Cabela's Incorporated reported revenue increased 20.7 percent to $756.8 million for the second quarter ended June 29. Retail store revenue increased 25.8 percent to $483.9 million; Direct revenue increased 13.7 percent to $180.1 million; and Financial Services revenue increased 11.7 percent to $88.6 million. Comparable store sales increased 10.5 percent and 9 percent excluding firearms.
For the quarter, net income increased 31.5 percent to $44.5 million compared to $33.9 million in the year ago quarter, and earnings per diluted share were $0.62 compared to $0.47 in the year ago quarter. Year to date cash flows from operations were $183 million compared to $70 million for the same period a year ago.
“Direct revenue increased for the third consecutive quarter,” Millner said. “We have made substantial progress in improving our Direct business with more improvement to come. During the quarter, we increased our marketing efforts behind special events such as Spring Great Outdoor Days and Father's Day. In the second half, our omni-channel initiatives will be focused on seamlessly providing the best possible customer experience across all sales channels.”
Merchandise gross margin improved 30 basis points to 37.7 percent compared to the prior year quarter. Merchandise margin increased in 10 of 13 subcategories. Higher margins in most subcategories more than offset the mix effect of lower margin firearms and ammunition.
“It is important to note that our strong sales, improved merchandise margin and a favorable tax rate together allowed us to sharply increase our business building expenditures in the quarter,” Millner said. “Our plan to do so was discussed in our first quarter earnings conference call. Specifically, we raised our national advertising, direct marketing spend, and store opening and store labor expense, all while still exceeding our profit objectives. Early success of our 'It's In Your Nature' campaign led us to significantly expand the scope of this national brand advertising.”
The tax rate in the quarter was 30.5 percent compared to 35.9 percent in the year ago quarter. More effective tax planning in the second quarter of 2013, as well as a state income tax settlement in the second quarter a year ago, led to this reduction in the tax rate. The tax rate is expected to be 32.5-33.5 percent for the remainder of 2013 and should continue throughout 2014.
|CABELA'S INCORPORATED AND SUBSIDIARIES|
|CONDENSED CONSOLIDATED STATEMENTS OF INCOME|
|(Dollars in Thousands Except Earnings Per Share)|
Three Months Ended
Six Months Ended
|June 29, |
|June 30, |
|June 29, |
|June 30, |
|Financial Services revenue||88,578||79,267||174,350||162,722|
|Cost of revenue:|
|Merchandise costs (exclusive of depreciation and amortization)||413,465||339,782||872,092||690,502|
|Cost of other revenue||–||595||68||634|
|Total cost of revenue (exclusive of depreciation and amortization)||413,465||340,377||872,160||691,136|
|Selling, distribution, and administrative expenses||275,468||229,049||540,155||455,218|
|Impairment and restructuring charges||937||–||937||–|
|Interest expense, net||(3,914||)||(6,444||)||(9,270||)||(10,948||)|
|Other non-operating income, net||1,108||1,450||2,647||2,851|
|Income before provision for income taxes||64,129||52,834||139,427||96,307|
|Provision for income taxes||19,584||18,964||45,035||33,611|
|Earnings per basic share||$||0.63||$||0.48||$||1.34||$||0.90|
|Earnings per diluted share||$||0.62||$||0.47||$||1.32||$||0.87|