Cabela's 2008 Annual Report Download - page 21

16
Any disruption of the supply of products and services from our vendors could have an adverse impact on
our revenue and profitability.
Our vendors and service providers include the following:
• vendors to supply our merchandise in sufficient quantities at competitive prices in a timely manner;
• outside printers and catalog production vendors to print and mail our catalogs and to convert our catalogs
to digital format for website posting;
• shipping companies, such as United Parcel Service, the U.S. Postal Service, and common carriers, for
timely delivery of our catalogs, shipment of merchandise to our customers, and delivery of merchandise
from our vendors to us and from our distribution centers to our retail stores;
• telephone companies to provide telephone service to our in-house customer care centers;
• communications providers to provide our Internet users with access to our website and a website hosting
service provider to host and manage our website;
• software providers to provide software and related services to run our operating systems for our Retail and
Direct businesses; and
• third-party card processors, such as First Data Resources, that process Cabela’s CLUB Visa transactions.
Any disruption in these services could have a negative impact on our ability to market and sell our products,
and serve our customers. Our ten largest trade vendors collectively represented approximately 13% of our total
merchandise purchases in 2008. If we are unable to acquire suitable merchandise or lose one or more key vendors, we
may not be able to offer products that are important to our merchandise assortment. We also are subject to risks, such
as the unavailability of raw materials, labor disputes, union organizing activity, strikes, inclement weather, natural
disasters, war and terrorism, and adverse general economic and political conditions that might limit our vendors’
ability to provide us with quality merchandise on a timely basis. We have no contractual arrangements providing for
continued supply from our key vendors and our vendors may discontinue selling to us at any time. We may not be able
to develop relationships with new vendors, and products from alternative sources, if any, may be of a lesser quality
and more expensive than those we currently purchase. Any delay or failure in offering products to our customers
could have an adverse impact on our revenue and profitability. In addition, if the cost of fuel rises, the cost to deliver
merchandise to the customers of our Direct business and from our distribution centers to our retail stores may rise
which could have an adverse impact on our profitability.
Political and economic uncertainty and unrest in foreign countries where our merchandise vendors are
located and trade restrictions upon imports from these foreign countries could adversely affect our ability to
source merchandise and operating results.
In 2008, approximately 15% of our merchandise was imported directly from vendors located in foreign
countries, with approximately 88% of our imported merchandise being obtained directly from vendors located in
China, Hong Kong, South Korea, and Taiwan. In addition, we believe that a significant portion of our other vendors
obtain their products from foreign countries that may also be subject to political and economic uncertainty. We are
subject to risks and uncertainties associated with changing economic and political conditions in foreign countries
where our vendors are located, such as:
• increased import duties, tariffs, trade restrictions, and quotas;
• work stoppages;
• economic uncertainties (including inflation);
• adverse foreign government regulations;
• wars, fears of war, and terrorist attacks and organizing activities;
• adverse fluctuations of foreign currencies; and
• political unrest.
We cannot predict when, or the extent to which, the countries in which our products are manufactured will
experience any of the above events. Any event causing a disruption or delay of imports from foreign locations would
likely increase the cost or reduce the supply of merchandise available to us and would adversely affect our operating
results, particularly if imports of our Cabela’s branded merchandise were adversely affected as our margins are
higher on our Cabela’s branded merchandise.