Cabela's misses mark in fourth quarter
Cabela's revenue and earnings per share for 2013 grew at a double-digit rate for the fifth consecutive year, according to CEO Tommy Millner. However, despite an 18% increase in net income year-over-year to $80.1 million from $68 million, results for the fourth quarter did not meet the company’s expectations.
Millner explained that the two biggest short-term factors affecting results in the quarter were a much sharper-than-expected decline in ammunition sales as compared to last year’s surge and a softer-than-expected holiday season.
“On the other hand, comparable store sales excluding firearms and ammunition were down 3.5% with positive comparable store sales in hunting apparel, men’s casual apparel, footwear and non-shooting related hunting equipment in the quarter,” Millner added.
Revenue increased 3% during the fourth quarter, to $1.08 billion from $1.05 billion, and 14% during the year, to $3.2 billion from $2.8 billion. Same-store sales dropped 3.5% during the quarter.
“We are delighted with the growing success of our longer-term initiatives, which will lead to ongoing profitable growth for Cabela’s,” Millner said. "These include the results of our new stores, which performed at least 50% better than our older stores on a sales and profit per square foot basis and generated comparable store sales 200 basis points better than our older stores. For the full year, we operated 11 of our new format stores that averaged sales per square foot of over $500. We currently plan to open 14 new stores in 2014.”
The company’s direct business performed much like retail in that customers shifted away from ammunition more sharply than the company expected. However, fishing, camping and most soft goods categories experienced sales growth in the quarter. Millner also highlighted improvements in the company’s mobile platform and said that it contributed to a meaningful lift in both traffic and conversion.
Despite the slower finish to 2013, Millner said it was a year of record breaking performance and significant accomplishments for the company.
"We believe that our operational improvements combined with new store performance will continue to deliver outstanding returns to shareholders," Millner said. "At the same time, in the next two quarters, we expect moderation in both comparable store sales and in the direct business due to the stronger than expected fall-off from last year's firearms and ammunition surge. We expect first quarter 2014 earnings per diluted share to be between $0.32 and $0.42 and full year 2014 earnings per diluted share to increase at a high single-digit or low double-digit rate versus 2013 adjusted earnings per diluted share of $3.32."
In 2015 and 2016, Cabela’s also plans to expand its footprint in Ammon, Idaho; Short Pump, Va.; and Fort Oglethorpe, Ga.
Construction in Ammon is scheduled to begin later this year and the company anticipates a spring 2015 opening. The 42,000-sq.-ft. store will be located in the Sandcreek Commons development near Hitt Road and Sunnyside Ave. off Interstate 15, serving the greater Idaho Falls area.
It will be Cabela’s third Idaho location, joining the Boise store opened in 2006 and the Post Falls store opened in 2007. Cabela’s expects the store to employ approximately 90 full-time and part-time employees.
The Ammon store will feature wildlife displays, innovative digital signage, an indoor archery range and archery tech room and a gun counter. Online order kiosks positioned throughout the store will allow customers to access all Cabela’s merchandise with free shipping with in-store pickup options.
Construction in Short Pump is scheduled to begin in 2015 and the company anticipates a spring 2016 opening. The 97,500-sq.-ft. store will be located in the Short Pump Station regional shopping center near the intersection of West Broad Street and Cold Hill Lane along Interstate 64, serving the greater Richmond area.
It will be Cabela’s second Virginia location, joining the Bristol store scheduled to open in 2015. The store will employ approximately 150 full-time and part-time employees.
The store will be built in Cabela’s next-generation layout, designed to surround customers in an outdoor experience. It will feature thousands of outdoor products, as well as wildlife displays, a mountain with a built-in aquarium, a gun library, a bargain cave, an indoor archery range and archery tech room, a boat shop, a fudge shop and a deli. It also will feature a Wildlife and Land Management department offering a full complement of tractors, attachments and feed and seed.
Construction in Fort Oglethorpe is scheduled to begin later this year and the company projects a fall 2015 opening. The 70,000-sq.-ft. store will be located in Catoosa County near the intersection of Interstate 75 and State Route 146 in a development currently anchored by Costco, serving the greater Chattanooga, Tenn., area.
It will be Cabela’s third Georgia store, joining the Augusta location scheduled to open in March and the Acworth location scheduled to open this fall. Cabela’s expects the store to employ approximately 140 full-time and part-time employees.
The store will include a mountain replica featuring North American game animals recreated in their natural habitat, an aquarium, a bargain cave, an indoor archery range and a deli, in addition to thousands of outdoor products.
Currently, Cabela’s operates 50 stores across North America with plans to open an additional 23 throughout the next two years.