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Specialty retailer Cabela's Q3 results miss expectations

Nov '08
Cabela's Incorporated reported financial results for its third fiscal quarter ended September 27, 2008.

Total revenue for the third quarter of 2008 increased 11.9% to $611.8 million compared to $546.8 million for the third quarter of 2007. Net income for the third quarter of 2008 was $9.7 million, or $0.15 per diluted share, compared to $13.2 million, or $0.20 per diluted share, for the third quarter of 2007.

In the third quarter of 2008, retail store revenue increased 27.5% to $328.0 million with a same store sales decrease of 9.0%; direct revenue was $241.2 million; and financial services revenue was $41.9 million.

Total revenue for the nine months ended September 27, 2008, increased 14.6% to $1.67 billion compared to $1.46 billion for the same period last year. Net income for the nine months ended September 27, 2008, was $27.0 million, or $0.40 per diluted share, compared to $31.6 million, or $0.47 per diluted share, for the nine months ended September 29, 2007.

"The challenging macro-environment, general consumer concerns about the economy and the unprecedented events in the financial markets impacted sales trends in our business during the quarter," said Dennis Highby, Cabela's President and Chief Executive Officer. "We continue to monitor our business carefully and remain focused on managing factors within our control, including executing on our profit-improvement initiatives, implementing additional cost reductions and aggressively managing inventory levels."

"To that end, we have experienced significant improvements in inventory levels and cash generated from operations. Additionally, despite the difficult environment we continue to gain market share, grow our direct customer file and add Cabela's CLUB Visa cardholders. The significant progress we have made in these areas positions us extremely well for future market share growth."

"During the third quarter, we opened our first next generation store and are very pleased with the initial results," Highby said. "At approximately 80,000 square feet, our next generation store in Rapid City, South Dakota, is designed to be smaller, more flexible and efficient, and less capital intensive than our more traditional stores. We will closely monitor the performance of this new prototype and expect to roll out similar-sized stores in the years ahead."

"We head into the fourth quarter fully cognizant of the current environment and its potential impact on the upcoming holiday selling season," Highby said. "Therefore, we believe it is prudent to adopt a more conservative outlook and now expect high single-digit percentage revenue growth for fiscal 2008. Additionally, we expect a low to mid-teen percentage decline in earnings per share for fiscal 2008 as compared to fiscal 2007."

"This compares to our previous guidance of mid-teen percentage revenue growth and mid-single-digit percentage earnings per share growth for fiscal 2008. Importantly, Cabela's leadership position in the market, its powerful brand, multi-channel operating model, strong cash flows and high level of customer service will serve us well, not only during these difficult times but for many years to come."

Cabela's Incorporated

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