West Marine (WMAR) 10-Q 4 May 15 2015 Q1 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	3 Months Ended
	Apr. 04, 2015	Apr. 27, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	WEST MARINE INC
Entity Central Index Key	912833
Current Fiscal Year End Date	-1
Entity Filer Category	Accelerated Filer
Document Type	10-Q
Document Period End Date	4-Apr-15
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q1
Amendment Flag	FALSE
Entity Common Stock, Shares Outstanding		24,546,620

Condensed_Consolidated_Balance

Condensed Consolidated Balance Sheets (USD $)	Apr. 04, 2015	Jan. 03, 2015	Mar. 29, 2014
In Thousands, unless otherwise specified
ASSETS
Cash and cash equivalents	$6,637	$45,675	$10,436
Trade receivables, net	9,639	6,843	9,287
Merchandise inventories	256,633	214,298	245,179
Deferred income taxes	5,487	5,585	4,388
Other current assets	33,052	25,791	27,881
Total current assets	311,448	298,192	297,171
Property and equipment, net	81,937	79,447	74,939
Long-term deferred income taxes	3,887	3,993	5,574
Other assets	3,898	3,869	3,548
TOTAL ASSETS	401,170	385,501	381,232
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	53,525	33,244	46,713
Accrued expenses and other	45,210	40,922	44,435
Total current liabilities	98,735	74,166	91,148
Deferred rent and other	19,920	20,327	15,653
Total liabilities	118,655	94,493	106,801
Commitments and contingencies - see Note 5
Stockholders' equity:
Preferred stock, $.001 par value: 1,000,000 shares authorized; no shares outstanding	0	0	0
Common stock, $.001 par value: 50,000,000 shares authorized; 25,239,559 shares issued and 24,550,670 shares outstanding at April 4, 2015; 25,092,550 shares issued and 24,403,661 shares outstanding at January 3, 2015; and 24,712,822 shares issued and 24,023,933 shares outstanding at March 29, 2014	25	25	25
Treasury stock	-9,205	-9,171	-9,089
Additional paid-in capital	209,545	207,863	204,127
Accumulated other comprehensive loss	-446	-564	-524
Retained earnings	82,596	92,855	79,892
Total stockholders' equity	282,515	291,008	274,431
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$401,170	$385,501	$381,232

Condensed_Consolidated_Balance1

Condensed Consolidated Balance Sheets (Parenthetical) (USD $)	Apr. 04, 2015	Jan. 03, 2015	Mar. 29, 2014
Statement of Financial Position [Abstract]
Preferred stock, par value	$0.00	$0.00	$0.00
Preferred stock, shares authorized	1,000,000	1,000,000	1,000,000
Preferred stock, shares outstanding	0	0	0
Common stock, par value	$0.00	$0.00	$0.00
Common stock, shares authorized	50,000,000	50,000,000	50,000,000
Common stock, shares issued	25,239,559	25,092,550	24,712,822
Common stock, shares outstanding	24,550,670	24,403,661	24,023,933

Condensed_Consolidated_Stateme

Condensed Consolidated Statements of Income (USD $)	3 Months Ended
In Thousands, except Per Share data, unless otherwise specified	Apr. 04, 2015	Mar. 29, 2014
Income Statement [Abstract]
Net revenues	$127,067	$113,338
Cost of goods sold	100,085	88,415
Gross profit	26,982	24,923
Selling, general and administrative expense	44,975	44,041
Loss from operations	-17,993	-19,118
Interest expense	112	108
Loss before income taxes	-18,105	-19,226
Income tax benefit	-7,846	-8,211
Net loss	($10,259)	($11,015)
Net loss per common and common equivalent share:
Basic	($0.42)	($0.46)
Diluted	($0.42)	($0.46)
Weighted average common and common equivalent shares outstanding:
Basic	24,486	24,141
Diluted	24,486	24,141

Condensed_Consolidated_Stateme1

Condensed Consolidated Statement of Comprehensive Income (USD $)	3 Months Ended
In Thousands, unless otherwise specified	Apr. 04, 2015	Mar. 29, 2014
Statement of Comprehensive Income [Abstract]
Net loss	($10,259)	($11,015)
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments	118	41
Total comprehensive income	($10,141)	($10,974)

Condensed_Consolidated_Stateme2

Condensed Consolidated Statements of Cash Flows (USD $)	3 Months Ended
In Thousands, unless otherwise specified	Apr. 04, 2015	Mar. 29, 2014
OPERATING ACTIVITIES:
Net loss	($10,259)	($11,015)
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	5,025	4,055
Share-based compensation	685	867
Excess tax benefit from share-based compensation	0	-108
Deferred income taxes	-175	-72
Provision for doubtful accounts	55	-34
Lower of cost or market inventory adjustments	1,423	1,024
Loss on asset disposals	144	41
Changes in assets and liabilities:
Trade receivables	-2,851	-2,812
Merchandise inventories	-43,759	-43,167
Other current assets	-7,261	-8,521
Other assets	3	-120
Accounts payable	20,152	24,803
Accrued expenses and other	4,150	7,236
Deferred items and other non-current liabilities	-28	77
Net cash used in operating activities	-32,696	-27,746
INVESTING ACTIVITIES:
Proceeds from sale of property and equipment	17	5
Purchases of property and equipment	-7,507	-6,226
Net cash used in investing activities	-7,490	-6,221
FINANCING ACTIVITIES:
Borrowings on line of credit	366	427
Repayments on line of credit	-366	-427
Proceeds from exercise of stock options	1,136	546
Excess tax benefit from share-based compensation	0	108
Treasury shares acquired	-34	-4,684
Net cash provided by (used in) financing activities	1,102	-4,030
Effect of exchange rate changes on cash	46	25
NET DECREASE IN CASH	-39,038	-37,972
CASH AT BEGINNING OF PERIOD	45,675	48,408
CASH AT END OF PERIOD	6,637	10,436
Other cash flow information:
Cash paid for interest	69	73
Cash paid (received) for income taxes, net of refunds of $80 and $1,391	7	-697
Non-cash investing activities
Capital Expenditures Incurred but Not yet Paid	$596	$1,272

Condensed_Consolidated_Stateme3

Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows Parentheticals (USD $)	3 Months Ended
In Thousands, unless otherwise specified	Apr. 04, 2015	Mar. 29, 2014
Supplemental Cash Flow Elements [Abstract]
Proceeds from Income Tax Refunds	$80	$1,391

Basis_of_Presentation

Basis of Presentation	3 Months Ended
	Apr. 04, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Presentation	BASIS OF PRESENTATION
	The accompanying unaudited condensed consolidated financial statements have been prepared from the records of West Marine, Inc. and its subsidiaries (collectively, the “Company”) in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments (consisting only of normal recurring items) necessary to fairly state the financial position, results of operations and cash flows for the interim periods presented, have been included.
	The condensed consolidated balance sheet at January 3, 2015 presented herein has been derived from the audited consolidated financial statements of the Company that were included in the Company's Annual Report on Form 10-K for the year ended January 3, 2015 (the “2014 Form 10-K”). These unaudited condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements, including the notes thereto, for the fiscal year ended January 3, 2015 that were included in the 2014 Form 10-K.
	Accounting policies followed by the Company are described in Note 1 in the audited consolidated financial statements for the year ended January 3, 2015. Certain information and disclosures normally included in the notes to annual financial statements prepared in accordance with GAAP have been omitted for purposes of the condensed consolidated interim financial statements presented herein. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The results of operations for the 13-week period ended April 4, 2015 are not necessarily indicative of the results to be expected for any other interim period or for the fiscal year ending January 2, 2016. Historically, the Company's revenues and net income are higher in the second and third quarters and are lower in the first and fourth quarters of the fiscal year. The increase in revenues and earnings, principally during the period from April through August, is representative of the peak months for boat buying, usage and maintenance in most of the Company's retail markets.
	The Company's fiscal year consists of 52  or 53 weeks, ending on the Saturday closest to December 31. The 2015 fiscal year consists of 52 weeks ending on January 2, 2016, and the 2014 fiscal year consisted of 53 weeks ending on January 3, 2015. All quarters of both fiscal years 2015 and 2014 consist of 13 weeks, other than the fourth quarter of 2014, which consisted of 14 weeks. All references to years relate to fiscal years rather than calendar years.
	Fair Value of Financial Instruments
	Fair value is the exchange price that would be received for an asset or that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy prescribed under GAAP contains three levels, which prioritizes the inputs used in the valuation methodologies in measuring fair value:
	Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
	Level 2 - Include other inputs that are directly or indirectly observable in the marketplace.
	Level 3 - Unobservable inputs which are supported by little or no market activity.
	The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. As of April 4, 2015, there were no financial instruments which require disclosure under the fair value hierarchy.
	Cash and Cash Equivalents
	The Company's cash and cash equivalents consist of cash on hand, bank deposits and amounts in transit from banks for customer credit card and debit card transactions. As of April 4, 2015, January 3, 2015 and March 29, 2014 cash balances were $6.6 million, $45.7 million and $10.4 million, respectively.
	Reportable Segment
	West Marine is an omni-channel retail organization operating one reporting segment in accordance with the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 280, Segment Reporting. The metrics used by our Chief Executive Officer (as the Company's chief operating decision maker or the "CODM") to assess the performance of the Company are focused on viewing the business as a single integrated business. The CODM's process for allocating resources is based upon the omni-channel view of the Company. Additionally, the Company has integrated systems and concentrated its strategic focus on omni-channel retailing. In addition, the Company has commingled sales channel payroll expense, inventories, merchandise procurement and distribution networks. Revenues from customers are derived from merchandise sales and the Company does not rely on any individual major customers.
	The Company considers its merchandise expansion strategy to be extremely important to the future success of the Company and is providing the following product category information. The Company's merchandise mix for the period ended April 4, 2015 and March 29, 2014, respectively, is reflected in the table below:
		13 Weeks Ended
		April 4, 2015		March 29, 2014
	Core boating products	81.2	%	82.8	%
	Merchandise expansion products	18.8	%	17.2	%
	Total	100	%	100	%
	The Company considers core boating products to be maintenance related products, electronics, sailboat hardware, anchors/docking/moorings, engine systems, safety, electrical, plumbing, boats, outboards, ventilation, deck hardware/fasteners, navigation, trailering, seating/boat covers and barbecues/appliances. The Company considers its merchandise expansion products to be comprised of apparel, footwear, clothing accessories, fishing, watersports, paddlesports, coolers, bikes and cabin/galley.
	Recently Issued Accounting Pronouncements
	In April 2014, FASB issued Accounting Standards Update ("ASU") 2014-08, Reporting of Discontinued Operations and Disclosures of Disposals of Components of an Entity. ASU 2014-08 provides a narrower definition of discontinued operations. The new guidance requires that only disposal of a component of an entity, or a group of components of an entity, that represents a strategic shift that has, or will have, a major effect on the reporting entity's operations and financial results should be reported in the financial statements as discontinued operations. ASU 2014-08 also provides guidance on the financial statement presentations and disclosures of discontinued operations. ASU 2014-08 is effective prospectively for disposals (or classifications as held for disposal) of components of an entity that occur in annual or interim periods beginning after December 15, 2014. The provisions of this guidance were effective as of the beginning of the 2015 fiscal year and did not have a material impact on the Company's consolidated financial statements.
	In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers. ASU 2014-09 supersedes the revenue recognition requirements in Topic 605, Revenue Recognition and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 is effective retrospectively for annual or interim reporting periods beginning after December 15, 2016 with early application not permitted. On April 1, 2015, the FASB proposed deferring the effective date by one year to December 15, 2017 for annual reporting periods beginning after that date. The FASB also proposed permitting early adoption of the standard, but not before the original effective date of December 15, 2016. The Company is currently evaluating the new standard, and has not concluded whether the adoption of ASU 2014-09 will have a material impact on the Company's consolidated financial statements.

Income_Taxes

Income Taxes	3 Months Ended
	Apr. 04, 2015
Income Tax Disclosure [Abstract]
Income Taxes	INCOME TAXES
	The Company calculates its interim income tax provision by estimating the annual effective tax rate and applying that rate to its year-to-date ordinary earnings. The Company's effective income tax rate for the 13-week period ended April 4, 2015 was 43.3%, which resulted in a benefit of $7.8 million, while the effective tax rate for the 13-week period ended March 29, 2014 was 42.7%, which resulted in a benefit of $8.2 million. The increase in the effective tax rate is due largely to a change in foreign reserves.
	The Company continues to maintain a valuation allowance against its California Enterprise Zone credits in the amount of $2.8 million, as well as a $0.9 million valuation allowance against South Carolina state tax credits. In addition, the Company maintains a valuation allowance in the amount of $0.8 million against its Canadian net deferred tax assets, due to the Company's decision to phase out of Canada. The Company continues to monitor and adjust these valuation allowances based on current evaluations of its ability to realize these deferred tax assets.
	During the three months ended April 4, 2015, the Company recognized an additional $0.1 million expense related to uncertain tax positions, including accrued interest and penalties.
	The Company files income tax returns in the U.S. federal jurisdiction, various states and cities, Puerto Rico and Canada. The Company has substantially settled all federal income tax matters through 2010, as well as all state and foreign jurisdictions through 2008 and 2006, respectively.

ShareBased_Compensation

Share-Based Compensation	3 Months Ended
	Apr. 04, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Share-Based Compensation	SHARE-BASED COMPENSATION
	The Company recognized share-based compensation expense of $0.7 million for the 13-week period ended April 4, 2015 and $0.9 million for the 13-week period ended March 29, 2014, the majority of which was recorded as SG&A expense. The Company received no tax benefit associated with share-based compensation expense for the 13-week period ended April 4, 2015. The tax benefit associated with share-based compensation expense for the 13-week period ended March 29, 2014 was $0.1 million, which was recognized as excess tax benefit in additional paid-in capital.
	The Manager Share Appreciation Plan ("MSAP") compensation expense for the 13-week period ended April 4, 2015 was a credit to expense of $0.3 million due to fluctuation in the Company's share price. The corresponding liability at April 4, 2015 was $0.2 million. The MSAP compensation expense for the 13-week period ended March 29, 2014 was minimal. The corresponding liability at March 29, 2014 was $0.1 million.

Comprehensive_Income_Loss

Comprehensive Income (Loss)	3 Months Ended
	Apr. 04, 2015
Other Comprehensive Income (Loss), Net of Tax [Abstract]
Comprehensive Income (Loss)	COMPREHENSIVE INCOME (LOSS)
	Comprehensive income (loss) consists of net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) includes income, expenses, gains and losses that bypass the income statement and are reported directly as a separate component of equity. The Company’s comprehensive income consists of net income and foreign currency translation adjustments for all periods presented.

Contingencies

Contingencies	3 Months Ended
	Apr. 04, 2015
Commitments and Contingencies Disclosure [Abstract]
Contingencies	CONTINGENCIES
	On October 23, 2013, a putative class action lawsuit was filed against the Company in the United States District Court for the Northern District of California by two California former hourly employees. The complaint sought unspecified damages for alleged violations of the California Labor Code, the California Business and Professions Code and the federal Fair Labor Standards Act, as well as civil penalties and attorney’s fees under the Labor Code Private Attorney General Act. The complaint alleged that the Company miscalculated and failed to pay overtime for employees off-the-clock work and certain selling incentive bonuses (or "spiffs"), issued inaccurate wage statements, failed to provide adequate rest and meal periods and other labor-related complaints. In January 2015, the Company entered into a settlement and release agreement for all remaining class and individual claims, without admission of any wrongdoing, and the District Court granted the motion for preliminary approval of the settlement, with the hearing for final approval currently scheduled for May 21, 2015. The Company recorded a charge of approximately $0.4 million in 2014 for the estimated payments, including attorneys’ fees, costs and administrative expenses, in connection with this settlement liability. Such amount had no material impact on the Company's financial statements.
	Additionally, on October 8, 2014, a putative class action was filed against the Company in the Superior Court of the State of California, County of San Diego, by a California former hourly employee claiming violations of the California Labor Code and the California Business and Professions Code. The complaint seeks unspecified damages and attorney’s fees, alleging the Company's failure to pay overtime to hourly store employees who earned bonus wages or commissions during pay periods in which they worked overtime, and the derivative claims of failure to provide accurate wage statements and all wages owed upon termination of employment. The Company intends to defend this action vigorously and the outcome of this matter cannot be determined at this time.
	The Company is also involved in various other legal and administrative proceedings, claims and litigation and regulatory compliance audits arising in the ordinary course of business. Accordingly, material adverse developments, settlements or resolutions may occur and negatively impact our results in the quarter and/or fiscal year in which such developments, settlements or resolutions are reached.
	Based on the facts currently available, the Company does not believe that the disposition of the remaining class action lawsuit discussed above or any other claims, regulatory compliance audits, legal or administrative proceedings that are pending or asserted, individually and in the aggregate, will have a material adverse effect on the Company's financial position. However, an adverse judgment by a court, administrative or regulatory agency, arbitrator or a settlement could adversely impact the Company's results of operations in any given period.
	For the two class action lawsuits and for any other claims, regulatory compliance audits, legal or administrative proceedings where the Company has determined that a loss is probable, there is no material difference between the amount accrued and the reasonably possible amount of loss. For any such matters where a loss is reasonably possible, the range of estimated loss is not material individually and in aggregate.

Net_Income_Per_Share

Net Income Per Share	3 Months Ended
	Apr. 04, 2015
Earnings Per Share [Abstract]
Net Income Per Share	NET LOSS PER SHARE
	Basic net loss per share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net loss per share reflects the potential dilution that could occur if unvested restricted shares and outstanding options to purchase common stock were exercised. Options to purchase approximately 0.3 million and less than 0.1 million shares of common stock that were outstanding for the quarters ended April 4, 2015 and March 29, 2014, respectively, have been excluded from the calculation of diluted loss per share because inclusion of such shares would be anti-dilutive.
	The following is a reconciliation of the Company’s basic and diluted net loss per share computations (shares in thousands):
		13 Weeks Ended
		April 4, 2015				March 29, 2014
		Shares	Net Loss			Shares	Net Loss
			Per Share				Per Share
	Basic	24,486	$	(0.42	)	24,141	$	(0.46	)
	Effect of dilutive stock options	—	—			—	—
	Diluted	24,486	$	(0.42	)	24,141	$	(0.46	)

Basis_of_Presentation_Tables

Basis of Presentation (Tables)	3 Months Ended
	Apr. 04, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Schedule of Merchandise Product Categories [Table Text Block]	The Company's merchandise mix for the period ended April 4, 2015 and March 29, 2014, respectively, is reflected in the table below:
		13 Weeks Ended
		April 4, 2015		March 29, 2014
	Core boating products	81.2	%	82.8	%
	Merchandise expansion products	18.8	%	17.2	%
	Total	100	%	100	%

Net_Income_Per_Share_Tables

Net Income Per Share (Tables)	3 Months Ended
	Apr. 04, 2015
Earnings Per Share [Abstract]
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]	The following is a reconciliation of the Company’s basic and diluted net loss per share computations (shares in thousands):
		13 Weeks Ended
		April 4, 2015				March 29, 2014
		Shares	Net Loss			Shares	Net Loss
			Per Share				Per Share
	Basic	24,486	$	(0.42	)	24,141	$	(0.46	)
	Effect of dilutive stock options	—	—			—	—
	Diluted	24,486	$	(0.42	)	24,141	$	(0.46	)

Basis_of_Presentation_Details

Basis of Presentation (Details) (USD $)	3 Months Ended
In Thousands, unless otherwise specified	Apr. 04, 2015	Mar. 29, 2014	Jan. 03, 2015	Dec. 28, 2013
Schedule of Merchandise Product Categories [Line Items]
Cash and Cash Equivalents, at Carrying Value	$6,637	$10,436	$45,675	$48,408
Merchandise product categories	100.00%	100.00%
Core Boating Products [Member]
Schedule of Merchandise Product Categories [Line Items]
Merchandise product categories	81.20%	82.80%
Merchandise Expansion Products [Member]
Schedule of Merchandise Product Categories [Line Items]
Merchandise product categories	18.80%	17.20%

Income_Taxes_Details

Income Taxes (Details) (USD $)	3 Months Ended
	Apr. 04, 2015	Mar. 29, 2014
Valuation Allowance [Line Items]
Effective Income Tax Rate, Continuing Operations	43.30%	42.70%
Income tax benefit	($7,846,000)	($8,211,000)
Unrecognized Tax Benefits, Period Increase (Decrease)	100,000
CALIFORNIA
Valuation Allowance [Line Items]
Deferred Tax Assets, Valuation Allowance	2,800,000
SOUTH CAROLINA
Valuation Allowance [Line Items]
Deferred Tax Assets, Valuation Allowance	900,000
CANADA
Valuation Allowance [Line Items]
Deferred Tax Assets, Valuation Allowance	$800,000

ShareBased_Compensation_Detail

Share-Based Compensation (Details) (USD $)	3 Months Ended
	Apr. 04, 2015	Mar. 29, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Share-based Compensation	$685,000	$867,000
Excess Tax Benefit from Share-based Compensation, Operating Activities	0	-108,000
Manager Share Appreciation Plan Compensation	-300,000
Manager Share Appreciation Plan, Liabilities	$200,000	$100,000

Contingencies_Contigencies_Det

Contingencies Contigencies (Details) (USD $)	Apr. 04, 2015
In Millions, unless otherwise specified
Commitments and Contingencies Disclosure [Abstract]
Loss Contingency, Estimate of Possible Loss	$0.40

Net_Income_Per_Share_Details

Net Income Per Share (Details) (USD $)	3 Months Ended
	Apr. 04, 2015	Mar. 29, 2014
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	261,525
Weighted Average Number of Shares Outstanding, Basic	24,486,000	24,141,000
Earnings Per Share, Basic	($0.42)	($0.46)
Weighted Average Number Diluted Shares Outstanding Adjustment	0	0
Dilutive Securities, Effect on Basic Earnings Per Share, Including Options and Restrictive Stock Units	$0	$0
Weighted Average Number of Shares Outstanding, Diluted	24,486,000	24,141,000
Earnings Per Share, Diluted	($0.42)	($0.46)
Maximum [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount		100,000