West Marine has the goods to keep your boat shipshape. It is the nation's #1 boating supplies retailer, operating through some 320 company-owned stores, as well as a port supply wholesale business, and direct-to-customer website, catalog, and call center. Its stores, known by the West Marine banner, dot 38 US states, Canada, and Puerto Rico. Three stores are franchised in Turkey. Its direct-to-consumer arm offers about 75,000 boating products worldwide. The port supply business provides wholesaling and distribution to commercial, government, and industrial customers. West Marine's distribution centers are in California and South Carolina. The company was founded by Randolph Repass in 1975 as West Coast Ropes.
Reduced boating activity amid the US recession coupled with high fuel prices has constrained sales at the company. Although year-over-year revenues continued to rebound in the low single digits in 2011 -- from a four-year low in 2009 -- they are still below 2006 levels. The improvement in 2011 was driven by demand for electronics and fishing related products as well as apparel. Marine West managed to maintain earnings momentum for a third consecutive year and mark a record $29.7 million high. The increase, however, was largely due to a $15.7 million income tax benefit.
In response to the uncertain market for boats and boating supplies, the company is focusing on driving higher sales from its wholesale customers through its store operations, which account for 90% of consolidated sales. West Marine's larger stores enable the business to do double duty as a retail location, with a better selection of merchandise, and as a distribution center for wholesale orders and deliveries. Going forward, the company aims to further shrink its retail store network and corral operating expenses while expanding the successful super store format to lift its port supply business.
Concurrently, direct-to-customer sales, which generate 6% of Marine West's sales, are rapidly growing, by almost 10% in 2011 over the prior year, thanks to technology upgrades to its website and a broader range of offerings that appeal to more consumers and boost the average transaction. West Marine sells everything from maintenance and galley supplies to navigational systems, fish finders, and apparel. The positive response to its merchandising strategy is spurring the company to build out its selection (both online and in store) and accelerate the development of its West Marine private-label brands, which provide a higher profit margin.
The company's future is swayed by founder and chairman Randolph Repass. Repass owns about a third of West Marine's shares. – less