Cabela's 2010 Annual Report Download - page 43

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We have improved our retail store merchandising processes, management information systems, and
distribution and logistics capabilities. We have also improved our visual merchandising within the stores
and coordinated merchandise at our stores by adding more regional product assortments. To enhance
customer service at our retail stores, we have implemented management training and mentoring programs
for our next generation managers. Operating income for our Retail business segment increased $43 million,
or 26.2%, to $206 million in 2010 compared to 2009. In addition, operating income as a percentage of Retail
business segment revenue increased to 14.6% in 2010, up 290 basis points compared to 2009.
• Retail Expansion: Capitalize on our brand strength by developing a profitable retail expansion strategy
focused on site locations and appropriate sized stores in our top markets. Our goal is to increase our retail
presence across the United States and Canada by developing a profitable retail expansion strategy that
takes into consideration not only site location, but also the strategic size for each store in its given market.
We incorporated our next generation store format into our new store that opened on May 20, 2010,
in Grand Junction, Colorado. The Grand Junction store is 76,000 square feet and anchors the largest
destination mall on the Western Slope of Colorado. This retail store brings our total retail store square
footage to over 4.4 million square feet at the end of 2010. We expect to open two next generation stores
in 2011 in the United States - one in Allen, Texas, and one in Springfield, Oregon. In addition, we plan
to open one next generation store in Canada in 2011 in Edmonton, Alberta. We also announced plans to
open a next generation store in 2012 in Wichita, Kansas, and another store in 2012 in Canada, though the
location has not been named.
• Direct Business Growth: Grow our Direct business by capitalizing on quick-to-market Internet and
electronic marketing opportunities and expanding international business. 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.
Our efforts on redesigning our Internet website to support this important channel of our Direct business
continue. In October 2010, we launched our new website featuring significant enhancements including
guided navigation to improve customers’ movement throughout the site, managed content to aid in
customizing the individual shopping experience, better promotional capability, and international commerce
capabilities. Our Internet website continues to be the most visited sporting goods industry eCommerce
website 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 divested our non-core home restoration products business in October 2010 and our non-core
taxidermy and wildlife prints and collectibles businesses in the fall of 2009. The following table presents
a reconciliation of Direct and total revenue for 2010 and 2009 excluding the revenue of these non-
core businesses and week 53 for 2009. We believe presenting this non-GAAP comparable financial
data provides useful supplemental information regarding Direct and total revenues, and trends and
performance of our ongoing operations, and is useful for comparisons of results.
2010 2009 Increase (Decrease) % Change
(Dollars in Thousands)
Direct revenue (non-GAAP basis) $ 986,047 $1,002,307 $(16,260)(1.6)%
Direct revenue from non-core businesses (1) 13,724 39,082 (25,358)(64.9)
Direct revenue - week 53 (2) - 17,255 (17,255)
Direct revenue (GAAP basis) $ 999,771 $1,058,644 $(58,873)(5.6)
(1) Represents Direct segment revenue on our non-core businesses that we divested of in October 2010
(home restoration products) and in the fall of 2009 (taxidermy and wildlife prints and collectibles).
(2) Represents revenue earned in the last week of 2009 (week 53).