Outdoor sporting-goods store Cabela's
Until last year, the Motley Fool Hidden Gems recommendation had been on a building boom, rolling out new stores. That has been scaled back dramatically this year, as even management could no longer ignore the conditions that were setting in. Moreover, new stores in the works will be significantly smaller than previous ones, coming in at 80,000 square feet and allowing the company to conserve precious capital.
Management has also gotten conservative with its guidance, which before now was decidedly rosy. It had been expecting revenue growth in the mid-teens and earnings growth in the mid-single digits, but both have been scaled back like its new stores. In particular, Cabela's no longer sees profits for the full year, but rather steep declines in the mid-teens.
That can't be of much of much comfort to competitors like Dick's Sporting Goods
It's no surprise that retail is drawing in its horns in this economic environment as consumers use caution in spending scarce dollars. It's causing consternation among providers of entertainment to outdoor sports enthusiasts -- for example, fellow Hidden Gems pick Vail Resorts
While Cabela's didn't reveal much about its Internet and catalog business or its credit card portfolio, the credit situation can't be helping matters much. Financial-services revenue declined 6%, while the direct business remained essentially flat.
The continuing malaise in retail can only mean that Cabela's will be likely be on a long winter hunt in the wilderness for future sales.