| Summary of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BUSINESS —West Marine Inc. and its consolidated subsidiaries (“West Marine” or the “Company,” unless the context requires otherwise) is a leading waterlife outfitter in the United States. At December 31, 2016 , West Marine offered its products through 254 stores in 38 states, Puerto Rico and Canada, through its call center channel and on the Internet. As previously disclosed, the Company closed eight Canadian stores in 2015 and will close the remaining two stores by June 2017. The Company is also engaged in the distribution of marine equipment to its professional customers serving boat manufacturers, marine services, commercial vessel operations and government agencies. 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 its 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 customer. The Company considers its merchandise expansion strategy to be strategically important to its future success and is providing the following product category information. The Company's merchandise mix over the last three years is reflected in the table below: 2016 2015 2014 Core boating products 76.5 % 77.1 % 81.3 % Merchandise expansion products 23.5 % 22.9 % 18.7 % Total 100.0 % 100.0 % 100.0 % The Company considers core boating products to be comprised of 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. West Marine was incorporated in Delaware in September 1993 as the holding company for West Marine Products, Inc., which was incorporated in California in 1976. The Company’s principal executive offices are located in Watsonville, California. PRINCIPLES OF CONSOLIDATION —The consolidated financial statements include the accounts of West Marine, Inc. and its subsidiaries, all of which are wholly-owned, directly or indirectly. Intercompany balances and transactions are eliminated in consolidation. YEAR-END —The Company’s fiscal year consists of 52 or 53 weeks, ending on the Saturday closest to December 31 and as a result, a 53-week year occurs every five to six years. The fiscal years 2016 and 2015 consisted of the 52 weeks ended December 31, 2016 and January 2, 2016 , respectively, while the 2014 fiscal year consisted of the 53 weeks ended January 3, 2015 . References to 2016 , 2015 and 2014 are to the fiscal years ended December 31, 2016 , January 2, 2016 and January 3, 2015 , respectively. ACCOUNTING ESTIMATES —The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates include, but are not limited to, the following: useful lives and recoverability of fixed assets; inventory obsolescence and shrinkage reserves; capitalized indirect inventory costs; allowance for doubtful accounts receivable; calculation of accrued liabilities, including workers’ compensation and other self-insured liabilities; sabbatical liability, sales returns reserves, unredeemed gift cards and loyalty program awards; vendor consideration earned; fair value of share-based compensation instruments, income tax valuation allowances and uncertain tax positions; legal liabilities and other contingencies; and asset retirement obligations. Actual results could differ from those estimates. INVENTORIES —Merchandise inventories are carried at the lower of cost or market on an average cost basis. Capitalized indirect costs include freight charges for transporting merchandise to warehouses or store locations and operating costs incurred for merchandising, replenishment and distribution center activities. Indirect costs included in inventory value at the end of fiscal years 2016 and 2015 were $19.3 million and $19.7 million , respectively. Indirect costs included in inventory value are recognized as an increase in cost of goods sold as the related products are sold. Inventories are written down to market value when cost exceeds market value, based on historical experience and current information. Reserves for estimated inventory shrinkage based on historical shrinkage rates determined by the Company’s physical merchandise inventory counts and cycle counts were $2.1 million and $2.3 million at the end of 2016 and 2015 , respectively. Reserves for estimated inventory market value below cost, based upon current levels of aged and discontinued product and historical analysis of inventory sold below cost, were $4.7 million and $4.5 million at the end of 2016 and 2015 , respectively. DEFERRED CATALOG AND ADVERTISING COSTS —The Company capitalizes the direct cost of producing and distributing its catalogs. Capitalized catalog costs are amortized, once a catalog is mailed, over the expected net sales period, which is generally from one month to 24 months. Advertising costs, which are included in selling, general and administrative ("SG&A") expense, are expensed as incurred and were $13.9 million , $14.7 million and $16.0 million in 2016 , 2015 and 2014 , respectively. Advertising costs were partially offset by vendor allowances of $12.9 million , $11.2 million and $10.6 million in 2016 , 2015 and 2014 , respectively, which are included in cost of goods sold. The capitalized value of prepaid catalog and advertising costs on the balance sheet were immaterial as of December 31, 2016 and January 2, 2016 . PROPERTY AND EQUIPMENT —Property and equipment is stated at cost and depreciated using the straight-line method over the estimated useful lives of the various assets, as follows: Estimated Useful Lives Furniture and equipment 3–7 years Computer software and hardware 3–7 years Buildings 25 years Leasehold improvements are amortized over the lesser of the expected lease term or the estimated useful life of the improvement, which is usually about 10 years. CAPITALIZED INTEREST —The Company capitalizes interest on major capital projects. The Company did not capitalize interest in 2016, 2015 or 2014. CAPITALIZED SOFTWARE COSTS —Capitalized computer software, included in property and equipment, reflects costs related to internally-developed or purchased software that are capitalized and amortized on a straight-line basis, generally over a period ranging from three to seven years. ASSET RETIREMENT OBLIGATIONS —The Company estimates the fair value of obligations to clean up and restore leased properties under agreements with landlords and records the estimated amount as a liability when incurred. Liabilities for asset retirement obligations were $0.1 million as of December 31, 2016 , and $0.6 million as of January 2, 2016 . There were no significant changes attributable to the following components during the 2016, 2015 and 2014 reporting periods: liabilities incurred; liabilities settled; accretion expense; and revisions in estimated cash flows. IMPAIRMENT OF LONG-LIVED ASSETS —The Company reviews long-lived assets, including property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. If facts indicate a potential impairment, the Company would assess the recoverability by determining if the carrying value of the long-lived assets exceeds the sum of the projected undiscounted cash flows expected to result from the use and eventual disposition of the assets over the remaining economic life. If the recoverability test indicates that the carrying value of the long-lived assets is not recoverable, the Company will estimate the fair value of the long-lived assets using appropriate valuation methodologies, which would typically include an estimate of discounted cash flows. Any impairment would be measured as the difference between the long-lived assets' carrying amount and the estimated fair value less disposal costs. The Company recorded no asset impairment charges in fiscal years 2016, 2015 and 2014. COSTS ASSOCIATED WITH EXIT ACTIVITIES —The Company occasionally vacates stores prior to the expiration of the related lease. For vacated locations that are under long-term leases, the Company records an expense for the net present value of the difference between its future lease payments and related costs, such as real estate taxes and common area maintenance costs, from the date of closure through the end of the remaining lease term, net of expected future sublease rental income. Costs associated with exit activities as of December 31, 2016 and January 2, 2016 were $1.0 million and $1.5 million , respectively. Of these amounts, as of December 31, 2016 and January 2, 2016, $0.6 million and $0.9 million , respectively, were included in deferred rent and other. SELF-INSURANCE OR HIGH DEDUCTIBLE LOSSES —The Company uses a combination of insurance and self-insurance for a number of risk management activities, including workers’ compensation, general liability and employee-related health care benefits, a portion of healthcare costs is paid by its associates. Liabilities associated with these risks are estimated primarily based on amounts determined by actuarial analysis, and accrued in part by considering historical claims experience, demographic factors, severity factors and other actuarial assumptions. Any actuarial projection of losses is subject to a high degree of variability. Among the causes of this variability are unpredictable external factors affecting future inflation rates, litigation trends, legal interpretations, benefit level changes and claim settlement patterns. DEFERRED RENT —Certain of the Company’s operating leases contain periods of free or reduced rent or contain predetermined fixed increases in the minimum rent amount during the lease term. For these leases, the Company recognizes rent expense on a straight-line basis over the expected life of the lease, generally about 13 years, including periods of free rent, and records the difference between the amount charged to rent expense and the rent paid as deferred rent. Tenant improvement allowances received from landlords are deferred and amortized to reduce rent expense over the expected life of the lease. As of December 31, 2016 and January 2, 2016 , deferred rent totaled $10.9 million and $11.9 million , respectively, of which $1.1 million and $1.3 million is included in accrued expenses for December 31, 2016 and January 2, 2016, respectively. The non-current portion is included in the deferred rent and other line item on the Company's consolidated balance sheet. INCOME TAXES —Income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to the differences between existing financial statement carrying amounts and their respective tax bases and for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured at the tax rate expected to be in effect for the taxable years in which the Company expects those temporary differences to be recovered or settled. The Company recognizes the effect of changes in tax rates on deferred tax assets and liabilities in the period that includes the enactment date of the change. A valuation allowance is recorded to reduce deferred tax assets to the amount estimated as more likely than not to be realized. The Company also accounts for uncertainties in income taxes recognized in its financial statements. For more information, see Note 7. SALES AND USE TAX —Net revenues are recorded net of sales and use taxes. Net sales and use taxes are collected and remitted to all jurisdictions in which the Company has a physical presence in accordance with state, provincial and local tax laws. FAIR VALUE OF FINANCIAL INSTRUMENTS —Fair value of financial instruments represents the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. 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—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 December 31, 2016 and January 2, 2016 , there were no financial instruments which require disclosure under the fair value hierarchy. REVENUE RECOGNITION —Sales, net of estimated returns, are recorded when merchandise is purchased by customers at store locations. Revenue is recognized when merchandise shipped from a warehouse is received by the customer, based upon the estimated date of receipt by the customer. The Company reserves for sales returns through estimates based on historical experience. The sales return reserve for fiscal years 2016 , 2015 and 2014 was $(1.4) million , $(1.3) million and $(1.2) million , respectively. ACCOUNTS RECEIVABLE —Accounts receivable consists of amounts owed to West Marine for sales of services or goods on credit for our professional customers. The Company maintains an allowance for doubtful accounts receivable for estimated losses resulting from the inability of our customers to make required payments. The Company determines this allowance based on overall estimated exposure. Factors impacting the allowance include the level of gross receivables, the aging of accounts receivable at the date of the consolidated financial statements, the financial condition of the Company's customers and the economic risks for certain customers. The allowances for doubtful accounts receivable were as follows: 2016 2015 2014 (in thousands) Allowance for doubtful accounts receivable—beginning balance $ (265 ) $ (247 ) $ (243 ) Additions (191 ) (174 ) (307 ) Deductions and other adjustments 188 156 303 Allowance for doubtful accounts receivable—ending balance $ (268 ) $ (265 ) $ (247 ) The Company's policy for writing off uncollectible trade accounts receivables consists of systematic follow-up of delinquent accounts (over 90 days past the customer's terms of sale) and management review of accounts over a set dollar amount. UNREDEEMED GIFT CARDS —Aggregate sales of gift cards for fiscal years 2016 , 2015 and 2014 were $18.4 million , $18.4 million and $18.1 million , respectively. West Marine uses the proportional model for deferral of gift card sales. In line with the proportional method, sales of gift cards are deferred and treated as a liability on our balance sheet either until redeemed by customers in exchange for products or until we determine that breakage has occurred. Breakage is estimated in proportion to actual redemption. Under this method, we estimate breakage based on Company-specific data by analyzing historical experience and deriving a rate that represents the amount of gift cards that are expected to be unused and not subject to escheatment. This rate is then applied, and breakage is recognized in income, over the period of redemption. Gift card breakage income for 2016 , 2015 and 2014 was $0.9 million , $0.7 million and $0.7 million , respectively, and is included as net revenues in the Company's operating results. WEST ADVANTAGE CUSTOMER LOYALTY PROGRAMS —The Company has a customer loyalty program which allows members to earn points on qualifying purchases. Points earned entitle members to receive certificates that may be redeemed on future purchases through any retail sales channel. The certificates expire one year after they are issued. A liability is recognized and recorded as a reduction of revenue at the time the points are earned, based on the retail value of certificates projected to be redeemed, less the applicable estimate of breakage based upon historical redemption patterns. As of December 31, 2016 and January 2, 2016 , the Company had a recorded liability for the West Advantage customer loyalty program of $1.3 million and $1.3 million , respectively. COST OF GOODS SOLD —Cost of goods sold includes costs related to the purchase, transportation and storage of merchandise, shipping expense and store occupancy costs. Consideration in the form of cash or credits received from vendors is recorded as a reduction to cost of goods sold as the related products are sold. VENDOR ALLOWANCES —The Company receives various payments and allowances from its vendors through a variety of programs and arrangements. Monies received from vendors include rebates, allowances and promotional funds. The amounts to be received are subject to the terms of the vendor agreements, which are subject to ongoing negotiations that may be impacted in the future based on changes in market conditions, vendor marketing strategies and changes in the profitability or sell-through of the related merchandise. Rebates and other miscellaneous incentives are earned based on purchases, receipts or product sales and are accrued ratably over the purchase or sale of the related product. These monies are recorded as a reduction of merchandise inventories based on inventory turns and as the product is sold. COMPREHENSIVE INCOME —Comprehensive income consists of net income 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. FOREIGN CURRENCY —Translation adjustments result from translating foreign subsidiaries’ financial statements into U.S. dollars. West Marine Canada’s functional currency is the Canadian dollar. Balance sheet accounts are translated at exchange rates in effect at the balance sheet date. Income statement accounts are translated at average exchange rates during the year. Resulting translation adjustments are included as a component of other comprehensive income in the consolidated statements of stockholders’ equity. Gains (losses) from foreign currency transactions included in SG&A expense for 2016 , 2015 and 2014 were $0.1 million , $(0.7) million and $(0.5) million , respectively. ACCRUED EXPENSES —Accrued expenses consist of the following (in thousands): 2016 2015 Unredeemed gift cards $ 7,546 $ 7,336 Other accrued expenses 21,964 19,909 Accrued expenses $ 29,510 $ 27,245 NET INCOME PER SHARE —Basic net income per share is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net income 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 0.5 million shares, 0.6 million shares and 0.7 million shares of common stock that were outstanding in 2016 , 2015 and 2014 , respectively, have been excluded from the calculation of diluted income per share because inclusion of such shares would be anti-dilutive. The following is a reconciliation of the Company’s basic and diluted net income per share computations (shares in thousands): 2016 2015 2014 Shares Net Income Per Share Shares Net Income Per Share Shares Net Income Per Share Basic 24,893 $ 0.26 24,629 $ 0.18 24,244 $ 0.08 Effect of dilutive stock options 95 — 105 — 164 — Diluted 24,988 $ 0.26 24,734 $ 0.18 24,408 $ 0.08 . CASH AND CASH EQUIVALENTS —Cash consists entirely of cash on hand and bank deposits, of which approximately $74.4 million exceeded FDIC insurance limits as of December 31, 2016 . As of January 2, 2016 , approximately $46.6 million exceeded FDIC insurance limits. The Company classifies amounts in transit from banks for customer credit card and debit card transactions as cash and cash equivalents as the banks process the majority of these amounts within three to five business days. The amounts due from banks for these transactions classified as cash and cash equivalents totaled $3.9 million and $3.5 million at December 31, 2016 and January 2, 2016 , respectively We had no outstanding checks in excess of funds on deposit (book overdrafts) at December 31, 2016 and January 2, 2016 . SABBATICAL LEAVE —Certain full-time associates are eligible to receive sabbatical leave after each 5 years of continuous employment. The estimated sabbatical liability is based on a number of factors, including actuarial assumptions and historical trends. In fiscal years 2016 and 2015 , the Company had a recorded liability of $1.0 million and $1.2 million , respectively, as an estimate of accumulated sabbatical leave as of the respective balance sheet dates. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS — ASU 2014-09, Revenue from Contracts with Customers (Topic 606) ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients In May 2014, FASB issued an accounting standards update ("ASU") 2014-09, which supersedes the revenue recognition requirements in ASC 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. In August 2015, FASB issued ASU 2015-14, which deferred the effective date of ASU 2014-09 to December 15, 2017 for annual reporting periods beginning after that date. FASB also approved permitting early adoption of the standard, but not before the original effective date of December 15, 2016. The Company will not be early adopting the standard; therefore, the new standard will be effective for the Company's 2018 fiscal year. The standard permits the use of either the full retrospective or modified retrospective approach. The Company currently expects to adopt the new standard using the modified retrospective approach. In April 2016, FASB issued ASU 2016-10, which clarifies the following two aspects of Topic 606: identifying performance obligations; and licensing implementation guidance. The Company is currently assessing and evaluating the new standard and has not yet concluded whether the adoption of ASU 2016-10 will have a material impact on the Company's consolidated financial statements. The Company currently expects to adopt an accounting policy to account for shipping and handling activities that occur after the customer has obtained control of a good as an activity to fulfill the promise to transfer the good, rather than as an additional promised service. This guidance does not represent a change from current practice for the Company. The Company does not have any license or royalty revenue. In May 2016, FASB issued ASU 2016-12, which focuses on clarifying the guidance on assessing collectability, presentation of sales taxes, non-cash consideration, and completed contracts and contract modification at transition. The Company has not yet concluded whether the adoption of ASU 2016-12 will have a material impact on its consolidated financial statements. Consistent with its current accounting policy, the Company currently expects to exclude amounts collected from customers for all sales (and other similar) taxes from the transaction price. In August 2014, FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern, which requires management to disclose their assessment of the entity's ability to continue as a going concern. Under this guidance, management is required to evaluate whether there is substantial doubt about the entity's ability to continue as a going concern and, if so, provide certain footnote disclosures.The amendment is effective for the annual period ending after December 15, 2016, and interim periods thereafter. The Company adopted the standard for the year ended December 31, 2016. The adoption of this standard did not have an impact on our consolidated financial statements and related footnotes. In July 2015, FASB issued ASU 2015-11, Simplifying the Measurement of Inventory. The update requires an entity to measure inventory at the lower of cost or market and net realizable value. Subsequent measurement is unchanged for inventory using last -in, first out or the retail inventory method. The effective date for ASU 2015-11 is for fiscal years beginning after December 15, 2016. The Company expects the adoption of this accounting guidance will not have an impact on the Company's consolidated financial statements. In February 2016, FASB issued ASU 2016-02, Leases (Topic 842) , which is intended to increase transparency and comparability among organizations by recognizing lease assets and liabilities on the balance sheet for leases with a term of more than 12 months. In addition, the update will require additional disclosures regarding key information about leasing arrangements. Under existing guidance, operating leases with a term of more than 12 months are not recorded as lease assets and lease liabilities on the balance sheet. The update will be effective for the Company beginning in the first quarter of fiscal year 2019, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this accounting guidance on its consolidated financial statements. The Company expects the adoption of this accounting guidance to result in an increase in lease assets and a corresponding increase in lease liabilities on its consolidated balance sheets. In March 2016, FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting , which is intended to simplify several aspects of the accounting for share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. The update is effective for annual periods beginning after December 15, 2016, with early adoption permitted. The Company is not planning to early adopt and expects that this guidance will not have a material impact on its consolidated financial statements. In August 2016, FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which is intended to decrease the diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments in this update provide guidance on eight specific cashflow issues. The amendments in ASU 2016-15 are effective for the Company for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, and should be applied using the retrospective transition method for each period presented. Early adoption is permitted, but all amendments must be adopted in the same period. The Company is not planning to early adopt and is currently evaluating the impact that the amendments will have on its consolidated financial statements. In October 2016, FASB issued ASU 2016-16, Intra-Entity Transfers of Assets Other Than Inventory . The effective date for ASU 2016-16 is for fiscal years beginning after December 15, 2017. ASU 2016-16 is applied on a modified retrospective basis and the Company will recognize any effects of adoption in the retained earnings at the beginning of its 2018 fiscal year. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements. |
