Cabela's 2012 Annual Report Download - page 26

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Our failure to successfully manage our Direct business could have a material adverse effect on our
operating results and cash flows.
During 2012, our Direct business accounted for 33.5% of the total revenue in our Retail and Direct
businesses. Our Direct business is subject to a number of risks and uncertainties, some of which are beyond our
control, including:
• our inability to properly adjust the fixed costs of a catalog mailing to reflect subsequent sales of the
products marketed in the catalog;
• lower and less predictable response rates for catalogs sent to prospective customers;
• increases in United States Postal Service rates, paper costs, and printing costs resulting in higher catalog
production costs and lower profits for our Direct business;
• failures to properly design, print, and mail our catalogs in a timely manner;
• failures to introduce new catalog titles;
• failures to timely fill customer orders;
• changes in consumer preferences, willingness to purchase goods through catalogs or the Internet, weak
economic conditions and economic uncertainty, and unseasonal weather in key geographic markets;
• increases in software filters that may inhibit our ability to market our products through e-mail messages
to our customers and increases in consumer privacy concerns relating to the Internet;
• supply and delivery shortages or interruptions, including reduced service levels from the United States
Postal Service;
• changes in applicable federal and state regulation;
• breaches of Internet security; and
• failures in our Internet infrastructure or the failure of systems of third parties, such as telephone or
electric power service, resulting in website downtime, customer care center closures, or other problems.
Any one or more of these factors could result in lower-than-expected revenue for our Direct business. These
factors could also result in increased costs, increased merchandise returns, slower turning inventories, inventory
write-downs, and working capital constraints. Because our Direct business accounts for a significant portion of our
total revenue, any performance shortcomings experienced by our Direct business could have a material adverse
effect on our operating results and cash flows.
Any disruption of the supply of products and services from our vendors could have an adverse impact
on our revenue and profitability.
Our vendors and the products and services they provide include the following:
• vendors to supply our merchandise in sufficient quantities at competitive prices in a timely manner;
• outside printers and catalog production vendors to print and mail our catalogs and to convert our catalogs
to digital format for website posting;
• shipping companies, such as United Parcel Service, the United States Postal Service, and common
carriers, for timely delivery of our catalogs, shipment of merchandise to our customers, and delivery of
merchandise from our vendors to us and from our distribution centers to our retail stores;
• telephone companies to provide telephone service to our in-house customer care centers;
• communications providers to provide our Internet users with access to our website and a website hosting
service provider to host and manage our website;
• software providers to provide software and related services to run our operating systems for our Retail
and Direct businesses; and
• third-party card processors, such as First Data Resources, to provide processing for Cabela’s CLUB
Visa transactions.
We cannot predict when, or the extent to which, we will experience any disruption in the supply of products
and services from our vendors. Any such disruption could have an adverse impact on our revenue and profitability.