Cabela's Chief very pleased by Q1 performance

03 May '11

4 min read

The Cabela's CLUB Visa program also posted very strong results in the quarter. Throughout the quarter, the Company realized a significant acceleration in improvements in delinquencies and charge-offs. For the quarter, net charge-offs decreased 222 basis points to 2.74% compared to 4.96% in the prior year quarter. This is the lowest level of net charge-offs in the past three years. For the quarter, average active accounts increased 7.7%, the highest growth rate experienced in the past six quarters. Primarily due to these lower charge-offs, Financial Services revenue increased 20.7% in the quarter to $72 million, a new all-time record for any quarter.

Consolidated gross margin increased 70 basis points to 41.8% in the quarter - a new first quarter record since going public in 2004. This impressive result further validates Cabela's unique integrated business model between its merchandise business and the Cabela's CLUB Visa program. Merchandise gross margin declined slightly in the quarter to 33.0% from 33.3%. Margin improvements from pre-season planning, in-season management and vendor collaboration were more than offset by increased transportation costs.

Adjusting for divestitures, for the quarter, Direct revenue fell 4.9%. Approximately half of this decline came as a result of ammunition and shooting categories returning to more normal levels following unusually high levels in the first four months of last year. For the quarter, the number of multi-channel customers increased 2.5%.

"During the quarter, as a result of our strong revenue and consolidated margin expansion, we made certain additional investments in our business," Millner said. "These investments were highlighted by an increase in Retail Outfitters in our stores to better serve our customers, a trend we began last fall. We also made investments in other business building initiatives, including technology infrastructure and merchandising. Investments in new stores in Allen, Texas; Springfield, Oregon; and in Canada were made in the quarter to increase growth rates and market share in the future."

"Our strategies are working," Millner said. "We feel increasingly optimistic about our full year 2011 prospects and expect our full year 2011 earnings per share to meet or exceed current external expectations."

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