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West Marine Reports 14.6% Increase In 2012 Pre-Tax Earnings And Provides 2013 Full-Year Guidance

Net revenues for the fourth quarter increased by $4.9 million, or 4.3%, to $118.3 million compared to $113.4 million for the fourth quarter of 2011. Comparable store sales increased by 2.1%. Net loss for the fourth quarter ended December 29, 2012 was $11.1 million, an improvement of $2.9 million when compared to the net loss of $14.0 million for the fourth quarter of 2011.

Total inventory at December 29, 2012 was $194.3 million, a $1.0 million, or 0.5%, increase versus the balance at December 31, 2011, and a 2.3% increase on an inventory per square foot basis. Inventory turns for 2012 were up 4.6% versus last year.

Matt Hyde, West Marine's CEO, commented: "Our associates stayed focused on providing great service to our customers resulting in a respectable sales growth increase and we were able to manage the business such that we grew pre-tax income nearly three times faster than the top line. A year like 2012 reinforces our strategic direction."

At this time, we are introducing a new financial metric for West Marine, Return on Invested Capital ("ROIC"). We believe ROIC is an appropriate measure because it is driven by both the generation of earnings and the responsible management of our assets, and we believe it is closely correlated with creating shareholder value. ROIC is defined as adjusted net income divided by average total capital. Net income is adjusted to normalize our income tax rate, and to exclude interest and fixed rent expense as well as any one-time or unusual items, such as impairment charges and gains or losses on the sale of assets. The exclusions from net income are calculated on an after-tax basis. Total capital is calculated by adding total debt, operating leases capitalized at eight times annual rent expense, and total stockholders' equity, minus cash and cash equivalents. For more details on ROIC, see "Non-GAAP Financial Information" below. For fiscal year 2012, our ROIC was 7.9%, which compares to 7.6% in fiscal year 2011, and 6.9% in fiscal 2010. ROIC based on GAAP net income was 7.9%, 16.7% and 10.0% for fiscal years 2012, 2011 and 2010, respectively.

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