When economic times get tough, discretionary items are the first things that get crossed off the "must buy" list. When you're selling outdoor gear like Cabela's (NYSE:CAB) does, you must expect that your catalog is going to be in the bulls-eye for such cutbacks.

So while the World's Foremost Outfitter, as Cabela's bills itself, still reported yet another quarter of double-digit sales growth, it was actually much lower than we've seen in past quarters. Third-quarter revenues came in at $546.8 million, as it preannounced a few weeks ago, missing analyst estimates by about $300,000. Earnings, meanwhile, fell 12% to $13.2 million, reflecting higher promotional costs, store expansion, plus two stores that were just opened last year not performing up to expectations.

Is there a warning label to be found here? The Motley Fool Hidden Gems recommendation was, and is, primarily a catalog-based retailer that began in the last few years to expand its brick-and-mortar footprint. Its stores are tourist destination spots all by themselves, and there's a lot of sunk costs that go into building a veritable nature preserve inside one of its big boxes. They have been opened with great fanfare, and the company is keeping to an ambitious plan of opening new stores in prime locations. It's gotten to the point where the retail operations now supercede the catalog in terms of percentage of total sales.

We have to start looking at Cabela's more and more like Dick's Sporting Goods (NYSE:DKS) and Big 5 Sporting Goods (NASDAQ:BGFV), but also start questioning if they're taking on too much. Cabela's negotiates favorable deals for land, requiring localities to float bonds to pay for its storefronts, but there's a backlash building to such arrangements. Those deals may be harder to come by in the future.

Cabela's is going to have to try to wring more profits out of its current locations to get through these rough spots, and it seems that some of its activities haven't been paying off in terms of greater traffic. While same-store sales did increase 4.6% in the quarter, the rate of growth slowed precipitously. Check out how the segments have reported for the past year.

Quarterly Segment Growth, % YoY
























Source: Cabela's SEC filings.

While its catalogs have been performing consistently, retail and financial have seen their business contracting. With the major fall-off in retail, however, it looks like Cabela's expansion plans may just have to be put on the shelf. Investing during a slowdown can certainly help position a company for when the recovery begins. Yet focusing on what you do best also ensures that you don't become distracted when times get tough and your operations become a target for cutbacks.

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