Cabela's 2013 Annual Report Download - page 49

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39
Interchange income as a percentage of average credit card loans, including any accrued interest and fees,
would have been 9.8% for both 2013 and 2012, and Financial Services revenue as a percentage of average credit
card loans, including any accrued interest and fees, would have been 10.6% and 10.7% for 2013 and 2012,
respectively, excluding the effect of the $3.2 million increase and the $12.5 million decrease in 2013 and 2012,
respectively, to interchange income from the Visa settlement.
Our Cabela’s CLUB Visa credit card loyalty program allows customers to earn points whenever and wherever
they use their credit card, and then redeem earned points for products and services at our retail stores or through
our Direct business. The percentage of our merchandise sold to customers using the Cabela’s CLUB Visa credit
card approximated 30% for 2013. The dollar amounts related to points are accrued as earned by the cardholder and
recorded as a reduction in Financial Services revenue. The dollar amount of unredeemed credit card points and
loyalty points was $146 million at the end of 2013 compared to $128 million at the end of 2012.
Key statistics reflecting the performance of Cabela’s CLUB are shown in the following chart for the
years ended:
2013 2012 Increase
(Decrease) % Change
(Dollars in Thousands Except Average Balance per Account)
Average balance of credit card loans (1) $ 3,500,536 $ 3,095,781 $ 404,755 13.1%
Average number of active credit card accounts 1,688,843 1,537,209 151,634 9.9
Average balance per active credit card account (1) $ 2,073 $ 2,014 $ 59 2.9
Net charge-offs on credit card loans (1) $ 63,152 $ 57,803 $ 5,349 9.3
Net charge-offs as a percentage of average credit
card loans (1) 1.80% 1.87% (0.07)%
(1) Includes accrued interest and fees.
The average balance of credit card loans increased to $3.5 billion, or 13.1%, for 2013 compared to 2012 due to
an increase in the number of active accounts and the average balance per account. We define an active credit card
account as any account with an outstanding debit or credit balance at the end of any respective month. The average
number of active accounts increased to 1.7 million, or 9.9%, compared to 2012 due to our successful marketing
efforts in new account acquisitions. Net charge-offs as a percentage of average credit card loans decreased to 1.80%
for 2013, down seven basis points compared to 2012, due to improvements in bankruptcies, delinquencies, and
delinquency roll rates, partially offset by a decrease in recoveries. See “Asset Quality of Cabela’s CLUB” in this
report for additional information on trends in delinquencies and non-accrual loans and analysis of our allowance
for loan losses.
Other Revenue
Other revenue increased $4 million in 2013 to $17 million compared to 2012 primarily due to an increase in
real estate sales revenue in 2013 compared to 2012.
Merchandise Gross Profit
Merchandise gross profit is defined as merchandise sales less the costs of related merchandise sold and
shipping costs. Comparisons of gross profit and gross profit as a percentage of revenue for our operations, year
over year, and to the retail industry in general, are impacted by:
• shifts in customer preferences;
• retail store, distribution, and warehousing costs (including depreciation and amortization), which we
exclude from our cost of revenue;