Cabela's 2009 Annual Report Download - page 4

We are very pleased with the continued strength
of our balance sheet and cash fl ow, with operating
cash fl ow reaching a record $294 million for the year.
This strength has been of particular benefi t with our
supply base given the number of companies in the
outdoor recreation industry that encountered fi nancial
diffi culties. For example, our fi nancial health created
a competitive advantage in the acquisition of hard-to-
fi nd fi rearm and ammunition products compared to
competitors who could not reliably meet obligations to
pay. Our strong cash fl ow also allowed for a $32 million
debt reduction during the year, creating a lease adjusted
debt to total capitalization ratio of 29 percent; the
lowest among virtually all publicly-traded retailers.
These results are especially encouraging because
2009 was a year of change in our Company. Following
a distinguished career spanning more than 36 years,
Dennis Highby retired as our Chief Executive Offi cer
in April. Our leadership transition was exceptionally
smooth due to our shared dedication to Cabela’s. Also,
during the year we undertook a complete re-engineering
of our merchandising, planning and inventory control
departments. This initiative, named Project Outfi tter,
impacted approximately 350 employees and was
designed to align our multi-channel business model
with our organizational structure. Despite the transition
affecting every aspect of our buying and planning
operations, we exceeded our fi nancial objectives, a
testament to the passion, commitment and dedication of
Cabela’s employees.
2012 Vision
We also created a new long-term strategic plan in 2009.
Our 2012 Vision was the culmination of interaction
with key leaders in our business, store personnel,
distribution and call center team members, customers
and suppliers. Communication of our 2012 Vision began
in the third quarter and encompassed every part of
Cabela’s. The fi nal element of the plan was to align our
executive leadership team’s responsibilities with our
strategic plan. This occurred in early January 2010
with a broad realignment of responsibilities within our
executive management team.
The goal of our 2012 Vision is to become the best multi-
channel outdoor retail company in the world by the end
of 2012. To accomplish this goal, we must passionately
serve and please every customer every day; celebrate
and reward passion, innovation and results with our
employees; and achieve profi table growth with superior
returns for our owners. These three pillars of the plan
form our Circles of Excellence: Customers, Employees
and Owners, supported by six strategic initiatives:
• Focus on Core Customers
• Improve Retail Profi tability
• Improve Merchandise Performance
• Retail Expansion
• Direct Channel Growth
• Growth of World’s Foremost Bank
Focus on Core Customers
During 2009, we focused intently on our extensive
customer data base to develop a clear picture of our
customer. We came up with four customer personas which
represent the core of our business. Actually, we learned our
four personas were not people but families. These families
were ascribed names, buying attributes and demographic
characteristics based on actual data from our customer
fi le. We have artistic renderings of these families so each
employee can readily visualize these family or customer
personas. One of the fi rst benefi ts we realized is that
our merchants, retail operators and marketers use these
personas as a fi lter to make sure we make decisions
biased to our core customers.
Improve Retail Profi tability
This initiative reaped immediate benefi t in 2009 with
signifi cant opportunities still ahead. Retail segment
operating margin increased 70 basis points in 2009
compared to 2008, with labor productivity posting a 90
basis point improvement over last year as a result of
upgrades to our labor management software system.
Additionally, gains were realized from better truck-to-fl oor
shipping initiatives from our warehouses and vendors as
well as more effi cient placement of advertising in markets
and households around our retail stores. These initial
gains are supported by nearly 100 ongoing initiatives in
point improvement in retail profi tability by 2012. While
improving the profi tability of our retail stores, it is imperative
we maintain our reputation for excellent customer service.
During the year, we were recognized by the National
Retail Federation as a top 15 customer service retailer.
To support the need to improve retail profi tability while
never sacrifi cing customer service, we announced our new
retail operations to meet our goal of a 150 to 250 basis