Cabela's 2012 Annual Report Download - page 17

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Cabela’s CLUB Marketing. We have a low cost, efficient, and tailored credit card marketing program that
leverages the Cabela’s brand name. We market the Cabela’s CLUB Visa credit card through a number of channels,
including retail stores, inbound telemarketing, catalogs, and the Internet. Our customers can apply for the Cabela’s
CLUB Visa credit card at our retail stores and website through our instant credit process and, if approved, receive
reward points available for use on merchandise purchases the same day. When a customer’s application is approved
through the retail store instant credit process, the customer’s new credit card is produced and given to the customer
immediately thereafter. Maintaining the growth of our credit card program, while continuing to underwrite
high-quality customers, actively manage our credit card delinquencies and charge-offs, and provide exclusive
experiences is key to the successful performance of our Financial Services segment. The growth of Cabela’s CLUB
program is dependent, in part, on the success of our Retail and Direct businesses to generate additional sales and to
attract additional Financial Services customers.
Underwriting and Credit Criteria. We underwrite high-quality credit customers and have historically
maintained attractive credit statistics compared to industry averages. The scores of Fair Isaac Corporation
(“FICO”) are a widely-used tool for assessing a person’s credit rating. During the second quarter of 2012, the
Financial Services segment incorporated a newer version of FICO that utilizes the same factors as the previous
scoring model, but is more sensitive to utilization of available credit, delinquencies considered serious and
frequent, and maintenance of various types of credit. Management of the Financial Services segment believes the
newer version will enable us to improve our risk management decisions. The newer version FICO score resulted
in a slightly higher median score of our credit cardholders, which was 793 at the end of 2012 compared to 788 at
the end of 2011. We believe the median FICO scores of our cardholders are well above the industry average. Our
charge-offs as a percentage of total outstanding balances were 1.87% in 2012, which we believe is well below the
2012 industry average.
The table below presents data on the performance of our credit card portfolio comparing the last three
years and illustrates the high credit quality of our credit card portfolio. The following table shows delinquencies,
including any delinquent non-accrual and restructured credit card loans, and charge-offs, including any accrued
interest and fees, as a percentage of our average credit card loans:
2012 2011 2010
Delinquencies greater than 30 days 0.72% 0.87% 1.13%
Gross charge-offs 2.46 3.03 4.88
Charge-offs, net of recoveries 1.87 2.35 4.23
Products and Merchandising
We offer our customers a comprehensive selection of high-quality, competitively priced, national and regional
brand products, including our own Cabela’s brand. Our product assortment includes merchandise and equipment
for hunting, fishing, marine use, and camping, along with casual and outdoor apparel and footwear, optics, vehicle
accessories, and gifts and home furnishings with an outdoor theme.
The following table sets forth the percentage of our merchandise revenue contributed by major product
categories for our Retail and Direct segments and in total for the last three years.
Retail Direct Total
Product Category: 2012 2011 2010 2012 2011 2010 2012 2011 2010
Hunting Equipment 49.5% 45.7% 44.5% 37.1% 33.4% 33.7% 45.3% 41.1% 40.2%
General Outdoors 28.7 30.7 31.5 32.0 32.7 32.9 29.8 31.5 32.1
Clothing and Footwear 21.8 23.6 24.0 30.9 33.9 33.4 24.9 27.4 27.7
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%