West Marine

West Marine had been growing organically and through acquisitions over a number of years, and the board of directors determined that the then current management had essentially hit the “glass ceiling” of expertise. The Board of Directors then brought in a new CEO and the CEO brought in a new management team. A partner of the SCA group was brought in as controller, who later transitioned into the CFO role.

CASE DESCRIPTION

West Marine, a publically traded company, was operating three different divisions as a retailer of boating supplies to individual boaters and boating businesses in the U.S. Over a period of ten years, they experienced quick and steady growth through organic growth and several acquisitions.
However, it became apparent to the board of directors that the current senior management team simply lacked the skills and experience needed to manage a two-hundred-million-dollar public company. They decided to bring in a whole new senior management team, which included a SCA partner as the VP Controller. The Controller position quickly transitioned to VP of Finance, and then CFO as the SCA partner began implementing solid strategies and effective measures.
When the SCA partner came in, he analyzed the company’s strategies and operations and discovered the following:

  • The company and industry had both outgrown West Marine’s management team
  • All three of West Marine’s divisions were overstaffed with few to no established policies and procedures
  • Poor, outdated and unproductive IT systems
  • Slow and unusable inventory
  • Bad accounting controls leading to a major write-off of assets
  • And more

Additionally, SCA’s expert discovered millions of dollars of errors in the books that had to be corrected with the SEC with a write-down of assets and a restatement.

The SCA partner was instrumental in planning and coordinating a complete operational turnaround for West Marine that included major renovations to cash controls, banking, accounting controls, organization, IT, inventory, and reporting systems.
Among the many innovative solutions implemented were:

  • Creation of new bank lines to accommodate the changing needs and strategies of the business
  • Policies and procedures were drafted and implemented company-wide
  • A new IT system was established as well as new organization controls
  • Led the company’s investor relations strategy that included Company’s 1st “investor day”, instrumental in increasing stock analysts from 0 to 10 covering West Marine, numerous “road-shows” and presentations at “analyst conventions” in New York and other cities around the US.

Led by the SCA expert, SCA was instrumental in the following successes:

  • EPS increased to $1.20, in a declining comp-sales environment, increasing shareholder value by $134 million or 84%
  • Gross margin increased by 550bps, or 14%
  • Store count increased from 227 to 404
  • Successfully acquired the company’s largest competitor
  • Created and led profit recovery department, resulting in savings of over $10 million
  • Implemented Sarbanes Oxley and Section 404
  • The stock price went from a low of $4 to a high of $28 during the SCA expert’s tenure at the company, increasing market value by 10X or > $600 million.

The turnaround was completed halfway through the SCA partner’s tenure and the successes after that greatly improved the shareholder value for all the stakeholders, increasing enterprise value of the company by approximately 4.7 times.

CASE DETAILS

Company:

West Marine


Industry:

Retail/Wholesale Boating Supply


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