Cabela's 2011 Annual Report Download - page 43

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33
Canada; and our first Outpost store in Union Gap, Washington, increasing our retail square footage
approximately 10%. We have also announced plans to open next-generation stores in 2013 in Columbus,
Ohio; Grandville, Michigan; and Louisville, Kentucky. Looking to 2013, we expect to increase retail
square footage 11% to 13% with the opening of next-generation and Outpost stores.
• Direct Business Initiatives: 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. In addition,
we launched a Facebook shopping outlet to support our growing customer fan base, which is now over
1.4 million fans.
We expanded our mobile and social marketing initiatives by recently launching new mobile technology
enhancements that include a fully-integrated mobile site that displays our entire inventory assortment,
which will improve the customers’ portable shopping experience. We have seen early successes in our
mobile and social marketing and we will continue to utilize best-in-class technology to improve our
customers’ digital shopping experience and build on the advances we have already made in digital
marketing to capitalize on the ways our customers shop.
Our Direct revenue decreased $43 million, or 4.3%, in 2011 compared to 2010. We divested our non-core
home restoration products business in October 2010. For comparative purposes, Direct revenue in 2011
compared to 2010, adjusted for the effect of this divestiture, decreased $29 million, or 3.0%. The decrease
in Direct revenue comparing 2011 to 2010 was due to expected declines in ammunition and shooting
products, and due to decreases in the clothing and footwear, fishing and marine, and camping categories.
Operating income for our Direct business segment increased $16 million to $172 million in 2011
compared to $156 million in 2010. Operating income as a percentage of Direct business segment revenue
increased to 18.0% in 2011, up 240 basis points compared to 2010, due to an increase of $22 million in the
marketing fee received from the Financial Services segment.
We intend to leverage our knowledge on the ways that customers gather information, shop, and buy
merchandise. We will improve the quality of our multi-channel marketing themes and related advertising
and online events to leverage the Cabela’s reputation as the world-class outfitter; utilize best-in-class
technology to improve our customers’ digital shopping experience; optimize management of our
inventory to ensure the availability of a desired product; and build on advances we have made in digital
marketing and shopping to capitalize on the ways our customers shop, gather information, and buy
products and services.
• Growth of World’s Foremost Bank: Our goal is to continue to attract new cardholders through our
Retail and Direct businesses and increase the amount of merchandise or services customers purchase
with their CLUB Visa cards while maintaining the profitability of World’s Foremost Bank (“WFB”)
and preserving customer loyalty by creating marketing plans, promoting additional products, delivering
exclusive outdoor events and experiences, and expanding our partnership programs to best serve our
customers’ needs and give us brand exposure.
WFB continues to manage credit card delinquencies and charge-offs below industry average by adhering
to our conservative underwriting criteria and active account management. We added new credit
cardholders as the number of average active accounts increased 7.5% to 1.4 million compared to 2010.
Financial Services revenue increased $64 million, or 28.1%, in 2011 compared to 2010 primarily due to
an increase in interchange income, lower loan losses and interest expense, and growth in the number