Cabela's 2009 Annual Report Download - page 5

Legendary Guarantee program as well as our Cabela’s
Xtreme Protection plan. Both enhancements have been
well received by our customers.
Improve Merchandise Performance
This initiative is critical because improving merchandise
gross margin is the most important contributor to
overall profi t growth in our business. We are pleased
to report signifi cant improvement in the fi rst phase of
this long-term initiative during 2009, including clearing
unproductive and aged inventories. Compared to 2008,
we lowered inventories by $78 million, down to $440
million. Progress in this area sets the stage for our goal
of improving margin and merchandise performance 200
to 300 basis points by 2012. Key areas of opportunity
include a more collaborative approach with vendors
in areas of planning, store fi xturing, shared risk and
promotions. Additionally, we are scheduled to implement
enhancements to our JDA planning suites to bring
us to best-in-class status in the area of in-season
management, upgrade our point-of-sale system and
implement price optimization competencies. I remain
confi dent in our ability to achieve our strategic margin
improvement goals over the next three years.
Retail Expansion
Our expansion in retail is premised on several
absolutes. We will not be real estate developers as
in years past. We will build new stores in trafficked
retail areas. Our expansion will be a blend of
repurposed real estate and greenfield sites, all in
our next-generation format of 80,000-, 100,000-
and 125,000-square-foot stores. Our approach to
growth given the current economic environment
will be patient and purposeful, following the guiding
principle of profitable growth. In line with this
approach, we added one new 80,000 square-foot
store in Billings, Montana, in 2009, and we plan
to add one new store in 2010 in Grand Junction,
Colorado. The Grand Junction store will be 80,000
square feet and will anchor the largest destination
mall on the Western Slope of Colorado. Although still
in final negotiations, we also expect to open two new
next-generation stores in 2011, one in the Pacific
Northwest and one in the Southwest.
Following our acquisition of S.I.R. Warehouse Sports
in Winnipeg in late 2007, we spent most of 2009
scaling this business for future growth. We brought
aboard a president of Canadian Operations, added
strategic personnel, implemented SAP as our key
enterprise resource planning system and leased a
new distribution facility. The Cabela’s brand is as
strong in Western Canada as in the United States,
which gave us the confidence to announce plans to
open two next-generation format stores in Canada,
one in the spring, the other in the fall, of 2011.
Expansion of our retail footprint in Canada will have
the added benefit of accelerating our Direct business
in these markets.
Direct Channel Growth
In 2009, Cabela’s mailed more than 130 million catalogs,
interacted with 131 million customers on Cabelas.com
(an increase of 19.5 percent over 2008) and continued
to be the most dominant direct marketer in the sports
and recreation industry. As a result of capitalizing on the
planned trend toward lower catalog page counts, we
achieved savings in total catalog costs during 2009 of
$16 million. During 2009’s critical holiday season, ForSee,
a leading Internet customer satisfaction rating service,
scored Cabelas.com as the fi fth best Internet site from a
customer satisfaction standpoint, in company with such
businesses as Apple, Amazon, Netfl ix and QVC.
Our ownership of World’s Foremost Bank constantly
creates loyalty to our powerful Cabela’s brand. Last
year, more than $120 million in free merchandise
was earned by customers on their Cabela’s CLUB Visa
cards. We believe World’s Foremost Bank continues
as an essential component in the value proposition
to our customers, namely great products, superior
Our goal in the next three years is to reinforce our
dominant position on the Internet through a complete re-
engineering of our website in the late summer of 2010.
This change will dramatically increase ease of navigation,
allow us to expand our mobile and social marketing
initiatives, improve product presentation and increase
our opportunity to grow the international component of
our Internet business. Our catalogs will continue to direct
customers to Cabelas.com, call centers and our retail
stores. I am confident in our ability to grow our Direct
channel as a result of ongoing improvements in closely
matching offers to customers’ buying preferences.
Growth of World’s Foremost Bank