Cabela's is a hunter's and fisherman's Disneyland. The seller of outdoor sporting goods operates nearly 60 stores in more than 30 US states, plus seven 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 retail store business accounts for more than 60% of the company's total sales. Of its retail segment, Cabela's hunting equipment accounts for nearly 50% of its sales, while its general outdoor products generate another 30%. Its clothing and footwear products bring in the remaining revenue.
The direct business, which includes catalog and online sales, contributes about 25%. Cabela's financial services arm, which generates more than 10% of revenue, 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 30 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, West Virginia, and Wisconsin in the US; and another in Manitoba, Canada. To support the company's ongoing expansion, it plans to open a fifth distribution center in Utah.
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 $236 million on advertising in 2014, up from $208 million in 2013.
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 more than 25% of sales in 2014.
Cabela's sales have been growing steadily over the past several years. Revenue grew by more than 1% to $3.65 billion in 2014, thanks mostly to the addition of new retail stores (it added 14 new stores in 2014), particularly its new-format retail stores, which have been outperforming its legacy stores. The company's financial services division also grew by nearly 15%, mostly from interest income from higher credit card balances, which further boosted Cabela's top line. The direct division's sales, however, declined by nearly 13% from a combination of lower ammunition and related product sales, and sales cannibalization from its new retail stores.
Despite higher revenue, the company's profit reversed its upward trend in 2014. Net income fell by 10% to $201.72 million, mostly due to higher selling, distribution, and administrative expenses related to new store costs and costs in related support areas.
Operations provided $258 million, or 25% less cash than in 2013, partly because of lower earnings but mostly because the company paid a $50 million deposit toward federal taxes related to prior uncertain tax positions.
Cabela'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. Most of the 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).
In 2015, Cabela's announced its plans to open 13 retail stores in the US and Canada with more than one million square feet of combined retail space. In 2014, the company posted record sales after opening 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).
Following this strategy from 2005 through 2014, Cabella's revenue more than doubled from $1.8 billion to $3.65 billion, while profit nearly tripled from $72.6 million to $201.72 million -- thanks mostly to new store openings.