Cabelas Inc. said it will slash capital spending by 70% so it can focus on increasing profits at its existing stores after missing its fourth quarter financial targets. The outdoor retailer said it would scale back store openings from eight last year to two in 2008 and reduce planned capital expenditures, including purchases of marketable securities, to $110 million compared to approximately $376 million in 2007.
The disclosures came Wednesday when CAB alerted investors that its preliminary estimates indicated that its same-store sales in the fourth quarter declined 5.9%, a sharp reversal from the third quarter, when they rose 4.6%. CAB said it expects to report a 13.9% increase in revenue for the quarter ending December 29, including a 3.3% increase in online sales and other direct business revenue. Retail store revenue is expected to increase 31.8%. Diluted earnings per share for the fourth quarter are expected to be in the range of 83 cents to 85 cents, falling just short of Wall Street's average estimates of 86 cents.
For fiscal 2007, CAB estimated that revenue would 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 EPS for fiscal 2007 are expected to be in the range of $1.29 to $1.31, or essentially flat with a year ago.
The company said it will open one new store in the second quarter, and another in the third quarter. Current plans call for two additional locations to be opened in 2009.
Cabela's now anticipates earnings per share for 2008 will grow in the mid-single-digits.
