Cabela's 2014 Annual Report Download - page 51

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41
Comparisons and analysis of our selling, distribution, and administrative expenses are presented below for
the years ended:
2014 2013
Increase
(Decrease) % Change
(Dollars in Thousands)
Selling, distribution, and administrative
(“SD&A”) expenses $ 1,251,325 $ 1,201,519 $ 49,806 4.1%
SD&A expenses as a percentage of total revenue 34.3% 33.4% 0.9%
Retail store pre-opening costs $ 24,338 $ 22,405 $ 1,933 8.6
Selling, distribution, and administrative expenses increased $50 million, or 4.1%, in 2014 compared to 2013.
Selling, distribution, and administrative expenses increased primarily due to additional costs from increases in
the number of new stores and costs in related support areas. We are focusing on expense management throughout
the Company and have implemented many expense reduction efforts that have shown benefits in 2014 and should
continue to benefit operating income in upcoming periods.
The most significant factors contributing to the changes in selling, distribution, and administrative expenses
in 2014 compared to 2013 included:
x an increase of $38 million in building costs and depreciation primarily due to additional costs from
increases in the number of new stores and to the operations and maintenance of our existing retail stores
as well as corporate offices;
x a decrease of $22 million in employee compensation, benefits, and contract labor primarily due to a
reduction in incentive compensation and our emphasis on operating expense management;
x an increase of $20 million in advertising and promotional costs as we initiated our promotional activity
earlier in the fourth quarter of 2014 in an effort to increase sales and to address pricing of competitors; and
x an increase of $9 million in bad debt expense due to fraudulent transactions on the Cabela’s CLUB
credit card.
Significant changes in our consolidated selling, distribution, and administrative expenses related to specific
business segments included the following:
Retail Segment:
x An increase of $26 million in building costs and depreciation primarily due to additional costs from
increases in the number of new stores and to the operations and maintenance of our existing retail stores.
x An increase of $24 million in advertising and promotional costs.
x An increase of $14 million in employee compensation, benefits, and contract labor primarily due to the
opening of new retail stores.
Direct Segment:
x A decrease of $20 million in employee compensation, benefits, and contract labor in part related to our
emphasis on operating expense management.
x An increase of $20 million in advertising and promotional costs.
x A decrease of $2 million in building costs and depreciation.
Financial Services Segment:
x An increase of $9 million in bad debt expense due to fraudulent transactions on the Cabela’s CLUB
credit card.
x An increase of $3 million in employee compensation, benefits, and contract labor to support the growth
of credit card operations.
x A decrease of $1 million in advertising and promotional costs.