Cabela's 2011 Annual Report Download - page 3

Dear Cabela’s Shareholders:
Each year we honor an employee who best exemplifies the
core values of our Company, which Dick, Mary, and Jim
Cabela so deeply imbued in our culture. We call this The
Founders Award, which is presented at our Company’s
annual national meeting in Denver, Colorado. This year,
the presentation was one of the most moving events in
the long history of our Company.
Let me explain. This year, the award was presented by
Vietnam veterans, led by Sgt. Dick Glover and his squad
of Company C, 2nd Battalion, 27th Infantry, otherwise
known as the famed “Wolfhounds.” During service to
our nation, Sgt. Glover suffered a penetrating head
wound that nearly cost him his life. The result was
a long and painful recovery followed by an inability
to fully use the right side of his body. In spite of this
disability, Sgt. Glover went on to have a successful
career and raise a beautiful family. Unfortunately, his
injuries prevented him from enjoying his pre-Vietnam
passion – fi shing. This is where our Founders Award
winners stepped in.
Cabela’s Outfi tters Danny Thompson and Matt
Mollenhauer from our Owatonna, Minnesota, store heard
of Sgt. Glover’s situation and leapt into action. Using
their own money and time, Danny and Matt created an
ingenious mechanism that allowed Sgt. Glover to fi sh
again. They made his dream come true! In addition, our
entire Owatonna store staff rallied to give Company C a
hero’s welcome at the store. As you can imagine, when
Sgt. Glover and his squad stood before 600 Cabela’s
employees to present Danny and Matt their award, there
was not a dry eye in the audience. This is the fi rst year
we named more than one individual for the award.
I share this story with you against the backdrop of our
third consecutive year of exceptional improvements in
our Company. What continues to drive this exceptional
performance is the amazing culture within Cabela’s as
exemplifi ed by Danny and Matt. For you see, we fi rmly
believe that CULTURE drives BELIEFS which leads to
ACTIONS that produce RESULTS. Our culture is based
on simple principles which we constantly reinforce:
cherish and delight our customers; passionately love
the outdoors; respect each other; celebrate success; act
with honesty and integrity; and continuously improve.
As we accelerate retail store expansion, our focus on
culture becomes even more critical to ensure the results
of the last three years are repeated, and surpassed, in
the years ahead.
In 2011, our nearly 15,000 employees created a record
year for Cabela’s. Total revenue increased 5.6% to an
all-time record $2.8 billion and comparable store sales
increased 2.8%. Merchandise margin marked its
second consecutive year of improvement growing 50
basis points compared to 2010. During the year, we
opened new stores in Allen, Texas; Springfi eld, Oregon;
and Edmonton, Alberta. Additionally, we will open fi ve
new next-generation stores in 2012 in Wichita, Kansas;
Tulalip, Washington; Saskatoon, Saskatchewan; Rogers,
Arkansas; and Charleston, West Virginia. We also plan
to open our fi rst Cabela’s Outpost Store in 2012 in
Union Gap, Washington. We announced plans to test
several of these Outpost Stores, which will be a smaller
store format of approximately 40,000 square feet to
match markets with less than 250,000 people. We also
announced our retail expansion initiative would continue
well into the future, starting with stores in Columbus,
Ohio; Louisville, Kentucky; and Grandville, Michigan; all
scheduled to open in 2013. The decision to accelerate
retail expansion comes from the strong performance of
our next-generation stores opened since 2009 and the
600 basis point improvement in overall Retail segment
profi tability in the last four years.
We also enjoyed improvement in our Cabela’s CLUB
Visa program. Average active accounts increased 7.5%,
and Financial Services revenue as a percentage of
average total credit card loans expanded 140 basis
points to 10.6%. Our CLUB Visa program continues
to be our most powerful loyalty vehicle, generating
for CLUB members more than $150 million in points
for free merchandise in 2011. Our most important
measurement, return on invested capital, increased
to 14.3%, representing the third straight year of
improvement. As a result of rigorous focus on the
balance sheet, we have one of the lowest lease
adjusted debt-to-total-capital ratios in the entire
retail community, thus creating long-term stability for
shareholders, suppliers, and employees.
Letter To Shareholders