Cabela’s, Inc. was touting its multi-channel selling
model last week as it reported fourth quarter and fullyear
results for 2004. The retailer, which has built a
balanced business across its Direct, Retail, and Financial
Services segments, posted $579.1 million in total
revenue for Q4, up 5.7% compared to $548.1 million
total sales for the year-ago period. The 2004 quarter
had 13 weeks versus 14 weeks in the 2003 quarter.
Direct revenue increased 5.3% to $378.0 million for
the period, but jumped 11.2% on a comparative 13-
week basis. The gain was said to be due primarily to
growth in Internet sales and “greater promotional activity”. Direct revenue made up 65.3% of total revenues
in Q4, off a little from 65.5% of the total in Q4 last
year, and total year contribution from the Direct business
slipped four full points to 62.4% of the total business
versus 66.4% in 2003.
The increased promotions had little effect on the segments
profits as operating margins expanded 80 basis
points to 17.4% in the period, due primarily to leveraging
of fixed costs against improving revenues. Full year
operating margins declined 50 basis points to 15.1% of
Direct sales.
Retail revenue increased 0.1% to $171.6 million in Q4,
but rose 9.1% in apples-to-apples terms. Management
pointed to the tough comparisons against the opening
of the 247,000 sf mega-store in Hamburg, Penn. in the
same quarter last year as a limiting factor to the retail
gains. Retail revenues as a percentage of total sales
slipped 170 basis points to 29.6% of the total in Q4
versus 31.3% of the total in the year-ago quarter. But
the Retail segments share of the total pie actually grew
for the full year, rising 290 basis points to 32.1% of
total sales versus 29.2% in the prior year.
Comps were down in the 8% to 9% range, but were off
just 1.2% on an apples-to-apples 13-week comparison.
Management stressed the fact that only 25% of total
revenues are currently figured into the comp sales formula,
with two of the largest Cabelas stores still too
new to consider.
The same factors helped push sales per square foot to
$398/sf for the year versus $386 in the prior year period.
CAB management said that they now produce
almost double the sales per square foot versus their
competition.
Operating margins in the Retail segment declined 440
basis points to 18.0% in the fourth quarter from 22.4%
of sales in Q4 2003, due in large part to increased promotional
activity at the store level. Operating margin
rose 70 basis points for the year to 14.5% of Retail
sales.
Management said that Private Label made up about a
third of total merchandise sales, a number they see
creeping up over time.
Financial Services revenue increased 41.4% to $24.4
million, pushing receivables for the year in the segment
to over $1.3 billion at year-end as average active accounts
increased 18% and average account balances
increased 5% for the quarter. It looks like new customers
are the main drivers of the growth here, making
up roughly two-thirds to 80% of the total credit card
business. Financial Services accounted for 4.2% of total
sales in fourth quarter, up 90 basis points from Q4
last year, and made up 5.0% of sales for the year, up
80 basis points from 2003.
Total gross margin declined 40 basis points to 41.8% of
sales in Q4, compared to 42.2% in the 2003 quarter.
Merchandise GM was down 80 basis points to 39.4%
from 40.2% in the year-ago period, a decline that was
attributed primarily to “unanticipated higher freight
costs” resulting from higher fuel costs. Operating margins
were down 60 basis points to 9.6% of sales.
Net income for the quarter increased 9.9% to $38.5
million, or 58 cents per diluted share, compared to
$35.0 million, or 60 cents per diluted share, for the
fourth quarter of 2003.
Looking ahead, CAB management is sticking to its profit
and sales growth in the mid-teens. They see the Direct
business growing in the low-singles, so more growth is
certainly seen coming out of Retail, where two-thirds of
the stores opening in the next few years will be in excess
of 175,000 square feet.
