Cabela's 2006 Annual Report Download - page 2

Letter to Shareholders
Dear Cabela’s Shareholders:
Congratulations! You are part of our $2
billion company. We had a tremendous
year in 2006, reaching $2.06 billion in
total revenue. This important milestone is
the result of our successful multi-channel
retailing model, which continues to provide
a signifi cant advantage no competitor
can match.
In fi scal 2006, we earned a record $85.8
million, or $1.29 per diluted share, as
compared to $72.6 million, or $1.10 per
diluted share, in fi scal 2005. Total revenue
for 2006 increased 14.7% to $2.06 billion.
Revenue from our direct business (catalog
and Internet) increased a solid 4.2% to $1.09
billion, primarily due to growth in sales
through our website, Cabelas.com. Retail
revenue increased 32.3% to $820.3 million,
led by the opening of four new stores as well
as a 1.3% increase in comparable store sales.
Financial services revenue increased 29.9%
for the year as we continued to grow our
Cabela’s CLUB Visa credit card business.
It is important to note that over half of
our new credit card accounts are originated
from our retail stores. Additionally, in fi scal
2006, 20.3% of our merchandise sales were
generated by customers using their Cabela’s
CLUB Visa credit card.
The past year was a banner one for Cabela’s
in other ways. For one, we opened four new
destination retail stores, bringing our total
store count to 18. I am proud to say all these
stores opened on schedule and we are very
pleased with their initial performance.
Our Cabelas.com website received very
high marks in a Cisco Systems benchmark
study for “best shopping experience,”
edging out other top retailers. More
recently, a Business Week magazine
special report ranked the top 25 Customer
Service Champs in the country, and, not
surprisingly, Cabela’s was among them,
ranked 15th. Our high rankings in both
studies are great examples of the success
we had in 2006 and, as shareholders, you
should be pleased to hear these rankings.
As for operational milestones, we
spent considerable time during the year
implementing new technology initiatives to
further improve our operations, including:
• Implementing a new warehouse
management system in our distribution
centers. In 2007, we will complete the
installation of this system resulting in
improved inventory tracking and
order fulfi llment.
• Installing a new replenishment system
for our distribution centers and retail
stores. We look forward to improved
inventory levels at our distribution
centers and retail stores in the second
half of 2007 as we add vendors
to the system.
• Installing the fi rst phase of JDA’s
merchandise management system. This
system allows us to better support our
multi-channel business. We will be
working on the installation of the fi nal
phase throughout 2007.
• Installing a new learning management
system for outfi tters in our retail stores.
This system will help our outfi tters gain
a greater understanding of the products
we offer, and we expect it to increase
sales and enhance customer service.
During the coming year, we will continue
to work on these and other important
initiatives to maximize the effi ciency of our
operations and improve operating margins.
In closing, I can assure you that all of us at
Cabela’s are excited about reaching the $2
billion revenue mark, but consider it just
that, a mark we have passed on the way
to bigger and better things. We remain
determined to achieve our goals through
growth and superior customer service while
remaining committed to the values instilled
by our founders Jim and Dick Cabela.
As Jim and Dick have done for the past
46 years, I would like to give credit for our
incredible growth to our employees who
come to work every day ready and willing
to give 100 percent. Because of them
– and our reputation for quality, selection,
service and value – we will continue to
increase our market share and maximize
shareholder value.
Thank you for believing in us.
Sincerely,
Dennis Highby
President and Chief Executive Offi cer
Dennis Highby and Ruby, his 8-week-old
German Wiredhaired Pointer, on her fi rst
South Dakota pheasant hunt.