Cabela's Q3 FY'13 sales up 14.8%

Highlights:

- Third Quarter Diluted EPS Increased 16.7% to $0.70 vs. $0.60 a Year Ago
- Total Revenue Increased 14.8% to $850.8 Million
- Third Quarter Comparable Store Sales Up 3.9%
- Direct Revenue Increased 0.9%
- Merchandise Gross Margin Increased 10 Basis Points to 37.3%
- After-Tax Return on Invested Capital Increased 110 Basis Points

For the quarter, total revenue increased 14.8% to $850.8 million; Retail store revenue increased 20.8% to $550.9 million; Direct revenue increased 0.9% to $198.6 million; and Financial Services revenue increased 14.5% to $98.4 million.

Comparable store sales increased 3.9%. Net income increased 16.6% to $49.9 million compared to $42.8 million in the year ago quarter, and earnings per diluted share increased 16.7% to $0.70 compared to $0.60 in the year ago quarter.

"In today's difficult marketplace, the strong performance of our next-generation stores continues to be a competitive advantage," said Tommy Millner, Cabela's Chief Executive Officer. "Growing our retail footprint through our next-generation store format provides an exciting vision into the future of our Company.

"In the third quarter, 14 of our 18 next-generation stores were open for the full period and outperformed our legacy store base by approximately 50% in sales per square foot and approximately 60% in profit per square foot. Based on this, we plan to expand retail square footage at a low to mid-teens rate over the next several years with our next-generation and Outpost store formats."

The 3.9% increase in comp store sales is the eighth consecutive quarter of comp store sales increases. Excluding firearms, comp store sales increased 5.3% as sales of firearms significantly moderated during the quarter. The eight next-generation stores in the comp base at the end of the quarter generated comp store sales of 6.7%. Ammunition sales, while still above prior year levels, slowed during the quarter. We saw strong performance in men’s apparel, hunting apparel and general outdoors.

"Although Direct revenue increased for the fourth consecutive quarter, the results fell short of our expectations," Millner said. "These results were caused by a deceleration in ammunition sales and Internet traffic, lower average ticket and a more cautious consumer. Since we expect these trends to continue, our Direct business in the fourth quarter is anticipated to decline at a mid-single digit rate.

"During the quarter, we continued to enhance our omni-channel efforts through greater use of digital marketing and the limited roll out of omni-channel fulfillment. In the fourth quarter, we will continue to expand our omni-channel fulfillment capabilities and will implement a number of improvements to our mobile platform."

For the quarter, merchandise gross margin improved 10 basis points to 37.3% compared to the prior year quarter. Merchandise mix declines from ammunition sales were more than offset by margin improvement due to the elimination of free shipping to CLUB members and increased penetration of Cabela's brand merchandise.

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