Cabela's 2013 Annual Report Download - page 50

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40
• royalty fees we include in merchandise sales for which there are no costs of revenue;
• Financial Services revenue we include in revenue for which there are no costs of revenue;
• real estate land sales we include in revenue for which costs vary by transaction;
• customer service related revenue we include in revenue for which there are no costs of revenue; and
• customer shipping charges in revenue.
Comparisons and analysis of our gross profit on merchandising revenue are presented below for the
years ended:
2013 2012 Increase
(Decrease) % Change
(Dollars in Thousands)
Merchandise sales $ 3,205,632 $ 2,778,903 $ 426,729 15.4%
Merchandise gross profit 1,178,440 1,009,742 168,698 16.7
Merchandise gross profit as a percentage of
merchandise sales 36.8% 36.3% 0.5%
Merchandise Gross Profit – Our merchandise gross profit increased $169 million, or 16.7%, to $1.2 billion
in 2013 compared to 2012. The increase in our merchandise gross profit was primarily due to firearms and
ammunition, as well as continued improvements in vendor collaboration, an increase in private label products, and
further advancements in price optimization. Ammunition sales, while still above prior year levels, slowed during
the third quarter of 2013 and decreased during the fourth quarter of 2013 compared to the fourth quarter of 2012.
Our merchandise gross profit as a percentage of merchandise sales increased to 36.8% in 2013 from 36.3%
in 2012. The increase in the merchandise gross profit as a percentage of merchandise sales in 2013 compared to
2012 was primarily due to the elimination of free shipping to Cabela’s CLUB members, increased penetration
of Cabela’s brand merchandise, fewer sales discounts and markdowns, and higher margins in a our soft goods
category. The increase in our merchandise gross profit as a percentage of merchandise sales was enhanced by the
shift from firearms and ammunition to our soft goods categories, and was partially offset by the overall increase in
sales of firearms and ammunition year over year, which carry a lower margin.
Selling, Distribution, and Administrative Expenses
Selling, distribution, and administrative expenses include all operating expenses related to our retail stores,
website, distribution centers, product procurement, Cabela’s CLUB credit card operations, and overhead costs,
including: advertising and marketing, catalog costs, employee compensation and benefits, occupancy costs,
information systems processing, and depreciation and amortization.
Comparisons and analysis of our selling, distribution, and administrative expenses are presented below for
the years ended:
2013 2012 Increase
(Decrease) % Change
(Dollars in Thousands)
Selling, distribution, and administrative expenses $ 1,201,519 $ 1,046,861 $ 154,658 14.8%
SD&A expenses as a percentage of total revenue 33.4% 33.6% (0.2)%
Retail store pre-opening costs $ 22,405 $ 12,523 $ 9,882 78.9%