Cabela's 2012 Annual Report Download - page 3

Dear Cabela’s Shareholders:
2012 was another year of solid progress for
Cabela’s, thanks to the efforts of our dedicated and
hard-working Outfi tters, who now number more than
15,000. Our founders, Jim, Dick, and Mary Cabela,
have always credited employees with the Company’s
incredible record of success. This year is no different.
Revenue increased 11.2% to $3.1 billion, and earnings
per diluted share increased 28.3% to a record $2.72,
each excluding impairment and certain other items.
Comparable store sales increased for the fourth
consecutive year, and Direct revenue increased 1.7% in
the fourth quarter, the fi rst quarterly Direct revenue
increase in 11 quarters. Additionally, we realized a 70
basis point increase in merchandise gross margin, and
consolidated operating margin increased 120 basis
points to a Company record 9.9% for the full year.
These strong results led to further increases in one of
our most important metrics, return on invested capital,
which increased 160 basis points to 15.9%. Return on
invested capital is a key metric as we believe
increasing return on invested capital will ultimately be
rewarded with increasing shareholder value.
None of this would have been possible without the
efforts of our Outfi tters, the essence of our success.
As we look toward a bright future, these Outfi tters and
thousands more we hire will remain the cornerstone
cherishing and delighting each customer during each
interaction every day.
Three years ago we put in place a strategic plan we
named Vision 2012 to become the best multi-channel
outdoor company in the world. To achieve our vision
we focused on several goals designed to improve
profi tability, enhance shareholder return, and position
ourselves for accelerated growth. These goals were:
• Improve Merchandise Performance
• Improve Retail Profi tability
• Direct Channel Growth
• Focus on Core Customers
• Increase Return on Invested Capital
As 2012 marks the last year of this strategic plan,
it is important to summarize our results against
these fi ve goals.
Improve Merchandise Performance
In order to reaccelerate Retail growth, it was essential
we increase merchandise margin. A lofty goal was
established to increase merchandise margin 200-300
basis points between 2009 and 2012. This initiative
was a critical component of improving Retail profi tability
to generate the appropriate returns on invested capital
in our Retail segment. Ultimately, we grew consolidated
merchandise margin 170 basis points. However, what is
more important is that our Retail segment merchandise
gross margin increased 300 basis points from 2009
levels. The improvement in Retail merchandise margin
was a signifi cant contributor to increases in Retail
profi tability and is one of the reasons we have been
able to accelerate retail store expansion and generate
improving returns on invested capital.
Our ability to increase merchandise margins was an
enterprise-wide initiative. Progress was made improving
merchandise adjacencies in our retail stores, developing
skills in merchandising around pre-season planning and
in-season management, improving vendor collaboration,
and through a Company-wide effort to elevate the
quality and performance of Cabela’s branded products.
These improvements have not only laid a powerful
foundation for continuous improvement in the future, but
created a margin profi le which now makes retail square
footage expansion a reality.
Letter To Shareholders
the
of our success by providing legendary customer service,