Cabela's 2008 Annual Report Download - page 5

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One of our biggest opportunities lies with
improvements in merchandise gross margin. We
realize in this macro-economic environment this will
not be an easy task. Initiatives targeted at improving
merchandise gross margin include leveraging our core
SKUs, reducing overstocks, improving our discounting
process and in-season markdown strategy,
renegotiating and resourcing certain merchandise
programs and increasing vendor support related to
markdowns and promotions.
Another strategy we are implementing to improve
ROIC is SKU rationalization to help us focus on our
core SKUs, which represent roughly 40 percent of the
units, sales and gross profi t for Cabela’s. A focused
effort on these core SKUs will allow us to drive higher
fi ll rates, lower refunds and improve margins. One of
the goals of our SKU rationalization strategy will be to
eliminate the bottom 20 percent of SKUs by the end
of 2010. SKU rationalization also will help provide a
professionally edited assortment of good, better, best for
our customers, reinforce our core merchandise strategy
and provide opportunities to consolidate vendors.
Another aspect of improving ROIC will be our continued
emphasis on tightly managing inventories by driving
our “open-to-buy” process down to the class level and
reducing the level of unproductive inventory. Other areas
of opportunity include improving our vendor compliance,
reducing backorders and refunds, improving our
preseason planning and in-season management and
improving the velocity of merchandise to retail.
With these initiatives, despite the challenging macro-
economic environment, we enter 2009 optimistic and
determined to positively impact our business. With one of
the strongest balance sheets and the largest direct business
in our industry, we are confi dent Cabela’s will continue
to take market share and emerge from these turbulent
times a much stronger and more effi cient company.
Cabela’s Advantage
As you can imagine, 2008 was a tough year, but
Cabela’s pulled through thanks to the dedication and
hard work of our employees, who faced challenges
head-on, adapted to the changing economic climate
and quickly refocused on our new strategic direction. I
am extremely proud of our employees, their dedication
and their unfailing work ethic. They are a competitive
advantage no one can duplicate.
We expect 2009 to continue to be a tough retail
environment and, as such, we are focused on managing
factors within our control. We are determined to provide
the return our shareholders expect and deserve. In this
retail environment, we believe focusing on controlling
costs, generating cash fl ow and improving ROIC should
enhance shareholder value. I am confi dent our profi table
multi-channel selling platform, strong brand and
superior customer service are a competitive advantage
unmatched by anyone in our industry and will serve us
well for many years to come.
In closing, I would like you to know this will be my
last correspondence to you as Cabela’s President and
Chief Executive Officer. I am sure you are already
aware that I will be transitioning from my current
position to that as a Vice Chairman of Cabela’s Board
of Directors on April 6. I leave my position in the very
capable hands of Tommy Millner, who joins Cabela’s
from Freedom Group, Inc., the parent company of
Remington Arms Company, Inc.
Tommy’s many years in and understanding of the
industry, respect for Cabela’s values, passion for the
outdoors and knowledge of the competitive landscape
will be very important to his new position as President
and Chief Executive Offi cer of Cabela’s. Tommy and his
wife Merry Jeanne will be relocating to Sidney.
I feel privileged to have worked at Cabela’s through our
years of tremendous growth. It has been a rewarding
experience, far beyond any I could have imagined 33
years ago when Jim and Dick hired me. I would like
to thank them and all the hard-working and dedicated
employees who have made this a tremendous career,
fi lled with friendships and memories that will remain
with me always.
Thank you for your continued confi dence in us.
Sincerely,
Dennis Highby
President and Chief Executive Officer
March 31, 2009