In spite of rising comparable-store sales and strong
performance by the company's next-generation stores and growth at
its CLUB Visa program,
) posted lower than anticipated results. The quarterly earnings
of 70 cents a share missed the Zacks Consensus Estimate of 72
cents but rose 16.7% year over year.
Weakened firearms and ammunitions sales along with reduced
Internet traffic were the primary reasons behind the miss.
Total revenue comprising retail, direct and financial services
revenue increased 14.8% year over year to $850.8 million but fell
short of the Zacks Consensus Estimate of $855 million.
Total merchandise revenue, including retail and direct revenues,
rose14.8% to $749.1 million in the quarter, while merchandise
margins expanded 10 basis points to 37.3% due to increased
merchandise sales, removal of free shipping to consumers as well
as lower markdowns and discounts. However, a decline in arms and
an ammunition sales was a dampener.
Cabela's retail store revenues increased 20.8% to $550.9 million,
driven by strong performance of the company's new next-generation
stores and strategic merchandise and inventory planning.
Comparable-store sales increased 3.9%. Retail profitability (as a
percentage of segment revenues) expanded 10 basis points (bps) to
Direct business revenues inched up 0.9% year over year to $198.6
million. However, operating margin (as a percentage of segment
revenue) contracted 70 basis points to 14.7%.
Financial services revenue augmented 14.5% to $98.4 million,
reflecting increase in interest and fee income. Credit card
charge-offs as a percentage of average credit card loans for the
quarter remained almost flat at 1.72%. Moreover, delinquencies
improved while active average credit card accounts increased
10.1%. Other revenues decreased 19.8% year over year to
approximately $3. 0 million.
Total operating income rose 14.1% to $76.6 million, while
operating margin contracted 10 bps to 9.0%.
In the reported quarter, Cabela's opened 4 next-generation stores
in Ashwaubenon, Wis.; Thornton, Colo.; Lone Tree, Colo.; and
Regina, Saskatchewan. Further, the company plans to open 3 stores
in Nanaimo, British Columbia, Canada; Garner, N.C.; and Sun
Other Financial Aspects
This Zacks Rank #2 (Buy) company ended the quarter with cash and
cash equivalents of $409.7 million, long-term debt (excluding
current maturities) of $524.1 million and shareholders' equity of
$1,526.0 million. The company registered a 110 bps rise in return
on invested capital while remaining focused on increasing it
further in the coming quarters.
During the nine months, Cabela's generated $94 million in cash
flow from operations. For 2013, management expects to incur
capital expenditures in the range of $300-$325 million, owing to
its store expansion plans. Further, cash flow from operations is
expected to be approximately $300-$350 million.
Other Stocks to Consider
Apart from Cabela's, other stocks worth considering in the retail
KAR Auction Services, Inc.
Five Below, Inc.
). All these have a Zacks Rank #2.
CABELAS INC (CAB): Free Stock Analysis Report
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MARINEMAX INC (HZO): Free Stock Analysis
KAR AUCTION SVC (KAR): Free Stock Analysis
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