Cabela’s continues to see its Retail business capture a larger part of a fast-growing business as the big-box outdoor recreation retailer prepares for its pending IPO. Cabela’s is poised to partake of the same success experienced by rival Gander Mountain’s IPO, and based on their performance in the first quarter, they aim to show the market that you can make money in this market. Net income jumped 161% in the quarter to more than $8.0 million on a 6.7% increase in comparable store sales.

Direct revenue increased 8.8% to $205.8 million from $189.2 million in the year-ago quarter, due primarily to “an increase in customer purchases or orders”, particularly Internet orders, and “an increase in orders of new or recently introduced product categories”. Direct revenues were 65.6% of total revenues in Q1 versus 72.1% of the total in Q1 last year. Operating income for the Direct segment rose 12.9% to $30.2 million, or 14.7% of Direct revenues versus 14.1% of Direct revenues in Q1 last year.

Customer orders shipped increased 3.1% to 1.6 million orders on catalog circulation that increased at the same 3.1% rate to 9.2 billion pages. Auto and ATV accessories, casual athletics, western apparel and slippers, and women’s and children’s casual wear were all cited as key categories for growth in the direct business in Q1, with women’s and children’s casual wear touted as the fastest growing category.

Retail revenue increased 50.9% to $90.5 million in the first fiscal quarter to 28.8% of the business, versus $60.0 million, or 22.9% of the business, in the year-ago quarter. New stores contributed $26.6 million, or 87% of the Q1 sales gain, while comps increased 6.7% versus a 6.6% decline in Q1 last year. Marine products, hunting equipment and firearms, and fishing tackle were all cited as key growth categories for Cabela’s in Q1, with wader and cold weather boots held up as the fastest growing category in the Retail segment.

Retail segment operating income jumped 390% to $11.3 million, or 12.5% of Retail revenues versus just 3.9% of Retail revenues in Q1 last year.

Financial Services revenue increased 43.3% to $16.4 million.

Gross margins improved 50 basis points to 39.9% of sales in Q1, primarily on the back of the increase Financial Services revenue, which represented $5.0 million of the increase in gross profit and has no cost of revenue. Gross profit of the merchandising business increased 30 basis points to 36.9% of sales in Q1 from 36.6% in the first fiscal quarter of 2003.

>>> Keep an eye on this one when it floats, it could be an interesting ride…