Cabela's 2005 Annual Report Download - page 21

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Fishing and marine equipment. We provide products for fresh water fishing, fly-fishing, salt water fishing
and ice-fishing. In addition, our fishing and marine equipment offering features a wide selection of electronics,
boats and accessories, canoes, kayaks and other floatation accessories.
Camping equipment. We primarily focus on outdoor gear for the outdoor enthusiast, augmented with gear
for family camping and the weekend hiker. In addition, we include automobile and ATV accessories in this
general category.
Clothing and footwear. Our clothing and footwear merchandise includes both technical gear and lifestyle
apparel and footwear for the active outdoor enthusiast as well as apparel and footwear for the casual customer.
Gifts and home furnishings. Our gifts and home furnishings merchandise includes gifts, games, food
assortments, books, jewelry, restoration products and home furnishings with an outdoor theme. Our home
restoration products, distributed by Van Dyke’s Restorers, include unusual and hard-to-find antique furniture and
vintage home restoration supplies.
Cabela’s Branded Products. In addition to national brands, we offer our exclusive Cabela’s branded
merchandise. We have a significant penetration of Cabela’s branded merchandise in casual apparel and footwear
as well as in selected hard goods categories such as camping, fishing and optics. Where possible, we seek to
protect our Cabela’s branded products by applying for trademark or patent protection for these products. Our
Cabela’s branded products typically generate higher gross profit margins compared to our other branded
products. In fiscal 2005, our Cabela’s branded merchandise accounted for more than one-third of our
merchandise revenue. By having an appropriate mix of Cabela’s branded and other branded merchandise, we
strive to meet the expectations and needs of our customers.
We have in-house teams that are responsible for the design and development of all Cabela’s branded
merchandise. This allows us to exercise significant control over the merchandise development process and the
quality of our products. The design and development of our products is based on our understanding of our
customers’ styles and preferences as well as their price expectations.
We intend to continue to design and develop a variety of new Cabela’s branded products to increase our
revenue, enhance our margins and expand the recognition of the Cabela’s brand. In addition, these Cabela’s
branded products are important to our efforts to broaden our customer base and communicate our value position.
In certain categories where there is not a dominant national brand, we believe that our Cabela’s branded products
have stronger brand recognition than other branded products.
Merchandising, Planning and Sourcing. Our merchandising planning and sourcing team is comprised of
approximately 173 people with an average of seven years of experience working for us. The members of this
team are responsible for selecting our products and negotiating the costs of our merchandise. We also have a
retail planning team that is responsible for the regional and local merchandise needs of each destination retail
store. In addition, our merchants provide product quality assurance for our retail and direct businesses. The
merchandising teams use historical revenue data from our direct and retail businesses, feedback from our retail
store managers and industry trends to determine which products to purchase. Our merchants are outdoor
enthusiasts who use our products in the field to gain a better understanding of our customers’ needs as well as the
functionality and overall performance of the products. We believe that we are well known to our customers for
providing the widest product offering to the outdoor recreation market and we continue to look at category
expansion to further serve our customers.
We have developed strong vendor relationships over the past 44 years. These relationships generally provide
us with greater access to technological innovations and new products. We source our merchandise from
approximately 5,000 suppliers in over 100 countries. In fiscal 2005, over half of our merchandise was sourced
from locations in foreign countries, with approximately 36.1% of our merchandising being sourced from China,
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