Cabela's 2013 Annual Report Download - page 58

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48
Selling, Distribution, and Administrative Expenses
Comparisons and analysis of our selling, distribution, and administrative expenses were as follows for the
years ended:
2012 2011 Increase
(Decrease) %
Change
(Dollars in Thousands)
Selling, distribution, and administrative expenses $1,046,861 $954,125 $92,736 9.7%
SD&A expenses as a percentage of total revenue 33.6% 33.9% (0.3)%
Retail store pre-opening costs $ 12,523 $ 9,700 $ 2,823 29.1
Selling, distribution, and administrative expenses increased $93 million, or 9.7%, in 2012 compared to 2011.
Expressed as a percentage of total revenue, selling, distribution, and administrative expenses decreased 30 basis
points to 33.6% in 2012 compared to 33.9% in 2011. The most significant factors contributing to the changes in
selling, distribution, and administrative expenses in 2012 compared to 2011 included:
• an increase of $59 million in employee compensation, benefits, and contract labor primarily due to the
opening of new retail stores and increases in staff for other retail stores, merchandising support areas,
distribution centers, credit card growth support, and general corporate overhead support;
• an increase of $15 million in building costs and depreciation primarily related to the operations and
maintenance of our new and existing retail stores as well as corporate offices;
• an increase of $11 million in advertising and direct marketing costs, in advertising and promotional costs
to support customer relationships, for new store openings, and from an increase in account origination
costs in our Financial Services segment; and
• an increase of $3 million in equipment and software expense primarily to support operational growth.
Significant selling, distribution, and administrative expense increases and decreases related to specific
business segments included the following:
Retail Segment:
• An increase of $29 million in employee compensation, benefits, and contract labor primarily due to the
opening of new retail stores and increases in staff for other retail stores and merchandising teams.
• An increase of $12 million in building costs primarily related to the operations and maintenance of our
new and existing retail stores.
• An increase of $15 million in advertising and promotional costs related to new and existing retail stores.
Direct Segment:
• A net increase of $3 million in advertising and direct marketing costs primarily due to increases in
Internet related expenses due to our expanded use of digital marketing channels and enhancements to our
website, partially offset by reduced catalog related costs.
• An increase of $1 million in building costs and depreciation primarily related to improvements to our
distribution centers.
• A decrease of $2 million in employee compensation, benefits, and contract labor.
Financial Services Segment:
• An increase of $8 million in employee compensation, benefits, and contract labor principally for
positions added to support the growth of credit card operations.
• A decrease of $7 million in advertising and promotional costs primarily due to the classification of new
account origination costs.
• An increase of $2 million in losses from fraudulent transactions on Cabela’s CLUB Visa cards.