Cabela's 2007 Annual Report Download - page 10

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4
Cabela’s CLUB Visa Card Loyalty Program. The Cabela’s CLUB Visa card loyalty program is a rewards-
based credit card program, which we believe has increased brand loyalty among our customers and has helped reduce
customer attrition in our merchandising businesses. Our rewards program is a simple loyalty program that allows
customers to earn points whenever and wherever they use their credit card and then redeem earned points for products
and services at our retail stores or through our Direct business. Our rewards program is integrated into our store
point of sale system which adds to the convenience of the rewards program as our employees can inform customers of
their number of accumulated points when making purchases at our stores. The percentage of our merchandise sales
that were made on the Cabela’s CLUB card increased to 26.3% for 2007 from 24.6% for 2006.
Financial Services Marketing. We adhere to a low cost, efficient, and tailored credit card marketing program
that leverages the Cabela’s brand name. We market the Cabela’s CLUB Visa card through a number of channels,
including retail stores, inbound telemarketing, catalogs, and the Internet. Customer service representatives at our
customer care centers offer the Cabela’s CLUB Visa card to qualifying customers. This card is marketed throughout
our catalogs. Our customers can apply for the Cabela’s CLUB Visa card at our retail stores and website through
our instant credit process and, if approved, receive reward points available for use on merchandise purchases the
same day. When a customer’s application is approved through the retail store instant credit process, the customer’s
new credit card is produced and given to the customer immediately thereafter. Maintaining the growth of our credit
card program, while continuing to underwrite high-quality customers, is key to the successful performance of our
Financial Services business. Our Financial Services growth is dependent, in part, on the success of our Retail and
Direct businesses to generate additional sales and to attract additional Financial Services customers.
Underwriting and Credit Criteria. We underwrite high-quality credit customers and have historically
maintained attractive credit statistics compared to industry averages. We adhere to strict credit policies and target
consistent profitability in our Financial Services business. The scores of the Fair Isaac & Company (“FICO”) are a
widely-used tool for assessing a person’s credit rating. At the end of 2007, our cardholders had a median FICO score
of 787, which we believe is well above the industry average. Our charge-offs as a percentage of total outstanding
balances were 2.01% in 2007, which we believe is well below the 2007 industry average.
The table below presents data on our credit card portfolio’s performance comparing the last three years and
illustrates the high credit quality of our managed credit card portfolio.
As a Percentage of Managed Loans 2007 2006 2005
Delinquencies ......................................................................................................... 0.97% 0.75% 0.67%
Gross charge-offs .................................................................................................... 2.53% 2.29% 2.54%
Net charge-offs ....................................................................................................... 2.01% 1.86% 2.15%
Products and Merchandising
We sell “fun.” We offer our customers a comprehensive selection of high-quality, competitively priced,
national and regional brand products, including our own Cabela’s brand. Our product offering includes merchandise
and equipment for hunting, fishing, marine use, and camping, along with casual and outdoor apparel and footwear,
optics, vehicle accessories, taxidermy products, gifts and home furnishings with an outdoor theme, and furniture
restoration related merchandise.
At the end of 2007, we had 48 different product categories that we classify into five general categories which are
summarized below. The following chart sets forth the percentage of revenue contributed by each of the five product
categories for our Retail and Direct businesses and in total for the last three years.
Retail Direct Total
Product Category 2007 2006 2005 2007 2006 2005 2007 2006 2005
Hunting Equipment........................... 38.7% 35.6% 33.8% 26.6% 27.1% 26.4% 32.6% 30.7% 29.1%
Fishing and Marine ........................... 15.6 16.7 16.0 12.3 12.5 12.5 14.0 14.3 13.8
Camping ........................................... 12.9 12.1 12.0 15.4 14.8 14.8 14.1 13.7 13.8
Clothing and Footwear ..................... 27.0 29.1 31.5 36.3 36.7 37.4 31.7 33.5 35.2
Gifts and Furnishings ....................... 5.8 6.5 6.7 9.4 8.9 8.9 7.6 7.8 8.1
Total .................................................. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%