Cabela's 2009 Annual Report Download - page 15

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6
Our bank subsidiary is a Federal Deposit Insurance Corporation (“FDIC”) insured, special purpose, Nebraska
state-chartered bank. Our bank’s charter limits us to issuing consumer credit cards and certificates of deposit of
$100,000 or more. Our bank does not accept demand deposits or make non-credit card loans. During 2009, we had
an average of 1,244,621 active credit card accounts with an average balance of $1,857 compared to an average of
1,140,834 active credit card accounts with an average balance of $1,828 during 2008.
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 was 27.9% for 2009 compared to 27.5% for 2008.
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 and our Internet site. 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 and actively manage our credit card
delinquencies and charge-offs, 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
high credit quality obligors. The scores of Fair Isaac Corporation (“FICO”) are a widely-used tool for assessing
a person’s credit rating. Our cardholders had a median FICO score of 787 at the end of 2009 compared to 786 at
the end of 2008. We believe the median FICO scores of our cardholders are well above the industry average. Our
charge-offs as a percentage of total outstanding balances were 5.06% in 2009, which we believe is well below the
2009 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: 2009 2008 2007
Delinquencies greater than 30 days 1.79%1.68%0.97%
Gross charge-offs 5.52 3.40 2.53
Net charge-offs 5.06 2.95 2.01
Products and Merchandising
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 assortment includes merchandise and equipment
for hunting, fishing, marine use, and camping, along with casual and outdoor apparel and footwear, optics, vehicle
accessories, gifts and home furnishings with an outdoor theme, and furniture restoration related merchandise.