Cabela's 2014 Annual Report Download - page 56

Download and view the complete annual report

Please find page 56 of the 2014 Cabela's annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 132

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132

46
Direct Revenue – Direct revenue increased $43 million, or 4.6%, in 2013 compared to 2012. The increase
in Direct revenue compared to 2012 was primarily due to an increase in the hunting equipment product category.
This increase was negatively impacted as ammunition growth slowed faster than we anticipated leading to a lower
average customer order.
Internet sales increased in 2013 compared to 2012. The number of visitors to our website increased 25.8%
during 2013 as we continued to focus our efforts on utilizing Direct marketing programs to increase traffic to our
website and social media networks. Our hunting equipment and clothing and footwear categories were the largest
dollar volume contributor to our Direct revenue for 2013. The number of active Direct customers, which we define
as those customers who have purchased merchandise from us in the last twelve months, remained even compared
to 2012.
We continued to focus on smaller, more specialized catalogs, and we reduced the number of pages mailed
and decreased total circulation, leading to continued reductions in catalog related costs. Mostly offsetting the
reductions in catalog related costs were increases in website and mobile platform related expenses due to our
expanded use of digital marketing channels and enhancements to our website.
Financial Services Revenue – The following table sets forth the components of our Financial Services
revenue for the years ended:
2013 2012
Increase
(Decrease)
%
Change
(Dollars in Thousands)
Interest and fee income $ 343,353 $ 301,699 $ 41,654 13.8%
Interest expense (63,831) (54,092) 9,739 18.0
Provision for loan losses (43,223) (42,760) 463 1.1
Net interest income, net of provision for loan losses 236,299 204,847 31,452 15.4
Non-interest income:
Interchange income 344,979 292,151 52,828 18.1
Other non-interest income 7,530 12,364 (4,834) (39.1)
Total non-interest income 352,509 304,515 47,994 15.8
Less: Customer rewards costs (212,998) (189,963) 23,035 12.1
Financial Services revenue $ 375,810 $ 319,399 $ 56,411 17.7
Financial Services revenue increased $56 million, or 17.7%, in 2013 compared to 2012. The increase in
interest and fee income of $42 million was due to an increase in credit card loans. The increase in interest expense
of $10 million was due to the issuances of securitization and certificates of deposit in 2013, which were used to
fund growth. The increases in interchange income of $53 million and customer rewards costs of $23 million were
primarily due to an increase in credit card purchases. Also impacting interchange income was a $12.5 million
accrual in 2012 for the estimated liability for the Visa settlement compared to a $3.2 million reduction of the
estimated liability in 2013. The decrease in other non-interest income was a result of the discontinuance of our
payment assurance program in the third quarter of 2012, partially offset by approximately $3 million of identity
theft program income recognized in 2013.