for 2008. However, as a percentage of net revenues, gross profit increased by 0.4% to 29.4% compared to gross profit of 29.0% for the same period last year. The increase in gross profit as a percentage of revenues primarily resulted from improved product margins due to a reduction in promotional and clearance activity, a shift in sales mix to higher margin product categories, and improved shrinkage results, which was partially offset by higher unit buying and distribution costs and deleveraging of store occupancy costs on lower revenues.

SG&A expense for the first nine months was $116.0 million, a decrease of $23.6 million, or 16.9%, compared to $139.6 million for the same period last year, and expenses as a percentage of revenues decreased by 3.0% to 23.9%. Drivers of the expense savings included: an $11.3 million decrease in selling and support expense, including a $3.1 million reduction in costs related to the now-settled SEC investigation; an $8.3 million reduction in payroll, marketing and other variable expenses reflecting lower revenues; and $5.0 million of savings related to closed stores.

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