Cabela's Inc. will get a nice $90 million boost in the cash line this year from the sale of land and the monetization of economic development bonds. CAB pocketed roughly $21 million from the sale of land around four of its store locations. Only $1.7 million went to the bottom line in the second quarter due to the cost basis of the land, but the whole number will certainly help fund continued store growth. The retailer is also expecting to pocket another $57 million in the next few weeks from the monetization of EcoDev bonds associated with their Kansa City location. They still hold about $3.5 million in bonds for the KC location, but they will turn that into cash over the next 12 to 18 months. CAB will also pick up another $4.5 million in Q3 on the refinancing of city bonds that Cabelas holds that are related to a distribution center in Wisconsin.
Excluding the land sale in the quarter, total revenues grew 15.7% to approximately $323 million. Excluding the impact of a double-digit comp store sales decline in Q2, retail comps were down 3.2% for the period. Company president and CEO Dennis Highby maintained that higher gas prices had a hand in keeping people home and shopping through the catalog or on the Internet, but he also pointed to a tough economic climate in Michigan impacting the store there.
Operating income in the Direct segment increased roughly 26.5% to $23.2 million in the quarter, compared to $18.4 million in the year-ago period. Operating margins in the segment were up 160 basis points to 12.7% of sales. Catalog costs as a percent of revenues declined 100 basis points to 13.9% of sales.
Operating income in the Retail segment fell about 28.0% to $5.5 million in the period, compared to $7.7 million in Q2 2004. Operating margins declined 290 basis points to 5.0% in the second quarter. Pre-opening expenses were about $2.6 million versus near zero last year.
Excluding the benefit of the land sale, net income would have still jumped 115% for the period, thanks in large part to a $13.3 million increase in operating income in the financial services segment.
Looking ahead, Cabelas expects to see its Reno, Nev. location slip into 2007, while the Wheat Ridge, Colo. store is experiencing some delays as well. The East Rutherford, N.J. project is still on plan for 2007. The new stores in Gonzales, La. and Glendale, Ariz. are expected to open in 2006 as planned, along with two to three other unnamed locations which are each expected to be in the 160,000 sf to 185,000 sf range.
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| Cabelas, Inc. | |||
| Second Quarter Results | |||
| (in $ millions) | 2005 | 2004 | Change |
| Total Revenues | $343.9 | $279.1 | +23.2% |
| Direct | $183.2 | $165.9 | +10.5% |
| Retail | $109.2 | $96.5 | +13.2% |
| Financial | $30.4 | $15.0 | +103% |
| Merch. GM | 35.4% | 34.9% | +50 bps |
| Net Income | $6.0 | $2.0 | +203% |
| Diluted EPS | 9¢ | 3¢ | +200% |
| Inv. @ Qtr-end | $411.0 | $316.4 | +29.9% |
| Comp Sales | -6.0% | +2.5% | |
