Cabela's is a hunter's and fisherman's Disneyland. The seller of outdoor sporting goods operates more than 75 stores in 35-plus US states, plus nine stores in Canada. Located mainly in the Midwest, the stores are as big as 247,000 sq. ft. and include such features as waterfalls, mountain replicas, aquariums, in-store shooting galleries, and banquet and meeting facilities. Cabela's sells footwear, clothing, and gear for fishing, hunting, camping, and other outdoor activities. Cabela's also mails more than 132 million catalogs each year, sells magazines and merchandise online, and has an outdoors show on television. Cabela's was founded in 1961 by chairman Dick Cabela and his younger brother, Jim.
Cabela's operates three core business segments. Its Retail segment counts its retail store business, and accounted for 66% of the company's total sales during fiscal 2016 (ended January 2, 2016). Of its retail segment, Cabela's hunting equipment accounted for 46% of its sales that year, while its general outdoor products generated another 31%. Its clothing and footwear products bring in the remaining revenue.
The Direct business segment (21% of total sales) includes catalog and online sales, while Cabela's Financial Services segment (13% of total sales) consists of its CLUB VISA credit card business and is managed by World's Foremost Bank, a wholly-owned subsidiary of the company.
Fast-growing Cabela's has stores in more than 35 US states. Major markets include Kansas, Michigan, Minnesota, Nebraska, Texas, and Washington. The retailer operates stores in Canada in Alberta, Manitoba, and Saskatchewan. Cabela's operates distribution centers in Nebraska, Utah, West Virginia, Washington, and Wisconsin in the US.
Sales and Marketing
To spur sales of its outdoor products, Cabela's has been using digital marketing channels in mobile marketing and social networking. It also markets through print catalogs. The company spent $235 million on advertising in FY2016 (ended January 2, 2016), compared to $236 million and $208 million in the prior two fiscal years, respectively.
The retailer sponsors include sportsmen and women advocacy groups and wildlife conservation organizations, including the US Sportsmen's Alliance, National Rifle Association, Women in the Outdoors, and Ducks Unlimited. It also sponsors fishing tournaments and similar events.
Cabela's retail stores generate millions of visitors per store a year, and its Kansas City, Kansas, and Owatonna, Minnesota, stores are near the top of the list in tourist attractions for those states. Most of the company's stores were built within the last decade and are located along major Interstates in small towns not far from large metropolitan areas. Cabela's branded products accounted for 24% of sales in FY2016.
Cabela's sales have risen more than 40% since 2011 mostly as the retailer has more than doubled its store count from 34 to 77 at the end of 2015. While its profits are 30% higher over the same period, Cabela's profits have been trending downward since 2013 as it's incurred higher overhead costs to support new store expansion.
The retailer's revenue jumped 10% to $3.99 billion during fiscal 2016 (ended January 2, 2016), mainly thanks to higher merchandise sales stemming from 13 new retail stores openings, but also because the retailer added an additional week to its fiscal year which added $84 million in sales. Comparable store sales shrank 3.4% during the year due to a decline in clothing and footwear product sales. Also among comparable stores, transaction volumes fell 6.2% while average sales per transaction rose 4.4%. The company's financial services division grew by 15% on interest from higher credit card balances, while the Direct division's sales tumbled 3% as unseasonably warmer weather hurt winter clothing sales and as it transferred its ammunition sales from online to retail.
Despite strong revenue growth in FY2016, Cabela's net income sunk 6% to $189.33 million as it spent more toward its growth in building new stores and raising incentive compensation, incurred impairment charges on some of its stores, and faced higher corporate office restructuring costs during the year. The retailer's operating cash levels climbed 27% to $326.9 million on higher cash earnings and because it used less cash toward inventory and decreased its income tax receivables balance.
Cabela's outlined its "Vision 2020" long-term growth plan in early 2016, which followed six strategic focused areas including: Improve Top-Line Sales in existing stores by optimizing floor space and utilizing its Direct business to create an omni-channel experiences; Increase Bottom-Line Profits; Retail Store Expansion and Innovation (it planned to open 8 new stores in 2016); Customers First; Focus on All Outfitters to increase its employee diversity; and Grow the CLUB by fostering loyalty to build its credit card business.
The retailer's chief sales and profit growth strategy has been to accelerate its retail store growth rate, with the goal of opening 13 to 15 stores annually. During 2015, Cabela's posted another year of record sales after opening 13 retail stores in the US and Canada with more than one million square feet of combined retail space. In 2014, the company opened 14 new retail stores, including 11 stores in the US and three in Canada, and noted that its new store format outperformed its legacy stores format in sales. In 2013, after adding six new stores in 2012, the company opened 10 retail stores (in Colorado, Kentucky, Michigan, Montana, Ohio, in the US, and in Saskatchewan in Canada).
Most of the retailer's new stores conform to the retailer's adaptable next-generation format, which ranges in size from about 80,000 to 125,000 sq. ft. and allows the company to expedite new store opening in prime locations. The retailer's "Outpost" store format is smaller (~40,000 sq. ft.) and boasts a "core-flex" merchandise strategy (stocking selected core merchandise with a flexible seasonal mix).