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Cabela's Sanctions Share Repurchase Program Worth $500M

Cabela's Incorporated 's CAB board of directors recently approved a $500 million share repurchase program. This repurchase initiative is separate from the previous share buyback program authorized in April, per which the company has already repurchased 2 million shares via open market operations.

The latest share buyback program is expected to significantly boost shareholders' return, reflecting the company's strong balance sheet.

Apart from regularly buying back shares, the company has also been restructuring its management structure.

In August, the company announced that it has moved Brian J. Linneman from the position of Executive Vice President and Chief Merchandising Officer and handed him the responsibilities of strategic advisor. This leading specialty retailer further announced its decision to promote Scott K. Williams to the post of Executive Vice President and Chief Commercial Officer.

Moreover, Cabela's appointed Peter S. Swinburn in its board of directors. Swinburn, who has 40 years of experience, was the former Chief Executive Officer and President of Molson Coors Brewing Company TAP .

It is noteworthy that the management change came on the heels of the company's second-quarter 2015 results, which were below expectations.

In the second quarter, the company delivered a negative earnings surprise of 6.7%. Lower-than-expected merchandise sales, contraction in merchandise margin and increased merchandise costs impacted the bottom line, which also declined by 8.2% year over year.

We expect the share repurchase and management change initiatives to help regain shareholder confidence which was lost following the disappointing second quarter results, reported in Jul 23. It is to be noted that since Jul 23, shares of the company have fallen 12.7%.

It is now a wait and see situation that whether the above mentioned initiatives will bear fruit or not.

Cabela's currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same industry are Build-A-Bear Workshop Inc. BBW and Five Below, Inc. FIVE . While Build-A-Bear Workshop carries a Zacks Rank #1 (Strong Buy), Five Below holds a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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