Cabela's Inc. earnings fell 12.1% in the fourth quarter to $49.4 million, or 74 cents a share, from $56.2 million, or 84 cents, a year ago. Retail store revenue increased 6.9% to $429.5 million with a same store sales increase of 2.2%; direct revenue decreased 8.2% to $410.4 million; and financial services revenue increased 0.7% to $38.1 million. Consolidated revenue was $879.4 million compared to $889.5 million for the fourth quarter of 2007.

Fourth quarter earnings in 2008 were negatively impacted by $5.8 million of restructuring and impairment charges and aided by an $8.7 million revenue benefit due to a change in estimate for breakage on gift cards.

“We are excited about our fourth quarter performance where we recorded our largest increase in same store sales in over a year,” said Dennis Highby, Cabela's president and chief executive officer. “Our improved retail execution with a particular emphasis on sales of firearms and related accessories, along with an aggressive merchandise strategy to take market share, increase inventory turns and improve cash flow, is working. We are pleased to see these improved sales results continuing into 2009 and expect first quarter same store sales to be positive as well.”

“Additionally, our initiatives in inventory management allowed us to reduce inventory levels at year end by $91 million, generate a record $155 million of cash flow from operations for the year and voluntarily prepay $26 million of debt, ” Highby said. “This debt prepayment further strengthens our balance sheet, which is one of the strongest in the retail sector. “

“We ended the year with $410 million of cash on our balance sheet. Of this amount, $402 million was held at our wholly-owned bank subsidiary World's Foremost Bank. As we have previously disclosed, we intend to fund more of our bank subsidiary's credit card portfolio through lower-cost certificates of deposit and were active in the certificate of deposit market throughout the fourth quarter. We intend to use cash on hand at our bank subsidiary to refinance a $250 million term securitization that matures next month, ” Highby said. “After this refinancing, our next term securitization doesn't mature until October 2010.”

Consolidated 2008 revenue increased 8.6% to a Company record of $2.55 billion compared to $2.35 billion in 2007. Net income for 2008 was $76.4 million compared to $87.9 million for 2007, and earnings per share were $1.14 per diluted share compared to $1.31 per diluted share for 2007.

Retail store revenue increased 23.2% to $1.29 billion in 2008 with a same store sales decrease of 3.7%; direct revenue was $1.10 billion; and financial services revenue was $159.0 million. During 2008, the Company opened new retail stores in Scarborough, Maine, and Rapid City, South Dakota, to end the year with 29 stores totaling 4.3 million square feet of retailing space, a 5% increase over 2007.

“Despite the current macroeconomic environment, recent encouraging trends in our business lead us to expect 2009 consolidated revenue to decline only slightly as compared with 2008 and earnings per share to be roughly equal with 2008 levels. This guidance incorporates a low single-digit percentage decline in same store sales and direct revenue, and charge-offs of 4.5-4.6%, for the full year,” Highby said. “A significant amount of our business is driven by a group of core customers who we have found to be very resilient during a recession. Just as we have seen in previous recessions, these customers are continuing to shop at Cabela's.”


CABELA'S INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Dollars in Thousands Except Earnings Per Share)

(Unaudited)

 

Three Months Ended

 

Fiscal Year Ended

 

December 27,
2008

 

December 29,
2007

 

December 27,
2008

 

December 29,
2007

REVENUE:

 

 

 

 

 

 

 

 

Merchandise sales

$

839,902

 

$

848,750

 

$

2,380,655

 

$

2,173,995

 

Financial services revenue

 

38,114

 

 

37,838

 

 

158,971

 

 

159,335

 

Other revenue

 

1,414

 

 

2,912

 

 

13,095

 

 

16,269

 

Total revenue

 

879,430

 

 

889,500

 

 

2,552,721

 

 

2,349,599

 

 

 

 

 

 

 

 

 

 

COST OF REVENUE (exclusive of depreciation and amortization)

 

533,969

 

 

517,673

 

 

1,540,214

 

 

1,378,386

 

 

 

 

 

 

 

 

 

 

SELLING, DISTRIBUTION, AND ADMINISTRATIVE EXPENSES

 

261,205

 

 

277,724

 

 

871,468

 

 

820,121

 

OPERATING INCOME

 

84,256

 

 

94,103

 

 

141,039

 

 

151,092

 

 

 

 

 

 

 

 

 

 

INTEREST EXPENSE, NET

 

(7,259

)

 

(6,793

)

 

(29,658

)

 

(18,778

)

OTHER NON-OPERATING INCOME, NET

 

1,624

 

 

1,560

 

 

6,854

 

 

6,913

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE PROVISION FOR INCOME TAXES

 

78,621

 

 

88,870

 

 

118,235

 

 

139,227

 

 

 

 

 

 

 

 

 

 

PROVISION FOR INCOME TAXES

 

29,174

 

 

32,629

 

 

41,831

 

 

51,348

 

 

 

 

 

 

 

 

 

 

NET INCOME

$

49,447

 

$

56,241

 

$

76,404

 

$

87,879

 

 

 

 

 

 

 

 

 

 

EARNINGS PER COMMON SHARE:

 

 

 

 

 

 

 

 

Basic

$

0.74

 

$

0.85

 

$

1.15

 

$

1.34

 

 

 

 

 

 
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