Cabela's 2006 Annual Report Download - page 34

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• Internet visits increased by 32.1% over fiscal 2005, and our website was the most visited sports and fitness
website in fiscal 2006 according to Hitwise Incorporated, an online measurement company. In addition,
Cabela’s website outranked major retailers as a leader in providing the best online shopping experience,
according to a study done by Cisco® Systems Internet Business Solutions Group, a business consulting
group.
• We were awarded an RIS News Fusion Award for “Customer Experience” for our “out-of-the-box thinking
in differentiating ourselves while delivering results in sales, profits and market share” and for adding
“technical expertise, service and education to our products.”
• We improved our operating income margin by 60 basis points from 6.4% in 2005 to 7.0% in 2006.
• We completed plans to open eight new destination retail stores in 2007.
• Our comparable store sales increased by $6.7 million or 1.3%.
• We implemented the second phase of a new warehouse management system that allows us to more
accurately and timely route customer orders based on available inventory and proximity to the closest
distribution location. This system will be rolled out to our destination retail stores in the first half of 2007
to complete the implementation.
• We completed the first phase of implementing our merchandise management system which consolidates
information related to our item master, vendor master and purchase order system and provides the
foundation for how we account for and manage our merchandise process.
• We installed software to help us improve our retail stock position and enhance our store merchandising.
• We improved the infrastructure of our Internet site by adding customer ratings and reviews.
• We expanded our electronic trading program with over 850 of our largest vendors, allowing us to receive
advanced ship notices, invoices and shipping labels electronically.
• We deployed a company-wide on-line learning management system to train our employees, which includes
training on topics such as product information, sales training and general office software applications.
• We completed a 574,000 square foot expansion to our Wheeling, West Virginia distribution center.
• We worked with local municipalities to retire $53.0 million of principal on economic development bonds
related to our Wheeling, West Virginia retail store and distribution center. This is part of our strategy of
monetizing economic development bonds to increase our return on investment of related facilities. In
addition, we received notice from the bond trustee that it intends to retire an additional $42.9 million of
principal in 2007.
• We completed the private placement of $215.0 million of long-term debt to support our Retail expansion.
• Our bank completed a $500.0 million securitization of credit cards under favorable terms, which replaced
a maturing securitization of $250.0 million and securitized an additional $250.0 million in credit card
loans. Our bank also successfully replaced the provider of its $300.0 million commercial paper conduit
program with another provider at favorable rates.
• We expanded our customer loyalty programs by launching a debit card and a loyalty rewards card to reach
a more diverse customer base.
Business Strategy
We continue our legendary focus on customer service, quality and selection as our multi-channel business
strategy emphasizes the following key components:
Continue to open new destination retail stores. We have increased our destination retail store base from
four stores in 1998 to 18 in 2006, representing 2.7 million square feet of retail space. We currently plan to open eight
destination retail stores in 2007, all of which have been announced. Through our extensive customer database and
analysis of historical sales data generated by our direct business, we are able to identify geographic areas with a high