912833--3/31/2006--WEST_MARINE

related topics

{acquisition, growth, future}

{cost, operation, labor}

{stock, price, operating}

{product, market, service}

{customer, product, revenue}

{personnel, key, retain}

{condition, economic, financial}

{loss, insurance, financial}

{operation, natural, condition}

{property, intellectual, protect}

{cost, regulation, environmental}

{gas, price, oil}

If we cannot successfully implement our expansion strategy, our growth and profitability could be adversely impacted. Our expansion into new, unfamiliar markets presents increased risks that may prevent us from being profitable in these new markets. Our continued expansion will result in a higher number of stores, which could adversely affect the operating results of our retail business and reduce the revenues of our direct sales business. An inability to find suitable new store sites or delays in new store openings could materially affect our financial performance. We have recently undertaken a number of initiatives designed to build long-term company strength. If one or more of these initiatives is unsuccessful, our profitability could be adversely affected. Our results of operations could be adversely affected if unseasonably cold weather, prolonged winter conditions, natural disasters such as hurricanes or extraordinary amounts of rainfall occur, especially during the peak boating season in the second and third fiscal quarters. Intense competition in the boating supply and outdoor recreation markets could reduce our revenue and profitability. Our ability to find attractive acquisition candidates and to successfully integrate any business we acquire could adversely affect our profitability. A decline in consumer discretionary spending or a decline in the boating industry generally could reduce our revenues. If any of our key vendors or manufacturers fails to supply us with merchandise, we may not be able to meet the demands of our customers and our sales could decline. If we lose key management or are unable to attract and retain the talent required for our business, our operating results and financial condition could suffer. Our business depends on our ability to meet our labor needs We must successfully order and manage our inventory to reflect customer demand in a volatile market and anticipate changing consumer preferences and buying trends or our revenues and profitability will be adversely affected. A natural disaster or other disruption at any one of our distribution centers could cause us to lose merchandise and be unable to effectively deliver to our direct customers and retail stores. A significant portion of our common stock is held by our founder and Chairman, Randolph K. Repass, whose interests may differ from that of our other stockholders. Our failure to comply with certain environmental regulations could adversely affect our business. The price of our common stock may be subject to volatile fluctuations based on fluctuations in our quarterly results, general economic and market conditions and by our ability to meet analysts expectations. Because we self-insure against certain risks and maintain high deductibles on certain of our insurance policies, our operating results may be adversely affected if we suffer a substantial casualty. Our current business strategy includes the opening of a number of superstores and Express stores, and our operating results could be adversely affected if this relatively new strategy does not prove successful over the long-term.

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912833--3/31/2006--WEST_MARINE_INC