Cabela's Inc. Reports Strong Third Quarter 2012 Results

Cabela's Inc. Reports Strong Third Quarter 2012 Results

- Third Quarter EPS Increased 28% to $.60 Compared to $0.47 a Year Ago

- Third Quarter Comp Store Sales Up 3.9%

- Merchandise Gross Margin Up 130 Basis Points to a New Third Quarter Record 37.2%

- New Next-Generation Stores Significantly Outperforming Legacy Store Base

- After-Tax Return on Invested Capital Up 150 Basis Points

SIDNEY, Neb.--(BUSINESS WIRE)-- Cabela's Incorporated (NYS: CAB) today reported strong financial results for third quarter fiscal 2012.

For the quarter, total revenue increased 9.2% to $741.2 million; Retail store revenue increased 15.8% to $456.0 million; Direct revenue decreased 6.7% to $196.8 million; and Financial Services revenue increased 20.3% to $85.9 million. For the quarter, comparable store sales increased 3.9%. Net income increased to $42.8 million compared to $33.3 million and earnings per diluted share were $0.60 compared to $0.47, each compared to the year ago quarter.

"The highlight of the quarter was the excellent performance of our new next-generation stores, which bodes well for our future," said Tommy Millner, Cabela's Chief Executive Officer. "The eight next-generation stores open for the full quarter outperformed our existing legacy store base in sales and profit per square foot by a wide margin. Additionally, same store sales from our next-generation stores exceeded the performance of our existing stores by several hundred basis points."

"Recently, we opened two next-generation stores in Charleston, West Virginia, and Rogers, Arkansas, and our first, even smaller, Outpost store in Union Gap, Washington," Millner said. "These stores generated the same great customer enthusiasm we experienced in our previous store openings and are performing at the same high level as our other next-generation stores. Of our 40 stores open today, eleven are either next-generation or Outpost stores, and all future stores will be in one of these formats."

"As a result of the strong performance of our new stores, we are accelerating square footage growth as we move into 2014," Millner said. "We now expect to open eight domestic next-generation stores in 2014. Of these eight stores, three have been previously announced, four new locations were approved at or prior to the October Board of Directors meeting and one is expected to be approved shortly."

Merchandise gross margin increased 130 basis points to 37.2%. This is the sixth consecutive quarter of merchandise margin improvement. Ongoing focus on Cabela's branded products, improved in-season and pre-season planning, and greater vendor collaboration contributed to the strong performance. These positives more than overcame strong sales of firearms and ammunition, which had a 60 basis point negative impact on merchandise gross margin.

"The one area that did not meet our expectations was revenue in our Direct segment," Millner said. "The entire decline in Direct revenue for the quarter was attributable to weaker demand for clothing and footwear, and a 300 basis point reduction in Direct revenue from the absence of shipping income due to our CLUB Visa free shipping offer. In September, we responded with increased levels of advertising, which we will continue through the holiday season. As a result, Direct revenue has improved in the first few weeks of the fourth quarter."

The Cabela's CLUB Visa program also posted very strong results in the quarter. For the quarter, net charge-offs as a percentage of average credit card loans decreased 52 basis points to 1.71% compared to 2.23% in the prior year quarter. This is the lowest level of net charge-offs in five years. Primarily due to higher interest and fee income and reduced interest expense, Financial Services revenue increased 20.3% in the quarter to $85.9 million.

"Our strong results led to another quarter of improvement in return on invested capital, a vital measurement," Millner said. "Return on invested capital improved 150 basis points. Key operational improvements and the strong performance of our new stores give us confidence in our ability to increase return on capital going forward."

"We are optimistic about our prospects for the remainder of 2012 and 2013," Millner said. "The 28% increase in earnings per share and 25% increase in operating profit both exceeded our internal budget. At the end of the second quarter, we said externally that we expected earnings per share for 2012 to be 1-3% ahead of then current expectations of $2.60, or a range of $2.63 to $2.68. We now feel strongly that full year 2012 earnings per share will be at the high end of this range. While our 2013 budget is not yet finalized, we expect 2013 earnings per share to grow at least at a low double-digit rate."

Conference Call Information

A conference call to discuss third quarter fiscal 2012 operating results is scheduled for today (Thursday, October 25, 2012) at 11:00 a.m. Eastern Time. A webcast of the call will take place simultaneously and can be accessed by visiting the Investor Relations section of Cabela's website at A replay of the call will be archived on

About Cabela's Incorporated

Cabela's Incorporated, headquartered in Sidney, Nebraska, is a leading specialty retailer, and the world's largest direct marketer, of hunting, fishing, camping and related outdoor merchandise. Since the Company's founding in 1961, Cabela's® has grown to become one of the most well-known outdoor recreation brands in the world, and has long been recognized as the World's Foremost Outfitter®. Through Cabela's growing number of retail stores and its well-established direct business, it offers a wide and distinctive selection of high-quality outdoor products at competitive prices while providing superior customer service. Cabela's also issues the Cabela's CLUB® Visa credit card, which serves as its primary customer loyalty rewards program. Cabela's stock is traded on the New York Stock Exchange under the symbol "CAB".

Caution Concerning Forward-Looking Statements

Statements in this press release that are not historical or current fact are "forward-looking statements" that are based on the Company's beliefs, assumptions and expectations of future events, taking into account the information currently available to the Company. Such forward-looking statements include, but are not limited to, the Company's statements regarding opening eight domestic next-generation stores in 2014, increasing return on capital going forward, full year 2012 earnings per share being at the high end of its previous guidance of $2.63-$2.68, and 2013 earnings per share growing at least at a low double-digit rate. Forward-looking statements involve risks and uncertainties that may cause the Company's actual results, performance or financial condition to differ materially from the expectations of future results, performance or financial condition that the Company expresses or implies in any forward-looking statements. These risks and uncertainties include, but are not limited to: the state of the economy and the level of discretionary consumer spending, including changes in consumer preferences and demographic trends; adverse changes in the capital and credit markets or the availability of capital and credit; the Company's ability to successfully execute its multi-channel strategy; increasing competition in the outdoor sporting goods industry and for credit card products and reward programs; the cost of the Company's products, including increases in fuel prices; the availability of the Company's products due to political or financial instability in countries where the goods the Company sells are manufactured; supply and delivery shortages or interruptions, and other interruptions or disruptions to the Company's systems, processes, or controls, caused by system changes or other factors; increased or adverse government regulations, including regulations relating to firearms and ammunition; the Company's ability to protect its brand, intellectual property, and reputation; the outcome of litigation, administrative, and/or regulatory matters (including a Commissioner's charge the Company received from the Chair of the U. S. Equal Employment Opportunity Commission in January 2011); the Company's ability to manage credit, liquidity, interest rate, operational, legal, and compliance risks; the Company's ability to increase credit card receivables while managing credit quality; the Company's ability to securitize its credit card receivables at acceptable rates or access the deposits market at acceptable rates; the impact of legislation, regulation, and supervisory regulatory actions in the financial services industry, including the Dodd-Frank Wall Street Reform and Consumer Protection Act; and other risks, relevant factors and uncertainties identified in the Company's filings with the SEC (including the information set forth in the "Risk Factors" section of the Company's Form 10-K for the fiscal year ended December 31, 2011, and Form 10-Q for the fiscal quarter ended June 30, 2012), which filings are available at the Company's website at and the SEC's website at Given the risks and uncertainties surrounding forward-looking statements, you should not place undue reliance on these statements. The Company's forward-looking statements speak only as of the date they are made. Other than as required by law, the Company undertakes no obligation to update or revise forward-looking statements, whether as a result of new information, future events or otherwise.

(Dollars in Thousands Except Earnings Per Share)
Three Months EndedNine Months Ended

September 29,

October 1,

September 29,

October 1,

Merchandise sales$652,313$604,288$1,730,252$1,601,807
Financial Services revenue85,93271,438248,654214,086
Other revenue2,933 2,884 13,030 11,528 
Total revenue741,178 678,610 1,991,936 1,827,421 
Cost of revenue:

Merchandise costs (exclusive of depreciation and amortization)

Cost of other revenue 5 634 8 

Total cost of revenue (exclusive of depreciation and amortization)

Selling, distribution, and administrative expenses264,136234,108719,354663,322
Impairment and restructuring charges 3,488  4,443 
Operating income67,11353,489171,517121,685
Interest expense, net(5,227)(6,177)(16,175)(18,322)
Other non-operating income, net1,288 1,699 4,139 5,656 
Income before provision for income taxes63,17449,011159,481109,019
Provision for income taxes20,389 15,704 54,000 36,227 
Net income$42,785 $33,307 $105,481 $72,792 
Earnings per basic share$0.61 $0.48 $1.51 $1.05 
Earnings per diluted share$0.60 $0.47 $1.47 $1.02 
Basic weighted average shares outstanding69,894,538 69,554,229 69,794,416 69,203,978 
Diluted weighted average shares outstanding71,555,862 71,013,861 71,624,451 71,394,912 
(Dollars in Thousands Except Par Values)

September 29,

December 31,

October 1,

Cash and cash equivalents$265,675$304,679$



Restricted cash of the Trust16,70918,296523,138
Accounts receivable, net20,77347,12726,542
Credit card loans (includes restricted credit card loans of the Trust of $3,193,162, $3,142,151, and $2,779,854), net of allowance for loan losses of $65,750, $73,350, and $75,3003,151,6473,094,1632,726,779
Prepaid expenses and other current assets143,930146,479147,455
Income taxes receivable and deferred income taxes52,261 5,709 18,011 
Total current assets4,372,6964,111,2814,175,851
Property and equipment, net971,401866,899840,369
Land held for sale or development39,43738,39339,314
Economic development bonds92,74486,563113,630
Deferred income taxes7,637
Other assets29,091 30,635 25,671 
Total assets$5,505,369 $5,133,771 $5,202,472 
Accounts payable, including unpresented checks of $18,819, $19,124, and $21,876$366,992$266,793$246,168
Gift instruments, and credit card and loyalty rewards programs218,068227,414192,000
Accrued expenses129,869143,695114,785
Time deposits310,61788,401146,756
Current maturities of secured variable funding obligations of the Trust460,000282,000
Current maturities of secured long-term obligations of the Trust425,000925,000
Current maturities of long-term debt8,3988,387106,236
Income taxes payable and deferred income taxes  931 
Total current liabilities1,033,9441,619,6902,013,876
Long-term time deposits763,938893,912888,131
Secured long-term obligations of the Trust, less current maturities1,827,500977,500722,500
Long-term debt, less current maturities443,199336,535338,744
Deferred income taxes33,71226,367
Other long-term liabilities99,59398,451109,403
Preferred stock, $0.01 par value; Authorized - 10,000,000 shares; Issued - none
Common Stock, $0.01 par value; Authorized - 245,000,000 shares;
Issued - 70,545,524, 69,641,818, and 69,572,089 shares;
Outstanding - 70,019,501, 68,840,883, and 69,572,089 shares705696696
Additional paid-in capital344,541334,925333,389
Retained earnings968,395862,914793,086
Accumulated other comprehensive income (loss)8,9172,7312,647
Treasury stock, at cost - 526,023 and 800,935 shares(19,075)(19,950) 
Total stockholders' equity1,303,483 1,181,316 1,129,818 
Total liabilities and stockholders' equity$5,505,369 $5,133,771 $5,202,472 
(Dollars in Thousands)
Three Months EndedNine Months Ended

September 29,

October 1,

September 29,

October 1,


Financial Services85,93271,438248,654