Cabela's 2009 Annual Report Download - page 14

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of 2010. We will fund this 2010 retail store from operating cash flows. This store will feature our next generation
format while the exterior will reflect our traditional store model. The 2007 acquisition of S.I.R. Warehouse Sports in
Winnipeg, Manitoba, serves as our platform for planned expansion into Canada.
Store Locations and Ownership. We currently own 25 of our 30 retail stores. However, in connection with
some of the economic development packages received from state or local governments where our stores are located,
we have entered into agreements granting ownership of the taxidermy, diorama, or other portions of our stores to
these state and local governments. Refer to Item 2 –“Properties” for the locations of our stores.
Direct Business
Our Direct business uses catalogs and the Internet as marketing tools to generate sales orders via the Internet,
telephone, and mail. Our Direct business generated revenue of $1.1 billion in 2009, representing 43.3% of our total
revenue from our Retail and Direct businesses.
Catalog Distributions. We have been marketing our products through our print catalog distributions to our
customers and potential customers for over 48 years. We believe that our catalog distributions have been one of the
primary drivers of the growth of our brand and serve as an important marketing tool for our Retail business. In 2009,
we mailed more than 130 million catalogs to all 50 states and to more than 190 countries. Our master catalogs offer
a broad range of products while our specialty catalogs offer products focused on one outdoor activity, such as fly
fishing, archery, or waterfowl, or one product category, such as women’s clothing.
Many of our customers read and browse our catalogs, but order products through our website. Based on our
customer surveys, we believe that our customers wish to continue to receive catalogs even though they purchase
merchandise and services through our website. Accordingly, we remain committed to marketing our products through
our catalogs, as we view our catalogs and the Internet as a unified selling and marketing tool. Our goal is to continue
to fine tune our catalogs, as well as the number of pages and product mix in each, in order to improve the profitability
of each title. We want to create steady, profitable growth in our direct channels, while reducing marketing expenses
and significantly increasing the percentage of market share we capture through the Internet.
Direct Business Marketing. We market our products through our website and catalog circulation. Our website
is a cost-effective medium designed to offer a convenient, highly visual, user-friendly, and secure online shopping
option for new and existing customers. We continue to expand electronic marketing strategies and customize Internet
marketing campaigns to target and optimize specific markets. In addition to the ability to order the same products
available in our catalogs, our website gives customers the ability to review product information, purchase gift
certificates, research general information on the outdoor lifestyle and outdoor activities, purchase rare and highly
specialized merchandise, and choose from other services we provide. The number of visits to our website increased
19.5% in 2009 compared to 2008. Our website was the most visited sports and fitness website in 2009 according to
Hitwise, Incorporated, an online measurement company.
We use our customer database to ensure that customers receive catalogs matching their merchandise preferences,
to identify new customers, and to cross-sell merchandise to existing customers. We focus on a disciplined approach
in determining the number of pages and circulation of our catalogs in order to maximize productivity and profits as
postage and printing costs continue to increase. We also utilize our marketing knowledge base to determine optimal
circulation strategies to control our catalog costs while continuing to grow our merchandising business.
Financial Services Business
Through our wholly-owned subsidiary, World’s Foremost Bank, we issue and manage the Cabela’s CLUB
Visa card and related customer loyalty rewards program. We believe the Cabela’s CLUB Visa card loyalty rewards
program is an effective vehicle for strengthening our relationships with our customers, enhancing our brand name,
and increasing our merchandise revenue. The primary purpose of our Financial Services business is to provide our
merchandise customers with a rewards program that will enhance revenue, profitability, and customer loyalty in our
Retail and Direct businesses.