Cabela's Inc (CAB)

CAB 
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Cabela's Inc. (CAB)

Q1 2009 Earnings Call

April 30, 2009 4:30 pm ET

Executives

Chris Gay - Treasurer and IR Manager

Dennis Highby - Vice Chairman

Tommy Millner - President and CEO

Ralph Castner - VP and CFO

Pat Snyder - SVP of Merchandising, Marketing and Retail Operations

Brian Linneman - SVP of Global Supply Chain Operations

Analysts

Rick Nelson - Stephens Inc.

Mitchell Kaiser - Piper Jaffray

Paul Lejuez - Credit Suisse

Reed Anderson - DA Davidson

Mark Smith - Feltl and Company

Kristine Koerber - JMP Securities

Jim Duffy - Thomas Weisel

Presentation

Operator

Welcome to the Cabela's Incorporated first quarter fiscal 2009 Earnings Call. (Operator instructions).

I will now like turn the conference over to Mr. Chris Gay, Treasurer and Investor Relations Manager. Please go ahead.

Chris Gay

Good afternoon. I welcome everyone listening today both on the conference call and by web cast. A replay of today's call will be archived on our website at www.cabelas.com. With me on today's call are Dennis Highby, Cabela's Vice Chairman; Tommy Millner, Cabela's President and Chief Executive Officer; and Ralph Castner, Cabela's Vice President and Chief Financial Officer. Dennis, Tommy and Ralph each have prepared comments related to first quarter operating results.

Additionally Pat Snyder, Senior Vice President of Merchandising, Marketing and Retail Operations; and Brian Linneman, Senior Vice President of Global Supply Chain Operations will be available during the question and answer portion of the call.

This conference call will include forward-looking statements. These statements are made on a basis of our views and assumptions as of this time and are not guarantees of future performance. Actual events or results may differ materially from those statements. For information about certain factors that could cause such differences, investors should consult our annual report on Form 10-K and quarterly reports on Form 10-Q filed at the Securities and Exchange Commission and available on our website, including the information set forth under the captions "Risk Factors" and special note regarding forward-looking statements.

Now on to the financial results. Consolidated revenues increased modestly for the quarter to $540 million exceeding external estimates. Retail revenue increased 8.3% to $276 million as compared to $254 million in the year-ago period. The increase in retail revenue was driven comparable store sales increase of 8.2%, which also exceeded external estimates. Direct revenue decreased 4.7% to $225 million as compared to $237 million in the year ago quarter.

These are extremely strong results given the fact we reduced direct marketing costs 13%. Revenue increases were driven by continued strength in our hunting category as we continue to see significant demand for hunting equipment. Financial services revenue decreased 16.7% to $34 million as compared to $41 million in a year ago quarter and diluted earnings per share for the quarter were $0.08, exceeding external estimates.

Now I'll turn the call over to Dennis Highby, Cabela's Vice Chairman.

Dennis Highby

Thanks Chris. Good afternoon everyone. I'm glad you could join us today. This will be my last earnings call for Cabela's as a transition from President and Chief Executive Officer to a Vice Chairman of the Board. Imagine the changes I've seen in the past 33 years, growing Cabela's at a compounded annual rate of 21% from $5 million to $2.5 billion company, was possible only because of the devoted team of professionals that are focused on listening to our customers and providing them with a broad selection of high quality merchandise. Cabela's multi-channel model and its management team is still the envy of our industry.

I've truly enjoyed working for Cabela's all these year in an industry for which I have such a strong passion. I've been most fortunate to have worked side-by-side with so many legends of our industry, people like Jim and Dick Cabela and so many of our dedicated employees, many of them my closest friends. It has been a privilege working with them all these years. It has been a dream career, truly rewarding in every sense.

I'm excited as I step aside that Cabela's is in the strong confident hands of Tommy Millner. As CEO of Remington, Tommy had a long understand of Cabela's, our traditions, values, customers and culture. Tommy is not a newcomer in any sense of the word. He joins us with a solid understanding of the industry, our vendors and has a passion for the outdoors.

Under Tommy's leadership, Cabela's will continue to grow and prosper and continue to take market share from our competitors. With his in-depth knowledge of the competitive landscape he is without question, the right executive for the top job. I look forward to helping Cabela's in my new role as a Vice Chairman and I thank you for allowing me this time to reminisce.

Now I'd like to introduce Tommy Millner, Cabela's President and Chief Executive Officer.

Tommy Millner

Thank you, Dennis and good afternoon. First I'm honored and excited to have been chosen to service as Cabela's first CEO, chosen from outside of the company. Rest assured I understand the burden this places on my shoulders. I welcome this challenge, because of my deep knowledge of this company and its fine people during my 15 years as CEO of Remington Arms. The values Dick Cabela, Jim Cabela and Dennis Highby built Cabela's upon are consistent with my vision for the future both personally and professionally.

Over the past three and half weeks, my time has been spent doing a deep dive on every aspect of our business. I visited a number of our locations already and will visit all of our stores, call centers, distribution centers, as well as the world's foremost bank in the next few months, as well as meet in one hour individual sessions with each of our top 50 key managers.

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