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.
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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.