Boating accessory retailer West Marine
What analysts say:
- Buy, sell, or waffle? Eight analysts study West Marine, most with ambivalence. One votes buy, one votes sell, and everyone else says to hold.
- Revenues. On average, they're looking for a 2.5% slide in quarterly sales to $121.7 million ...
- Earnings. ... but a loss narrowing from last year's $1.01 to $0.34 per share.
What management says:
But wait -- it gets better. West Marine actually gave us a preview of Wednesday's news early in January, preannouncing quarterly sales of $122.3 million, or more than the analysts were expecting, with comps down just 0.2%, essentially flat year over year. Speaking of years, the annual sales number was $715.1 million, or 3.3% better than in 2005, helped by a 2.3% increase in comps.
CEO Peter Harris further observed that "product margins improved" as more of the firm's sales went through its retail "Stores" segment rather than through its wholesale channel. The firm also closed 35 underperforming stores over the course of the year.
In other news, in December, West Marine announced that it had brought Thomas Moran aboard as its new CFO. Moran previously worked as CFO for Aramark's WearGuard-Crest division.
What management does:
Moran has his work cut out for him. Over the last 18 months, the firm's rolling gross, operating, and net margins have suffered a long, steady slide -- with the one bright light being a small uptick in operating margins alone, last quarter.
|
7/05 |
10/05 |
12/05 |
4/06 |
7/06 |
9/06 |
|
|---|---|---|---|---|---|---|
|
Gross |
32.0% |
31.5% |
29.7% |
29.7% |
28.6% |
28.2% |
|
Operating |
5.6% |
4.4% |
2.3% |
1.5% |
0.2% |
0.3% |
|
Net |
3.1% |
2.3% |
(0.3%) |
(0.9%) |
(2.1%) |
(2.3%) |
One Fool says:
CEO Harris observed in last month's sales report that he remains "cautious about the boating market cycle." On the one hand, that doesn't sound like particularly good news. On the other, when viewed in the context of West Marine's continued deteriorating margins, and its plunge into the red on the bottom line, "caution" is certainly appropriate going forward.
What's more, looking at these numbers, I'm actually encouraged that Harris chose to express his outlook as just "cautious," and not "despondent to the point of jumping off a pier."
How's the rest of the boating industry doing? Get the views of Brunswick Corp
Marine Products is a Motley Fool Hidden Gems recommendation. A free trial will let you find out why.Fool contributor Rich Smith does not own shares of any company named above.
