Cabela’s Outlines Plans for 2010 and Beyond

 

To start off the presentation, CEO Tommy Millner pointed to some of the companys highlights from 2009, including the seamless leadership transition to Millner from former CEO Dennis Highby, along with the culmination of a three-year plan that stresses margin growth and prolonged health of the company. Millner touched on financial results, pointing out that the company reduced inventory levels, improved ROI by 150 basis points and generated cash flow of $294 million in 2009.

 

Among the goals for 2010, Millner opened with planned margin expansion, but warned analysts that improving margins would be a marathon, not a sprint, and noted that …this is not a quick-fix part of [the] business. Millner said extended initiatives would be to eliminate the roll process in 2010, a term he used to describe the process of clearing out seasonal merchandise before new inventory arrives. 

 

Among key operational objectives for fiscal 2010 and beyond, EVP and COO Michael Copeland said the company plans to lower operational costs and improve retail segment operating margins by between 150  and 250 basis points. Likewise, Copeland noted that Cabelas would improve retail inventory integrity with the application of a cycle-count program that aids in checking inventory levels on a SKU-by-SKU basis.

 

Copeland added that the company has employed a third party to put analytics in place that gives management the ability to better identify selling periods based on customer service experiences as reported by consumers. 

 

Brian Linneman, chief merchandising officer, followed by outlining CABs initiatives for improving merchandising performance in 2010. Linneman noted that the company would focus on improving external and internal trends while implementing go-forward merchandising and evolving and aligning CABs current merchandising. From an external standpoint, Linneman emphasized providing todays multi-channel customer with a consistent shopping experience across all channels while ensuring that the product offerings are timely and relevant.

 

Presenting next, EVP and CFO Ralph Castner spoke on growing the retail segment through the continued expansion of next-generation retail stores and by streamlining efficiencies in-store-all while retaining the brand essence of the Cabelas retail store. Among impending initiatives in 2010, Castner said CAB plans to expedite store development time, reduce capital investment and increase the retail-to-gross selling ratio to 75% from 66% at traditional destination stores.

 

For the companys direct business, EVP and Chief Marketing Officer Pat Snyder said Cabelas would implement several initiatives to improve upon a direct segment that reportedly ranked first in total Internet traffic for sports and fitness websites and ranked in the top five in online retailer shopper satisfaction. To maximize its customer base in 2010, Snyder said CAB would utilize targeted marketing efforts focused on customer interests, which the company believes will drive an additional 1% to 2% in sales by differentiating the values of customers.

 

For the Worlds Foremost Bank, management highlighted the CLUB business, which will focus on increasing spending by customers, reducing customer attrition, achieving attractive returns for shareholders and providing incentives to customers through third-party party funds. Management emphasized the importance of fully integrating the CLUB business with the retail and direct.