Cabela's 2010 Annual Report Download - page 5

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by the end of 2012. While we have clearly exceeded
our goal, many of these initiatives are ongoing, and we
have added other initiatives providing for signifi cant
opportunities still ahead.
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. In 2010, we improved
merchandise gross margin 50 basis points. Margin
expansion was broad-based and a result of better
pre-season planning and in-season management.
We expect our ongoing initiatives related to greater
vendor collaboration, better pre-season planning and
in-season management, price optimization, and better
inventory quality to support future margin expansion. I
remain confi dent in our ability to achieve our strategic
margin improvement goal of a 200-300 basis point
improvement over 2009 levels by the end of 2012.
Retail Expansion
Given the significant improvements in Retail
profitability and merchandise gross margin and the
performance of our next generation stores, we are
excited that 2011 will be the year we accelerate
retail store expansion. In 2011, we will open two
stores in the United States, one in Springfield,
Oregon, and the other in Allen, Texas. Our United
States retail store expansion will continue to
focus on building stores in trafficked retail areas,
and these two new stores are prime examples of
this. Additionally, our expansion will be a blend of
repurposed real estate and newly constructed sites,
all in our next generation store format. Our approach
to growth will continue to be patient and purposeful,
following the guiding principle of profitable growth.
In 2011, in addition to our two stores in the United
States, we will also open a new store in Edmonton,
Canada, doubling our store base in this great
market. This marks the beginning of our retail store
expansion into Canada following our acquisition of
a Canadian outdoor specialty retailer in late 2007.
The Cabela’s brand is as strong in Western Canada
as it is in the United States, and we are excited
about our expansion into Canada, which like our
expansion in the United States, will be patient and
purposeful utilizing our next generation store format.
We are very excited about the opportunities in this
underserved market.
Direct Channel Growth
There is no question we have the leading direct business
in our industry. In 2010, our Cabelas.com website was
once again the most visited website in our industry.
We have spent the last few years positioning our Direct
business for renewed growth as we divested several
non-core businesses, installed a new customer
relationship management system, and launched our new
Cabelas.com website. Additionally, we have expanded
our mobile and social marketing initiatives by recently
launching new mobile technology enhancements that
include a fully-integrated mobile site showcasing our entire
assortment. In addition, we have launched a Facebook
shopping outlet to support our growing fan base, currently
at 850,000 fans. Several additional digital enhancements
will soon be launched during 2011. These enhancements
include rich apps for both the iPhone and Android devices,
which will enhance our customer shopping experience. In
addition, new digital customer engagement tools will be
leveraged allowing us to better interact with and serve our
passionate customer base. I am confi dent in our ability to
remain the leading direct marketer in our industry.
Growth of Cabela’s CLUB Visa Program
The Cabela’s CLUB Visa program constantly creates
significant loyalty to our powerful Cabela’s brand, and
last year more than $134 million in free merchandise
was earned by CLUB members. In 2010, average
active cardholders increased 5.9 percent and the
average account balance increased 1.0 percent.
In addition, we realized significant improvements
in delinquencies, charge-offs, and funding costs.
We continue to focus on finding new ways to use
the Cabela’s CLUB Visa program to drive greater
customer loyalty and additional customer spending
through all of our channels. In 2010, we implemented
a number of creative programs for our cardholders,
including inviting CLUB members on exclusive fishing
and hunting trips. Customer response to these
trips was overwhelming, and we look forward to
expanding these opportunities in 2011. The Cabela’s
CLUB Visa program is the glue to adhere our best