Cabela's 2012 Annual Report Download - page 4

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Of all our efforts, improvement of Cabela’s branded
products clearly stands above all others. Throughout
our 52-year history, hunters, anglers, and campers
have trusted Cabela’s products to provide performance,
quality, and solid value. Over the last three years,
we have continued a decades-long strategy to bring
innovation to the Cabela’s brand. Improvements have
included breakthrough products such as Made in the
Shade sun protection apparel, Guidewear rainwear,
Cabela’s by Meindel hunting and hiking footwear,
Cabela’s Euro optics, Platinum ZX rods, and Alaskan
Guide tents. Cabela’s branded products offer protection
from competitive intrusion as well as signifi cantly
higher margins.
Improve Retail Profi tability
Led by improvements in merchandise margin, we
were equally focused on improving Retail profi tability.
Starting with a focused effort on seven stores in 2009,
we quickly learned many lessons in our journey to
improve profi tability. Most notably, we used advanced
technology to maximize staffi ng during peak periods,
increased Outfi tter product training, developed
adjacency strategies to place high-margin products,
like sunglasses, on drive aisles, and focused on
improving the positioning of Cabela’s branded products
within our stores. The effect of these strategies was
dramatic, particularly after we expanded them to all
stores. From 2009 through 2012, Retail segment
operating contribution increased 700 basis points
from 11.7% to 18.7%.
Concurrent with our legacy store improvement efforts,
we began to benefi t from the improved performance
of our next-generation stores. Ranging from 80,000 to
100,000 square feet, these stores have generated sales
and profi t per square foot at least 40 to 50% higher
than our legacy stores. Customers fl ocked to these new
stores and our Voice of the Customer satisfaction scores
have continued to improve.
The combination of our merchandise margin
improvement and our success increasing Retail
profi tability allowed us to resume retail square footage
growth with great confi dence. Specifi cally, we opened
10 new stores from the end of 2009 through 2012 for a
17.5% total increase in retail square footage.
Direct Channel Growth
Frankly, we have been disappointed in our progress with
reaching this goal as we have relied too heavily on our
leadership position in this area and focused signifi cant
resources on improving our Retail business.
Our history is steeped in knowledge of catalog execution,
so it is understandable that we missed a number of
rapid changes affecting digital commerce. We are
improving our customer experience in the Direct channel.
Recently, we opened an offi ce in Westminster, Colorado,
which will allow us to attract additional digital marketing
talent and capabilities. In the near future, you will
see improvements in user experience, mobility, site
navigation, content, and our continued shift from print to
digital media.
While still in the early stages of turning the Direct
business consistently positive, we are encouraged about
our prospects for the fi rst time in a number of years as
we realized Direct revenue growth in the fourth quarter
of 2012, the fi rst quarter of revenue growth in
Focus on Core Customers
Cabela’s has one of the most powerful brands in the
outdoor industry and is growing toward one of the most
powerful brands in all of retail. This loyalty is driven
by our legacy of intense customer focus in service and
products, delivered by Outfi tters who are passionate
about our customers and the outdoor lifestyle.
The Cabela’s CLUB Visa program is the primary vehicle
through which we reward our customers’ loyalty. Over
the last three years, we have rewarded customers with
more than $480 million in free merchandise. Since
2009, we have added Signature Outdoor Adventures,
which have opened the door to one-of-a kind hunting
and fi shing trips. We have also introduced CLUB
Family Outdoor Days, which focus on rewarding our
CLUB members and their families with a fun-fi lled day
focused on shooting, fi shing, and outdoor education.
These events have been a huge success, and customers
appreciate the opportunity to participate in these unique
experiences. Efforts like these create loyalty and have
11 quarters.
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