For fiscal 2007, total revenue is expected to increase 13.9% over 2006, with a 3.9% increase in direct business revenue. Total retail store revenue is expected to increase 27.2%, with a 1.2% decline in same store sales. Diluted earnings per share for fiscal 2007 are expected to be in the range of $1.29 to $1.31, which compares with $1.29 a year ago.
Cabela's said its fourth quarter results were primarily impacted by a challenging retail environment which negatively impacted the companys same store sales and to a lesser extent the companys direct business. Additionally, productivity of some new stores did not meet expectations.
During 2008, the company intends to significantly slow retail expansion and focus on improving the profitability of its existing operations. The primary focus of the company during the year will be to improve:
- advertising strategy by using more targeted campaigns throughout its multi-channel model;
- retail productivity and same store sales through enhanced product assortment, streamlined flow of merchandise to its stores and reduced operating expenses;
- merchandise planning by reallocating retail store space by department by season and reducing unproductive inventory; and
- inventory management through better leveraging its existing technologies.
The company expects to open two stores in 2008. One location will open in the second quarter, and another in the third quarter. Current plans call for two additional locations to be opened in 2009.
As a result of the decision to slow retail expansion and concentrate on improving the companys existing operations, the company now anticipates earnings per share for 2008 will grow at a mid-single digit rate. For 2008, capital expenditures, including purchases of marketable securities, are expected to be $110 million, as compared to approximately $376 million in 2007.
“During the fourth quarter, our top line was impacted by an overall challenging consumer environment,“ said Dennis Highby, Cabelas President and Chief Executive Officer. “Part of our strategy involves an ongoing review of our previously planned store openings to reconfirm our expectations. Based upon these ongoing reviews and current economic conditions, we will pare our store openings in 2008 to just two of the previously planned retail stores. We expect to fund the 2008 expansion from our recently completed $57 million senior note offering and cash flows from operations. We will continue to develop our next generation store format, which is intended to improve return on invested capital and better serve our retail customers.“
“While our fourth quarter results did not meet our expectations, we remain encouraged about the opportunities that lie ahead and our ability to perform in this challenging retail climate. We have developed a number of strategic initiatives for 2008 aimed at improving profitability, and we remain focused on successful execution of our plan,“ Highby said.
