Cabela's 2008 Annual Report Download - page 3

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Dear Cabela’s Shareholders:
It should come as no surprise when I say 2008 was one
of the toughest macro-economic environments we have
ever faced. Despite the diffi cult environment, Cabela’s
had many accomplishments which position us well
for the upcoming year. I believe our fi nancial results
demonstrate the power of our profi table multi-channel
model, the strength of the Cabela’s brand, our ability to
capture market share and the considerable traction we
are realizing in our efforts to reduce costs and carefully
manage inventory levels.
The state of the economy has required us to take a
hard look at our business practices and our goals. We
have identifi ed several areas where we can build upon
our 2008 achievements and implement effi ciencies
that will save money and improve operations while still
giving our customers the positive shopping experience
they have come to expect from the World’s Foremost
Outfi tter. Given the effi ciencies we put in place last
year and the aggressive initiatives we have going
forward, I am optimistic Cabela’s will weather the
current economic climate and emerge a stronger, leaner
company that will continue to lead the industry in both
performance and value.
I am proud to say Cabela’s strongest assets, our
dedicated, hard-working family of employees, faced
all the challenges of the year head-on and were
successful in their endeavors. They continue to impress
me with both their hard work and ability to adapt. Their
knowledge of our business and industry, along with their
strong work ethic, positive attitude and dedication to
Cabela’s, provides a strong base on which to build our
success. It bears repeating that without them, Cabela’s
would not be the industry leader it is today.
Fiscal 2008 Financial Results
For fi scal 2008, we earned $76.4 million, or $1.14 per
diluted share. Total revenue for 2008 increased 8.6% to
$2.55 billion. Revenue from our direct business (catalog
and Internet) decreased 3.1% to $1.10 billion. Despite
a 3.7% decline in same store sales, retail revenue
increased 23.2% to $1.29 billion due to a full-year
contribution of stores opened in 2007 and sales from
two new stores opened in 2008. Financial services
revenue was $159 million, consistent with last year.
We now have more than 1.2 million active cardholders
who earn rewards redeemable across our multi-channel
model. Additionally, we generated a record $155 million
of cash fl ow from operations and exited 2008 with less
debt than we did the prior year.
2008 Achievements
In 2008, I tasked my team to focus on tightly managing
inventory levels. I am pleased to report we made
tremendous progress as inventory levels decreased
15%, or $90 million, to $518 million at the end of 2008,
compared to $608 million at the end of 2007.
Cash fl ow from operations improved signifi cantly in 2008.
During the year, on a consolidated basis we generated a
record $155 million of cash fl ow from operations.
Because of our exceedingly strong cash fl ow, we
prepaid $26 million of outstanding debt at the end of the
fourth quarter. This debt repayment, along with a lower
outstanding balance on our revolving line of credit,
allowed us to exit 2008 with less debt than we had a
year ago. At the end of 2008, our lease adjusted debt to
total capital was 32%, compared to 35% at the end of
2007, giving us one of the strongest balance sheets in
the retail industry. We believe this strong balance sheet
will help us weather the current economic climate better
than our competitors.
I am pleased with the continued growth of our Internet
website, which registered a 32% increase in visits in
2008 and was once again the most visited e-commerce
website in the sporting goods industry. In 2008, Cabela’s
had more than twice the traffi c of our next closest
competitor. In fact, of the largest retail websites in the
United States, Cabela’s ranks in the Top 40 in annual
sales regardless of industry.
In our retail stores, our Outfi tter Associates made
signifi cant progress streamlining and improving store
labor productivity without sacrifi cing customer service.
Improvements in our retail operations include higher
Letter To Shareholders