Cabela's 2007 Annual Report Download - page 8

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PART I
ITEM 1. BUSINESS
Overview
We are a leading specialty retailer, and the world’s largest direct marketer, of hunting, fishing, camping, and
related outdoor merchandise. Since our founding in 1961, Cabela’s has grown to become one of the most well-
known outdoor recreation brands in the world. We have long been recognized as the “World’s Foremost Outfitter.”
Through our growing number of retail stores, and our well-established direct business, we believe we offer the
widest, and most distinctive selection of high-quality outdoor products at competitive prices, while providing superior
customer service. We also issue the Cabela’s CLUB Visa® credit card, which serves as our primary customer loyalty
rewards program. Refer to Note 23 entitled “Segment Reporting” 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 and Direct businesses, as well as our Financial Services business.
We were initially incorporated as a Nebraska corporation in 1965 and were reincorporated as a Delaware
corporation in January 2004. In June 2004, we completed our initial public offering of common stock. Our common
stock is listed on the New York Stock Exchange under the symbol “CAB.”
Retail Business
We currently operate 27 retail stores, 26 in 19 states and one in Canada. We opened eight retail stores in 2007,
increasing our total retail square footage by 1.3 million square feet, or 49%. Retail store total square footage was 4.0
million square feet at the end of 2007. The eight retail stores opened in 2007 were in Hazelwood, Missouri; Hoffman
Estates, Illinois; East Hartford, Connecticut; Gonzales, Louisiana; Hammond, Indiana; Reno, Nevada; Post Falls,
Idaho; and Lacey, Washington. Our Retail store business operations generated revenue of $1.04 billion in 2007,
representing 48.0% of our total revenue from our Retail and Direct businesses.
Customer Service Enhancements. In 2007, we implemented customer service enhancements directed at
increasing sales and customer satisfaction in 10 of our retail stores. These enhancements included: 1) in-store pick-
up for Internet website orders, 2) installation of Internet kiosks, and 3) the installation of catalog order desks. We
expect these customer service enhancements to be available in all existing retail stores in early 2008. We continue
to advance our efforts for offering customers integrated opportunities to access and use our retail store, catalog,
and Internet channels, including our roll-out of Internet kiosks, catalog order desks, and in-store pick-up for catalog
and Internet purchases. Our in-store pick-up program allows customers to have products ordered through our
catalogs and Internet site and delivered to the retail store of their choice without incurring shipping costs, increasing
foot traffic in our stores. Conversely, our expanding retail stores introduce customers to our Internet and catalog
channels. Our multi-channel model employs the same merchandising team, distribution centers, customer database,
and infrastructure, which we intend to further capitalize on by building on the strengths of each channel.
Store Format and Atmosphere. Our retail store concept is designed to appeal to the entire family and draw
customers from a broad geographic and demographic range. Our retail stores range in size from 35,000 to 247,000
square feet and our large-format retail stores are 150,000 square feet or larger. Our large-format 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.
Retail Store Expansion Strategy. Enhancing our retail store efficiencies and taking the necessary steps to
improve our financial performance is a high priority in our strategic planning. As such, we continually review our
previously announced stores to reconfirm our expectations based on what we have learned over the past year. Based
on these ongoing reviews, we now expect to open two retail stores in 2008. We expect to fund our 2008 expansion
from a $57 million debt offering completed in January 2008 and from operating cash flows. We are developing a
next generation store format intended to improve our return on invested capital and to better serve our customers. In
September 2007, we acquired S.I.R. Warehouse Sports in Winnipeg, Manitoba, which will serve as our platform for
planned expansion into Canada.