When you bill yourself as the World's Foremost Outfitter, your earnings results better live up to the title. Fortunately for Motley Fool Hidden Gems recommendation Cabela's
What was once simply a direct-mail retailer is now transforming itself into a destination-store retailer as well. Part retail store, part theme park, Cabela's destination stores are a unique experience, and the company ended the year with 18 stores opened. Stores feature replica mountains, huge freshwater aquariums, shooting galleries, indoor archery ranges, and more. It's Disneyland for outdoor enthusiasts.
These stores saw revenues rise 15% for the quarter and 32% for the year. With $820 million in revenues, the retail segment is quickly catching up to the direct segment, whose sales grew 4% for the year to almost $1.1 billion in revenue. Direct sales, though, still account for more than half of all revenues.
A year ago, Cabela's was experiencing declines in same-store sales, an important retail metric. That's turned around now, and the company has reported three straight quarters of rising comps, ending the year with 1.3% growth overall. That points to a still-competitive landscape. Primarily, Cabela's competes against privately held Bass Pro Shops and Orvis, Gander Mountain
Oddly enough, Cabela's is also a bank. Perhaps it's fitting that the World's Foremost Outfitter also runs the World's Foremost Bank. That might be a bit of hyperbole, since it's still a small component of operations, providing just $137 million out of almost $2.1 billion in 2006. The WFB primarily handles the company's branded credit cards, but it also has certificates of deposits, securitizations, and interest-only strips, and it just got into issuing bonds. Financial revenues increased 30% over 2005's results.
Cabela's says it has fairly strict standards when issuing credit cards to customers, and its delinquency rates compare favorably with industry standards. But it can miss out on a lot of business that way, so Cabela's has inked an agreement with Washington Mutual
While outdoor fans remain Cabela's primary target, it's seeking to reach out to more mainstream customers as well. Not every article of clothing comes in different shades of camouflage! That kind of brand extension will allow Cabela's to stay ahead of the herd and truly be the foremost outfitter in the world.
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Wal-Mart is an Inside Value selection, and Washington Mutual is an Income Investor recommendation.