West Marine SOLD....Time to Rejoice - Hopefully

Jeff Delbuono said:
Anybody remember BOAT US. or am i dating myself
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You are dating both of us..I think BOAT US sold their retail side to West Marine sometime in the mid 2000's. Also remember an outfit called E & B marine(?), but never ordered anything from them.
 
When I want to get a hard screwing I just skip Stress Marine and go straight to Marine Max. Just get in there and take it like a man!
 
They're a lot like Radio Shack. Great to have around as long as you know what you are looking for and what you are looking for is not an intelligent answer.
 
PlayDate said:
While most of you complain.....just wait. Private Equity doesn't buy things that don't make money. I would bet out of 237 stores....there will be half that number in 18 months. WM is just a storefront and does not make anything which means their only profit comes from marking up what they sell.

On-line stores have decimated their business model. Why would you buy something from WM when you can get it from Amazon tomorrow or the next day for 30% less? The answer is: you need it now.

That value equation with today's technology is not sustainable. I expect the new owners to push their other discount brands into the stores but the strategy of having brick and mortar storefronts for the resale of other people's products is problematic.

In my opinion, they have the Radio Shack problem which suggests that they have a niche as long as music still plays. Personally, I would probably be more interested in their future if they shifted to a franchise model. That would allow the local stores to tune their inventory and business practices to build relationships.
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An interesting analysis but I have two critiques:

Private equity doesn't buy things they can get money out of, it has nothing to do with whether or not what they are buying is actually capable of being made profitable. Much of the payout seems to come from saddling the takeover with new debt which pays management fees, selling off valuable assets and cutting costs, often in counter-productive ways. It's an open question whether WM looks like an under-realized retail operation or just a chance to spin the dials and extract cash for the owners.

I think the online-is-cheaper sales model, especially with Amazon, is running into the problems of counterfeit goods. A lot of the "value" proposition now seems to be in workalike unknown generics and knockoffs, and good luck trying to buy the real McCoy thanks to inventory mixing.

I think this is one place WM provides (or can provide) value to boaters -- making sure we get real stuff, not knockoffs. 316 stainless fittings that are actually 316 stainless and not cheaper grade, low quality castings. Reliable and consistent replacement parts. I have bought stuff from WM because I couldn't find another vendor I *trusted* to provide me with the real product. Even if the WM product is bad, WM is physically there to deal with the return or replacement.

Its an open question what the new owners actually want to do, maybe they want to expand it in different directions that aren't obviously "retail sales of boat parts" or they see the boating value proposition expanding, maybe they just want try another round of cost reductions and new debt.
 
mobocracy said:
An interesting analysis but I have two critiques:

Private equity doesn't buy things they can get money out of, it has nothing to do with whether or not what they are buying is actually capable of being made profitable. Much of the payout seems to come from saddling the takeover with new debt which pays management fees, selling off valuable assets and cutting costs, often in counter-productive ways. It's an open question whether WM looks like an under-realized retail operation or just a chance to spin the dials and extract cash for the owners.

I think the online-is-cheaper sales model, especially with Amazon, is running into the problems of counterfeit goods. A lot of the "value" proposition now seems to be in workalike unknown generics and knockoffs, and good luck trying to buy the real McCoy thanks to inventory mixing.

I think this is one place WM provides (or can provide) value to boaters -- making sure we get real stuff, not knockoffs. 316 stainless fittings that are actually 316 stainless and not cheaper grade, low quality castings. Reliable and consistent replacement parts. I have bought stuff from WM because I couldn't find another vendor I *trusted* to provide me with the real product. Even if the WM product is bad, WM is physically there to deal with the return or replacement.

Its an open question what the new owners actually want to do, maybe they want to expand it in different directions that aren't obviously "retail sales of boat parts" or they see the boating value proposition expanding, maybe they just want try another round of cost reductions and new debt.
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I agree and I think I stated that Monomoy Capital Partners did not spend $338M to lose their investment. The simple math is most of that "investment" will be new debt to the WM business which will drive any existing profitability to zero or negative. That triggers the next move which is to improve the profitability to cover the new debt.

I only know two ways out of that hole....cutting costs....increasing revenue. Of the two....PE almost always goes for cost cutting early because it has the most direct impact on profit while they "implement" their "success" strategy.

I don't agree with the thought that WM can exist because it has non-counterfeit products. Amazon and Ebay are increasing their activities to ferret out counterfeits and Seller's ratings are everything on Ebay.

For WM to be successful it must be localized not nationalized. Putting more clothes in WM is silly when the business serves people who maintain their boats. How many auto parts stores do you know that have a clothes section? In Alexandria.....clothes take up half the floor space.

I'm hopeful that the new owners are not a bunch of millennials with other people's money but time will tell.
 
PlayDate said:
I don't agree with the thought that WM can exist because it has non-counterfeit products. Amazon and Ebay are increasing their activities to ferret out counterfeits and Seller's ratings are everything on Ebay.
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I think this has not been a resounding success for either of them, especially Amazon. A combination of plenty of buyers who don't seem to care and an apparent lack of effort by the vendors.

I agree that genuine product is maybe not enough of a prime purpose for West Marine as a retail outlet, but at least it gives shoppers some reason to pay a slight premium.

I guess I'm also less hostile to the idea of some kind of inventory/concept expansion if it gets more dollars in the door. Maybe in combination with some kind of format change, shrinking some locations to a narrower, parts-only kind of small footprint and having a single larger, full inventory kind of store in any given market.

I also kind of wonder if there's any room for WM to expand into some kind of marine services. Maybe coastal areas are well served already, but I feel like a lot of inland areas have crap sandwich quality marine services. It's like MarineMax or other dealers or low-reliability local guys.
 
mobocracy said:
I think this has not been a resounding success for either of them, especially Amazon. A combination of plenty of buyers who don't seem to care and an apparent lack of effort by the vendors.

I agree that genuine product is maybe not enough of a prime purpose for West Marine as a retail outlet, but at least it gives shoppers some reason to pay a slight premium.

I guess I'm also less hostile to the idea of some kind of inventory/concept expansion if it gets more dollars in the door. Maybe in combination with some kind of format change, shrinking some locations to a narrower, parts-only kind of small footprint and having a single larger, full inventory kind of store in any given market.

I also kind of wonder if there's any room for WM to expand into some kind of marine services. Maybe coastal areas are well served already, but I feel like a lot of inland areas have crap sandwich quality marine services. It's like MarineMax or other dealers or low-reliability local guys.
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So the Chicago area is interesting. WM downtown store is big and has been generally well stocked. They have a parts counter. Stocked the steering cable I needed. Plus large electronics displays, clothes, shoes, toys, and everything else. Then there are two smaller stores. The one by the local small lakes has a lot of tubes and stuff. The one buy the big lake seems to have everything large boats may need in a pinch.
 
mobocracy said:
, but at least it gives shoppers some reason to pay a slight premium..
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I bought some 5/16” x 2” stainless bolts at the local hardware store yesterday which is high priced to begin with they were $1.19 ea....same bolt in West Marine today was $2.89.... they had a triangle dock box that I want to buy for the marina.... West Marine price was $849.00...my marina is $600 for the same box. Just 2 examples but there is nothing slight about their pricing
 
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Carpediem44DB said:
So what is there to rejoice in? Does anyone actually think that if West Marine is owned by a larger conglomerate that some how they will lower their margins, pay employees a higher wage to attract more experienced salespeople and open more stores in convenient locations? I have to drive 50 miles to the closest WM but when we are in Sausalito I do enjoy visiting the Marin City WM superstore, It is really nice and that store has very helpful folks and a great inventory, I don't mind paying the extra Boat cents because of the convenience factor. If I am looking for something specific and not in a hurry I rarely give WM a shot online I use several other online stores first. Now if they get bigger and can under cut the competition by 10 or 15 percent now we are talking.
Carpe Diem
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We are owned by a PE firm, actually we are on our 2nd one now. All they care about is a return on their investment. So my wager would be they initially invest and open more locations in select markets, revamp their online go to market strategy to be more competitive or relevant, look at people and processes they can upgrade, turn the screws on their suppliers, all while cutting costs wherever possible. If that doesn't lead to growth in a couple years, than they will cut costs everywhere to improve EBITDA where they can then exit and sell for a 10x multiple to another PE firm. Ideally this PE firm is out in 5 years. And the game goes round and round and round....
 
The low hanging fruit will be in under-performing markets. I would expect store closures and consolidations in many of our futures.
 
craigswardmtb said:
We are owned by a PE firm, actually we are on our 2nd one now. All they care about is a return on their investment. So my wager would be they initially invest and open more locations in select markets, revamp their online go to market strategy to be more competitive or relevant, look at people and processes they can upgrade, turn the screws on their suppliers, all while cutting costs wherever possible. If that doesn't lead to growth in a couple years, than they will cut costs everywhere to improve EBITDA where they can then exit and sell for a 10x multiple to another PE firm. Ideally this PE firm is out in 5 years. And the game goes round and round and round....
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Sounds normal for any acquisition
 
Lakeland auto marine and NAPA are both in Port Clinton Ohio. I have bought alot of tune up parts from NAPA over the years for boats. NAPA actually has a marine catalog. Curiosity got the best of me. So I checked NAPA price for wool buffing pad $33 so not bad when no shipping to pay.
 
Mark.60 said:
Here we go again,
Blue did you see Napa has a buffing pad for $33.

sorry couldn’t resist
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LOL..... I posted this pic today of my last day in storage. I was talking to the guy that sweeps up the storage floor after boats move. He said don’t worry I won’t sweep up all the blue under your boat until you leave. He is referring to all the blue wool you can see in the pic.
If I bought a $33 pad I would be buffing with Velcro in a couple hours :)

7881EAB7-F6A0-4081-A1C1-CFAA4CCB0128.jpeg
 
bobeast said:
The low hanging fruit will be in under-performing markets. I would expect store closures and consolidations in many of our futures.
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I don't know about other markets, but here in the northeast, particularly CT, they closed a bunch of stores over the past 5 years. I doubt they'll close more. With the way the market is I wouldn't be surprised if they expanded their brick & mortar presence. Although their best bang for the buck is investing in there Etailer space and figuring that out IMO. Go right at businesses like Defender, Jamestown distributors, boats.net, etc. Not an easy endeavor...
 
Blueone said:
Sounds normal for any acquisition
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Blueone said:
Sounds normal for any acquisition
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Increasing profits is always the end game. However how they get there and timing expectations are very different among public, private and PE backed companies.
More upside and downside in a short period of time for PE.
 
Some of the wool buffing pads I used in my shop were 2 sided. The centers were made to just screw onto the buffer. And anyone using a buffer needed their buffer spur's.
Rbd509c58e084dc7dd3be0db2d150c1a5
 
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