Citing a difficult 18 months to come, West Marine continues store and personnel cuts
By IBI Magazine
After announcing its quarterly financial figures, West Marine CEO Geoff Eisenberg said yesterday that the downturn in the US marine accessories market could continue for the next 18 months. But he also provided some details about what the new West Marine will look like when the market returns. "Our original plans for this year tended to be conservative in outlook," said Eisenberg on a webcast with financial analysts. "But market conditions and sales levels have been worse than we expected. We assume the market will remain weak through the next 18 months." Eisenberg announced a string of internal cost-cutting initiatives that he said will have a favorable US$20 to US$25 million impact. The company had previously announced plans to cut 10 to 15 more stores this year, but the number has been revised upward from 25 to 30 stores. Eisenberg said that the company is following a "store optimization" philosophy in which smaller regional stores with a low ROI will be merged into larger, more centralized stores. "We will continue to monitor and react to changes in individual markets," he said. West Marine is also building two "flagship" stores, one in Jacksonville, Florida and the other in Brick, New Jersey. The stores, which will be a template for future megastores, will be between 25,000 and 30,000sq ft. Eisenberg said that West Marine will also close its Hagerstown, Maryland distribution center, and distribute inventory from centers in South Carolina and California. A call center in Largo, Florida, will also be shut down. The West CEO also said that Port Supply, the company's wholesale division, will undergo the "most significant redesign" in its history. Port Supply, he said during the question and answer session, has reduced its staffing by 40 percent, as well restructured its "internal and external" sales and other functions. West Marine will also continue to pursue "substantial international opportunities," said Eisenberg. He cited the example of a new franchise store in Turkey, adding that there could be a "tremendous opportunities" to leverage the West Marine brand in boating countries outside the US.
(25 July 2008)
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