Cabela's 2010 Annual Report Download - page 16

6
increased 5.8% in 2010 compared to 2009. Our website was the most visited sporting goods website in 2010
according to Hitwise, Incorporated, an online measurement company. On December 15, 2010, we launched our
website in France, www.cabelas.fr, which offers more than 5,000 of Cabela’s branded products.
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 bank subsidiary, World’s Foremost Bank (“WFB”), we issue and manage the
Cabela’s CLUB Visa credit card, a rewards based credit card program. We believe the Cabela’s CLUB Visa credit
card loyalty rewards program is an effective vehicle for strengthening our relationships with our customers,
enhancing our brand name, and increasing our merchandise revenue. Our rewards program is a simple loyalty
program that allows customers to earn points whenever and wherever they use their Cabela’s CLUB Visa 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. Our customers are informed of their
number of accumulated points when making purchases at our stores or ordering through our Direct business. The
percentage of our merchandise sold to customers using the Cabela’s CLUB card was 30.0% for 2010 compared to
27.9% for 2009. The primary purpose of our Financial Services business is to provide customers with a rewards
program that will enhance revenue, profitability, and customer loyalty in our Retail and Direct businesses.
Our bank subsidiary is an 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 2010, we had an average of 1,317,890 active credit card
accounts with an average balance of $1,875 compared to an average of 1,244,621 active credit card accounts with an
average balance of $1,857 during 2009.
Financial Services Marketing. We have a low cost, efficient, and tailored credit card marketing
program that leverages the Cabela’s brand name. We market the Cabela’s CLUB Visa credit 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 credit 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 credit 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 790 at the end of 2010 compared to 787 at
the end of 2009. 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 4.23% in 2010, which we believe is well below the
2010 industry average.