Summary of Significant Accounting Policies (Policies)

12 Months Ended

Jan. 02, 2016

Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

PRINCIPLES OF CONSOLIDATION—The consolidated financial statements include the accounts of West Marine, Inc. and its subsidiaries, all of which are wholly-owned, directly or indirectly. Intercompany balances and transactions are eliminated in consolidation.

Fiscal Period, Policy [Policy Text Block]

YEAR-END—The Company’s fiscal year consists of 52 or 53 weeks, ending on the Saturday closest to December 31 and as a result, a 53-week year occurs every five to six years. The fiscal years 2015 and 2013 consisted of the 52 weeks ended January 2, 2016 and December 28, 2013, respectively, while the 2014 fiscal year consisted of the 53 weeks ended January 3, 2015. References to 2015, 2014 and 2013 are to the fiscal years ended January 2, 2016, January 3, 2015 and December 28, 2013, respectively.

Inventory, Policy [Policy Text Block]

INVENTORIES—Merchandise inventories are carried at the lower of cost or market on an average cost basis. Capitalized indirect costs include freight charges for transporting merchandise to warehouses or store locations and operating costs incurred for merchandising, replenishment and distribution center activities. Indirect costs included in inventory value at the end of fiscal years 2015 and 2014 were $19.7 million and $19.9 million, respectively. Indirect costs included in inventory value are recognized as an increase in cost of goods sold as the related products are sold.

Inventories are written down to market value when cost exceeds market value, based on historical experience and current information. Reserves for estimated inventory shrinkage based on historical shrinkage rates determined by the Company’s physical merchandise inventory counts and cycle counts were $2.3 million and $2.2 million at the end of fiscal years 2015 and 2014, respectively. Reserves for estimated inventory market value below cost, based upon current levels of aged and discontinued product and historical analysis of inventory sold below cost, were $4.5 million and $3.5 million at the end of fiscal years 2015 and 2014, respectively.

Advertising Costs, Policy [Policy Text Block]

DEFERRED CATALOG AND ADVERTISING COSTS—The Company capitalizes the direct cost of producing and distributing its catalogs. Capitalized catalog costs are amortized, once a catalog is mailed, over the expected net sales period, which is generally from one month to 24 months. Advertising costs, which are included in selling, general and administrative ("SG&A") expense, are expensed as incurred and were $14.7 million, $16.0 million and $14.7 million in 2015, 2014 and 2013, respectively. Advertising costs were partially offset by vendor allowances of $11.2 million, $10.6 million and $9.8 million in 2015, 2014 and 2013, respectively, which are included in cost of goods sold. The capitalized value of prepaid catalog and advertising costs on the balance sheet were immaterial as of January 2, 2016 and January 3, 2015, respectively.

Property, Plant and Equipment, Policy [Policy Text Block]

PROPERTY AND EQUIPMENT—Property and equipment is stated at cost and depreciated using the straight-line method over the estimated useful lives of the various assets, as follows:

	Estimated Useful Lives
Furniture and equipment	3–7 years
Computer software and hardware	3–7 years
Buildings	25 years

Leasehold improvements are amortized over the lesser of the expected lease term or the estimated useful life of the improvement, which is usually about 10 years.

Capitalized interest [Policy Text Block]

CAPITALIZED INTEREST—The Company capitalizes interest on major capital projects. The Company did not capitalize interest in 2015, 2014 and 2013.

Internal Use Software, Policy [Policy Text Block]

CAPITALIZED SOFTWARE COSTS—Capitalized computer software, included in property and equipment, reflects costs related to internally-developed or purchased software that are capitalized and amortized on a straight-line basis, generally over a period ranging from three to seven years.

Asset Retirement Obligations, Policy [Policy Text Block]

ASSET RETIREMENT OBLIGATIONS—The Company estimates the fair value of obligations to clean up and restore leased properties under agreements with landlords and records the amount as a liability when incurred. Liabilities for asset retirement obligations were $0.6 million as of January 2, 2016, and $0.6 million as of January 3, 2015. There were no significant changes attributable to the following components during the 2015, 2014 or 2013 reporting periods: liabilities incurred, liabilities settled, accretion expense, and revisions in estimated cash flows.

Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block]

IMPAIRMENT OF LONG-LIVED ASSETS—The Company reviews long-lived assets, including property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. If facts indicate a potential impairment, the Company would assess the recoverability by determining if the carrying value of the long-lived assets exceeds the sum of the projected undiscounted cash flows expected to result from the use and eventual disposition of the assets over the remaining economic life. If the recoverability test indicates that the carrying value of the long-lived assets is not recoverable, the Company will estimate the fair value of the long-lived assets using appropriate valuation methodologies, which would typically include an estimate of discounted cash flows. Any impairment would be measured as the difference between the long-lived assets' carrying amount and the estimated fair value. The Company recorded no asset impairment charges in fiscal years 2015, 2014 and 2013.

Costs Associated with Exit or Disposal Activities or Restructurings, Policy [Policy Text Block]

COSTS ASSOCIATED WITH EXIT ACTIVITIES—The Company occasionally vacates stores prior to the expiration of the related lease. For vacated locations that are under long-term leases, the Company records an expense for the net present value of the difference between its future lease payments and related costs, such as real estate taxes and common area maintenance costs, from the date of closure through the end of the remaining lease term, net of expected future sublease rental income. Costs associated with exit activities as of January 2, 2016 and January 3, 2015 were $1.5 million and $2.0 million, respectively. Of these amounts, as of January 2, 2016 and January 3, 2015, $0.9 million and $1.1 million, respectively, were included in deferred rent and other.

Contingent Liability Reserve Estimate, Policy [Policy Text Block]

SELF-INSURANCE OR HIGH DEDUCTIBLE LOSSES—The Company uses a combination of insurance and self-insurance for a number of risk management activities including workers’ compensation, general liability and employee-related health care benefits, a portion of which is paid by its associates. Liabilities associated with these risks are estimated primarily based on amounts determined by actuarial analysis, and accrued in part by considering historical claims experience, demographic factors, severity factors and other actuarial assumptions. Any actuarial projection of losses is subject to a high degree of variability. Among the causes of this variability are unpredictable external factors affecting future inflation rates, litigation trends, legal interpretations, benefit level changes and claim settlement patterns.

Deferred Charges, Policy [Policy Text Block]

DEFERRED RENT—Certain of the Company’s operating leases contain periods of free or reduced rent or contain predetermined fixed increases in the minimum rent amount during the lease term. For these leases, the Company recognizes rent expense on a straight-line basis over the expected life of the lease, generally about 10 years, including periods of free rent, and records the difference between the amount charged to rent expense and the rent paid as deferred rent. Tenant improvement allowances received from landlords are deferred and amortized to reduce rent expense over the expected life of the lease. As of January 2, 2016 and January 3, 2015, deferred rent totaled $11.9 million and $12.0 million, respectively, of which $1.3 million is included in accrued expenses for both years.The non-current portion is included in the Deferred rent and other line item on the Company's consolidated balance sheet.

Income Tax, Policy [Policy Text Block]

INCOME TAXES—Income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to the differences between existing financial statement carrying amounts and their respective tax bases, and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured at the tax rate expected to be in effect for the taxable years in which the Company expects those temporary differences to be recovered or settled. The Company recognizes the effect of changes in tax rates on deferred tax assets and liabilities in the period that includes the enactment date of the change. A valuation allowance is recorded to reduce deferred tax assets to the amount estimated as more likely than not to be realized. The Company also accounts for uncertainties in income taxes recognized in its financial statements. For more information, see Note 7.

Sales and Use Tax [Policy Text Block]

SALES AND USE TAX—Net revenues are recorded net of sales and use taxes. Net sales and use taxes are collected and remitted to all jurisdictions in which the Company has a physical presence in accordance with state, provincial and local tax laws.

Fair Value of Financial Instruments, Policy [Policy Text Block]

FAIR VALUE OF FINANCIAL INSTRUMENTS—Fair value of financial instruments represents the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.

The fair value hierarchy prescribed under accounting principles generally accepted in the United States ("GAAP") contains three levels, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2—Other inputs that are directly or indirectly observable in the marketplace.

Level 3—Unobservable inputs which are supported by little or no market activity.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. As of January 2, 2016 and January 3, 2015, there were no financial instruments which require disclosure under the fair value hierarchy.

Revenue Recognition, Policy [Policy Text Block]

REVENUE RECOGNITION—Sales, net of estimated returns, are recorded when merchandise is purchased by customers at store locations. Revenue is recognized when merchandise shipped from a warehouse is received by the customer, based upon the estimated date of receipt by the customer. The Company reserves for sales returns through estimates based on historical experience. The sales return reserve for fiscal years 2015, 2014 and 2013 was $(1.3) million, $(1.2) million and $(1.6) million, respectively.

Trade and Other Accounts Receivable, Policy [Policy Text Block]

ACCOUNTS RECEIVABLE—Accounts receivable consists of amounts owed to West Marine for sales of services or goods on credit for our professional customers. The Company maintains an allowance for doubtful accounts receivable for estimated losses resulting from the inability of our customers to make required payments. The Company determines this allowance based on overall estimated exposure. Factors impacting the allowance include the level of gross receivables, the aging of accounts receivable at the date of the consolidated financial statements, the financial condition of the Company's customers and the economic risks for certain customers. The allowances for doubtful accounts receivable were as follows:

	2015			2014			2013
				(in thousands)
Allowance for doubtful accounts receivable—beginning balance	$	(247	)	$	(243	)	$	(277	)
Additions	(174		)	(307		)	(325		)
Deductions and other adjustments	156			303			359
Allowance for doubtful accounts receivable—ending balance	$	(265	)	$	(247	)	$	(243	)

The Company's policy for writing off uncollectible trade accounts receivables consists of systematic follow-up of delinquent accounts (over 90 days past the customer's terms of sale) and management review of accounts over a set dollar amount.

Revenue Recognition, Gift Cards [Policy Text Block]

UNREDEEMED GIFT CARDS—Aggregate sales of gift cards for fiscal years 2015, 2014 and 2013 were $18.4 million, $18.1 million and $18.1 million, respectively. West Marine uses the proportional model for deferral of gift card sales. In line with the proportional method, sales of gift cards are deferred and treated as a liability on our balance sheet either until redeemed by customers in exchange for products or until we determine that breakage has occurred. Breakage is estimated in proportion to actual redemption. Under this method, we estimate breakage based on Company-specific data by analyzing historical experience and deriving a rate that represents the amount of gift cards that are expected to be unused and not subject to escheatment. This rate is then applied, and breakage is recognized in income, over the period of redemption. Gift card breakage income for 2015, 2014 and 2013 was $0.7 million, $0.7 million and $0.8 million, respectively, and is included as net revenues in the Company's operating results.

Revenue Recognition, Loyalty Programs [Policy Text Block]

WEST ADVANTAGE CUSTOMER LOYALTY PROGRAMS—The Company has a customer loyalty program which allows members to earn points on qualifying purchases. Points earned entitle members to receive certificates that may be redeemed on future purchases through any retail sales channel. The certificates expire one year after they are issued. A liability is recognized and recorded as a reduction of revenue at the time the points are earned, based on the retail value of certificates projected to be redeemed, less the applicable estimate of breakage based upon historical redemption patterns. As of January 2, 2016 and January 3, 2015, the Company had a recorded liability for the West Advantage customer loyalty program of $1.3 million and $1.2 million, respectively.

Cost of Sales, Policy [Policy Text Block]

COST OF GOODS SOLD—Cost of goods sold includes costs related to the purchase, transportation and storage of merchandise, shipping expense and store occupancy costs. Consideration in the form of cash or credits received from vendors is recorded as a reduction to cost of goods sold as the related products are sold.

Cost of Sales, Vendor Allowances, Policy [Policy Text Block]

VENDOR ALLOWANCES—The Company receives various payments and allowances from its vendors through a variety of programs and arrangements. Monies received from vendors include rebates, allowances and promotional funds. The amounts to be received are subject to the terms of the vendor agreements, which are subject to ongoing negotiations that may be impacted in the future based on changes in market conditions, vendor marketing strategies and changes in the profitability or sell-through of the related merchandise.

Rebates and other miscellaneous incentives are earned based on purchases, receipts or product sales and are accrued ratably over the purchase or sale of the related product. These monies are recorded as a reduction of merchandise inventories based on inventory turns and as the product is sold. 

Foreign Currency Transactions and Translations Policy [Policy Text Block]

FOREIGN CURRENCY—Translation adjustments result from translating foreign subsidiaries’ financial statements into U.S. dollars. West Marine Canada’s functional currency is the Canadian dollar. Balance sheet accounts are translated at exchange rates in effect at the balance sheet date. Income statement accounts are translated at average exchange rates during the year. Resulting translation adjustments are included as a component of other comprehensive income in the consolidated statements of stockholders’ equity. Gains (losses) from foreign currency transactions included in SG&A expense for 2015, 2014 and 2013 were $(0.7) million, $(0.5) million and $(0.6) million, respectively.

Earnings Per Share, Policy [Policy Text Block]

NET INCOME PER SHARE—Basic net income per share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net income per share reflects the potential dilution that could occur if unvested restricted shares and outstanding options to purchase common stock were exercised. Options to purchase approximately 0.6 million shares, 0.7 million shares and 0.2 million shares of common stock that were outstanding in 2015, 2014 and 2013, respectively, have been excluded from the calculation of diluted income per share because inclusion of such shares would be anti-dilutive.

The following is a reconciliation of the Company’s basic and diluted net income per share computations (shares in thousands):

	2015			2014			2013
	Shares	Net Income Per  Share		Shares	Net Income Per  Share		Shares	Net Income Per  Share
Basic	24,629	$	0.18	24,244	$	0.08	24,259	$	0.32
Effect of dilutive stock options	105	—		164	—		342	—
Diluted	24,734	$	0.18	24,408	$	0.08	24,601	$	0.32

Cash and Cash Equivalents, Policy [Policy Text Block]

CASH AND CASH EQUIVALENTS—Cash consists entirely of cash on hand and bank deposits, of which approximately $46.6 million exceeded FDIC insurance limits as of January 2, 2016. As of January 3, 2015, approximately $43.2 million exceeded FDIC insurance limits.

The Company classifies amounts in transit from banks for customer credit card and debit card transactions as cash and cash equivalents as the banks process the majority of these amounts within three to five business days. The amounts due from banks for these transactions classified as cash and cash equivalents totaled $3.5 million and $3.3 million at January 2, 2016 and January 3, 2015, respectively

We had no outstanding checks in excess of funds on deposit (book overdrafts) at January 2, 2016 and January 3, 2015.

Compensation Related Costs, Policy [Policy Text Block]

SABBATICAL LEAVE—Certain full-time associates are eligible to receive sabbatical leave after each 5 years of continuous employment. The estimated sabbatical liability is based on a number of factors, including actuarial assumptions and historical trends. In fiscal years 2015 and 2014, the Company had a recorded liability of $1.2 million and $1.3 million, respectively, as an estimate of accumulated sabbatical leave as of the respective balance sheet dates.