Cabela's 2012 Annual Report Download - page 43

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Comparing Retail segment results for 2012 to 2011:
• operating income increased $82 million, or 31.2%,
• operating income as a percentage of Retail segment revenue increased 170 basis points to 18.7%,
and
• comparable store sales increased 6.9%.
• Retail Expansion: Capitalize on our brand strength by developing a profitable retail expansion strategy
focused on site locations and appropriate sized stores in our top markets. Increase our retail presence
across the United States and Canada by developing a profitable retail expansion strategy that considers
site location and the strategic size for each store in its given market.
We opened five retail stores during 2012 in the next-generation store format. We also opened our
first Outpost store in Union Gap, Washington, on October 4, 2012, with store results exceeding our
expectations. Our total retail store square footage at the end of 2012 was 5.1 million square feet, an
increase of 9.8% compared to the end of 2011. Our next-generation store format improves our return on
invested capital and better serves our customers by providing shopper-friendly layouts with regionalized
product mixes, concept shops, and new product displays and fixtures with enhanced features. Our new
Outpost store format will be approximately 40,000 square feet in size and have a “core-flex” merchandise
strategy (selected core assortment of products and flexible seasonal merchandise) that will allow us to
effectively serve smaller markets with a large concentration of Cabela’s customers and is in addition
to our next-generation format. The new store formats are more productive and generate higher returns
which will help to increase our return on invested capital.
We have also announced plans to open additional retail stores as follows:
• in 2013, seven next-generation stores located in Columbus, Ohio; Grandville, Michigan;
Louisville, Kentucky; Green Bay, Wisconsin; Thornton, Colorado; Lone Tree, Colorado; and
Regina, Saskatchewan, Canada; as well as two Outpost stores located in Saginaw, Michigan; and
Waco, Texas; and
• in 2014, five next-generation stores located in Christiana, Delaware; Greenville, South Carolina;
Anchorage, Alaska; Woodbury, Minnesota; and Bristol, Virginia.
We will be relocating our existing 44,000 square foot Winnipeg, Manitoba, store in the second quarter of
2013 to a more desirable location and increasing the size to 70,000 square feet. We have also announced
plans to open an Outpost store in Kalispell, Montana, at a date yet to be determined. Looking to 2013, we
expect to increase retail square footage up to 13% over 2012, as well as generate an increased profit per
square foot compared to the legacy store base, with the planned openings of these next-generation and
Outpost stores.
• Direct Business Initiatives: Grow our Direct business by capitalizing on quick-to-market Internet
and electronic marketing opportunities and expanding international business. Continue to fine tune our
catalogs, as well as the number of pages and product mix in each, in order to improve the profitability of
each title. Create steady, profitable growth in our Direct channels, while reducing marketing expenses
and significantly increasing the percentage of market share we capture through the Internet.
We are adapting our marketing activities to capitalize on the changes in the way our customers
want to shop. As such, we are focusing on improving our customers’ digital shopping experiences
on Cabelas.com and via mobile devices. Our marketing focus will continue to be on developing a
seamless omni-channel experience for our customers regardless of their transaction channel. Our digital
transformation continues with efforts around enhancing our Internet website to support the Direct
business. Cabelas.com continues to be the most visited website in the sporting goods industry according
to Hitwise, Inc., an online measurement company. The amount of traffic now coming through mobile
devices is growing significantly. As a result, we continue to utilize best-in-class technology to improve
our customers’ digital shopping experience and build on the advances we have made to capitalize on the
variety of ways customers are shopping at Cabela’s today. We have seen early successes in our social
marketing initiatives and now have over 2.2 million fans on Facebook. Our omni-channel marketing
efforts are resulting in increases in new customers, as well as customer engagement across multiple
channels with a consistent experience across all channels.