Cabela's 2012 Annual Report Download - page 58

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48
Direct Revenue – Our Direct revenue decreased $43 million, or 4.3%, in 2011 compared to 2010 primarily
due to a decrease in revenue originated from our call centers, partially offset by an increase in Internet sales. We
divested our non-core home restoration products business in October 2010. For comparative purposes, Direct
revenue in 2011 compared to 2010, adjusted for the effect of this divestiture, decreased $29 million, or 3.0%. The
decrease in Direct revenue comparing 2011 to 2010 was due to expected declines in ammunition and shooting
products, and to decreases in the clothing and footwear, fishing and marine, and camping categories.
Internet sales increased in 2011 compared to 2010. Visitors to our websites increased 4.5% during 2011 as
we continued to focus our efforts on utilizing Direct marketing programs to increase traffic to our website and
social media networks. Our hunting equipment and clothing and footwear categories were the largest dollar volume
contributor to our Direct revenue for 2011. In October 2010, we launched our new website featuring significant
enhancements, including guided navigation to improve customers’ movement throughout the site, managed
content to aid in customizing the individual shopping experience, better promotional capability, and international
commerce capabilities. We continued to focus on smaller, more specialized catalogs, and we reduced the number
of catalog pages mailed and decreased total circulation, leading to reductions in catalog related costs. Mostly
offsetting the reductions in catalog related costs were increases in Internet related expenses due to our expanded
use of digital marketing channels and enhancements to our website.
2011 2010
Increase
(Decrease) % Change
Percentage increase year over year in Internet website visitors 4.5% 5.8%
Catalog circulation in pages (in millions) (1) 22,218 24,028 (1,810) (7.5)%
Number of separate catalog titles circulated (1) 102 98 4
(1) 2010 amounts were adjusted to reflect the activity related to the divestiture of our non-core home restoration
products business.
Financial Services Revenue – The following table sets forth the components of our Financial Services
revenue for the years ended:
2011 2010
Increase
(Decrease)
%
Change
(Dollars in Thousands)
Interest and fee income $ 277,242 $ 271,651 $ 5,591 2.1%
Interest expense (70,303) (86,494) (16,191) (18.7)
Provision for loan losses (39,287) (66,814) (27,527) (41.2)
Net interest income, net of provision for loan losses 167,652 118,343 49,309 41.7
Non-interest income:
Interchange income 267,106 231,347 35,759 15.5
Other non-interest income 13,620 12,247 1,373 11.2
Total non-interest income 280,726 243,594 37,132 15.2
Less: Customer rewards costs (156,632) (134,262) 22,370 16.7
Financial Services revenue $ 291,746 $ 227,675 $ 64,071 28.1
Financial Services revenue increased $64 million, or 28.1%, in 2011 compared to 2010. The increase in
interest and fee income of $6 million was due to an increase in credit card loans and a reduction in charge-offs
of cardholder fees and interest, partially offset with a decrease in interest and fees charged as a result of the
CARD Act. Interest expense decreased $16 million due to decreases in interest rates. The provision for loan losses
decreased $28 million due to favorable charge-off trends and an improved outlook on the quality of our credit card