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Cabela\'s Inc. Reports Operating Results (10-Q)

July 31, 2009 | About:
10qk

Cabela\'s Inc. (CAB) filed Quarterly Report for the period ended 2009-06-27.

Cabelas Inc is the nation\'s largest direct marketer and a leading specialty retailer of hunting fishing camping and related outdoor merchandise. Cabela\'s Inc. has a market cap of $1.09 billion; its shares were traded at around $16.21 with a P/E ratio of 14.7 and P/S ratio of 0.4.

Highlight of Business Operations:

Revenue in our merchandising businesses increased $21 million, or 4.3%, for the three months ended June 2009 compared to the three months ended June 2008, and $30 million, or 3.1%, for the six months ended June 2009 compared to the six months ended June 2008, despite the challenging macroeconomic environment. The net increases in total merchandise sales are due to 1) increases in comparable stores sales of 6.1% and 7.0%, respectively, for the three and six month 2009 periods compared to the 2008 periods, 2) the opening of our Billings, Montana, retail store on May 14, 2009, as well as the opening of new stores in May 2008 and August 2008, and 3) increases in Internet sales. Partially offsetting these increases were decreases in catalog mail order sales. Financial Services revenue increased $6 million, or 15.4%, for the three months ended June 2009 compared to the three months ended June 2008 primarily due to an increase in securitization income partially offset by a decrease in net interest income. Financial Services revenue decreased $1 million, or 1.2%, for the six months ended June 2009 compared to the six months ended June 2008 primarily due to a decrease in net interest income partially offset by an increase in securitization income. Other revenue decreased for the three and six months ended June 2009 compared to the respective 2008 periods due to decreases in real estate sales.

Our operating income for the three months ended June 2009 increased by $4 million, or 27.6%, compared to the three months ended June 2008. The increase in total operating income was primarily due to increases in revenue from our Retail business segment, higher merchandise gross margins, an increase in our Financial Services revenue, and a decrease in catalog and Internet related marketing costs due to a managed reduction in catalog page count. These improvements were partially offset by lower revenue from our Direct business segment and asset impairment charges. Operating income for the six months ended June 2009 decreased by $5 million, or 13.0%, compared to the six months ended June 2008. Operating income comparisons between periods are impacted by the challenging retail and macroeconomic environment. The decrease in total operating income was primarily due to asset impairment charges, lower revenue from our Direct business segment, and lower merchandise gross margins partially offset by a decrease in catalog and Internet related marketing costs due to a managed reduction in catalog page count and lower circulation. We finalized plans on certain future retail store sites during the second quarter of 2009 and consequently evaluated the recoverability of related properties and improvements resulting in the recognition of write-downs related to these assets totaling $12 million. We also announced a voluntary retirement plan in February 2009. Retirement costs in addition to other severance and related benefits totaling $1 million were incurred in the first six months of 2009. Known trends and management projections could change undiscounted cash flows in future periods which could trigger possible future write downs.

For the three and six months ended June 2009 compared to the respective 2008 periods, operating income for our Retail business segment increased $12 million and $3 million, respectively.

Our Direct revenue decreased $8 million and $19 million, respectively, during the three and six months ended June 2009 compared to the three and six months ended June 2008 primarily due to a decrease in catalog mail order sales resulting from planned decreases in catalog pages, and to a lesser extent a decrease in catalog circulation, customers buying more ammunition, firearms, and related products from our retail locations, and customers buying smaller quantities of higher margin soft goods. The managed decreases in catalog pages and circulation resulted in a decrease of $3 million and $8 million, respectively, in catalog-related costs comparing the three and six months ended June 2009 to the three and six months ended June 2008.

Read the The complete ReportCAB is in the portfolios of Wallace Weitz of Weitz Wallace R & Co, Ruane Cunniff of Ruane & Cunniff & Goldfarb Inc.

Rating: 3.4/5 (7 votes)

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