Cabela's 2004 Annual Report Download - page 19

feel of our interior lighting, wood or tile Öooring, cedar wood beams, open ceilings, neutral tone decor and
lodge type atmosphere. We also present our merchandise in a customer friendly fashion with engaging end-
cap displays and eÅective product category adjacencies and have begun the process of implementing a new
space planning software system for our destination retail stores which we believe will help us better utilize
the space in our destination retail stores.
In addition, our large-format destination retail stores are designed to simulate an outdoor lifestyle
environment by including numerous amenities and interactive areas so that customers can test our products
before making a purchase decision. These attributes diÅerentiate our destination retail stores making them
appeal to entire families and we believe increase the average shopping time customers spend in our stores.
The design, durability and style of our destination retail stores also allow us to keep our remodeling and
upkeep costs low.
New Store Site Selection. We have identiÑed locations that may be suitable for new destination retail
stores as part of our retail expansion strategy. With only ten destination retail stores in operation at the
present time, we believe opening additional destination retail stores provides a signiÑcant growth
opportunity. Through our extensive customer database generated by our direct business and additional
demographic and competitive research, we can identify geographic areas with a high concentration of
customers that represent potential new markets for our destination retail stores. We believe that there are
many additional markets throughout the United States that could potentially support one of our large-
format destination retail stores. We also believe that our customer database gives us a competitive
advantage in tailoring product oÅerings in each of our destination retail stores to reÖect our customers'
regional preferences. Additionally, we believe that smaller-format destination retail stores could provide
further opportunities for future retail expansion.
In August 2004, we opened a new 176,000 square foot destination retail store in Wheeling, West
Virginia. In 2005, we currently plan on opening a 230,000 square foot destination retail store in Ft. Worth,
Texas, a 185,000 square foot destination retail store in Buda, Texas, a 150,000 square foot destination
retail store in Lehi, Utah, and a 185,000 square foot destination retail store in Rogers, Minnesota. We also
continue to actively seek additional locations to open new destination retail stores.
Store Locations and Ownership. We own all of our destination retail stores. However, in connection
with some of the economic development packages received from state or local governments where our
stores are located, we have entered into agreements granting ownership of the taxidermy, diorama or other
portions of our stores to these state and local governments. See Item 2 ""Properties'' for a listing of
locations of our stores. We have evaluated the Securities and Exchange Commission's (SEC) recently
issued clariÑcation of lease accounting and we believe that we have accounted for our limited number of
lease agreements appropriately.
Construction and Store Development. Currently, the average initial net investment to construct a
large-format destination retail store ranges from approximately $40 million to $80 million depending on the
size of the store, the location and the amount of public improvements necessary. This includes the costs of
real estate, site work, public improvements such as utilities and roads, buildings, Ñxtures (including
taxidermy) and inventory. As we continue to open new destination retail stores, we believe that the layout
for our future destination retail stores will reÖect improvements in our construction processes, materials
and Ñxtures, merchandise layout and store design. These improvements may further enhance the appeal of
our destination retail stores to our customers and lower our overall costs. Historically, in connection with
the acquisition of land for our new stores, we have attempted to acquire and develop additional land for
use by complementary businesses, such as hotels and restaurants, which are adjacent to our destination
retail stores. We intend to continue to acquire, develop and sell additional land adjacent to some of our
future destination retail stores. We have previously aimed to obtain tailored economic development
arrangements from local and state governments where our destination retail stores are located and we
expect to obtain similar arrangements in connection with the construction of future destination retail
stores.
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