Guns, ammo drive Cabela’s 12% Q4 comp
Strong sales of guns at ammunition at Cabela’s contributed to a 12% same store sales increased and enabled the company to report record sales and profits for the fourth quarter and full year.
"Every area of our company performed at very high levels in the fourth quarter," said Tommy Millner, Cabela’s CEO. "Sales and profit per square foot at our next-generation stores were 40% higher than our legacy stores. Comparable store sales, aided by a surge in firearms and ammunition, increased 12%, a new record, and our direct business grew 1.7%, the first increase in 11 quarters."
So substantial was the impact of firearms and ammunition sales, Millner said if the company had experienced a normal level of activity the fourth quarter comp increase would have been 5%. For the quarter, excluding firearms and ammunition, merchandise margin increased 60 basis points. Merchandise margin increased in each of the company's 13 merchandise sub categories, including firearms and ammunition. Ongoing focus on Cabela's branded products, improved markdown management and greater vendor collaboration contributed to the improvement. Consolidated merchandise gross margin declined 20 basis points as a direct result of the mix effect from the firearm and ammunition surge.
Total sales for the quarter increased 15.2% to slightly more than $1.1 billion and profits increased 19.7% to nearly $90 million. Retail stores were responsible for most of the growth. Retail store revenue increased 26.3% to $664 million, direct revenue increased 1.7% to $385.5 million and financial services revenue increased 7.2% to $83.2 million.
"During the quarter, we made significant additional omni-channel investments in advertising," Millner said. "These investments helped accelerate comparable store sales and growth in Direct revenue. This acceleration has continued into the first quarter of 2013. Additionally, we are very encouraged with increases in new customers as it further expands our market share and has a positive long-term impact on our consumer franchise."