Cabela's 2005 Annual Report Download - page 19

Wild Wings, which offers wildlife prints and other collectibles, and the Ducks Unlimited catalog, which offers
waterfowl products. In 1996, we acquired the assets of the Gander Mountain direct business and integrated them
into our business.
Retail Business
We currently operate 14 destination retail stores in ten states. Our retail operations generated $620.2 million
in revenue in fiscal 2005 representing 37.4% of our total revenue from our direct and retail businesses for fiscal
2005. See Note 20 to our consolidated financial statements and our “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” for additional financial information regarding our retail business.
Store Format and Atmosphere. We have developed a destination retail store concept that is designed to
appeal to the entire family and draw customers from a broad geographic and demographic range. Our destination
retail stores range in size from 35,000 to 247,000 square feet and our large-format destination retail stores are
150,000 square feet or larger. These destination retail stores are similar in format, merchandise offered and
ambiance, despite variations in their size. The sites for our destination retail stores are generally located in close
proximity to major traffic arteries and in regions of the country that have large concentrations of existing
customers of our direct business. Our large-format destination retail stores have been recognized in some states
as one of the top tourist attractions, often attracting the construction and development of hotels, restaurants and
other retail establishments in areas adjacent to these stores. The large size of our destination retail stores allows
us to offer a broad selection of products, helps to provide us with flexibility to respond to seasonal needs and
merchandise trends and enables us to manage the flow of customer traffic.
We design our destination retail stores to reinforce our outdoor lifestyle image and to create an enjoyable,
friendly and interactive shopping experience for both casual customers and outdoor enthusiasts. These stores are
designed to communicate an outdoor lifestyle environment characterized by the outdoor feel of our interior
lighting, wood or tile flooring, cedar wood beams, open ceilings, neutral tone decor and lodge type atmosphere.
We also present our merchandise in a customer friendly fashion with engaging end-cap displays and effective
product category adjacencies and have implemented a new space planning software system for our destination
retail stores to help us more effectively utilize our merchandise space to enhance our customers’ shopping
experience and drive additional sales.
In addition, our large-format destination retail stores are designed to simulate an outdoor lifestyle
environment by including numerous amenities and interactive areas so that customers can test our products
before making a purchase decision. These attributes differentiate our destination retail stores making them appeal
to entire families and we believe increase the average shopping time customers spend in our stores. The design,
durability and style of our destination retail stores also allow us to keep our remodeling costs low.
New Store Site Selection. We have identified locations that may be suitable for new destination retail stores
as part of our retail expansion strategy. With only 14 destination retail stores in operation at the present time, we
believe opening additional destination retail stores provides a significant growth opportunity. Through our
extensive customer database generated by our direct business and additional demographic and competitive
research, we can identify geographic areas with a high concentration of customers that represent potential new
markets for our destination retail stores. We believe that there are many additional markets throughout North
America that could potentially support one of our large-format destination retail stores. We also believe that our
customer database gives us a competitive advantage in tailoring product offerings in each of our destination retail
stores to reflect our customers’ regional preferences. Additionally, we believe that smaller-format destination
retail stores could provide further opportunities for future retail expansion.
We successfully opened four destination retail stores in 2005, increasing our total retail square footage by
780,780 feet or 59.3%. Our four destination retail stores opened in 2005 are located in Fort Worth, Texas, Buda,
Texas, Lehi, Utah and Rogers, Minnesota. We have begun locating our stores closer to major metropolitan areas
to make our stores easier to reach for more of our customers.
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