Cabela's 2014 Annual Report Download - page 53

Download and view the complete annual report

Please find page 53 of the 2014 Cabela's annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 132

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132

43
was recognized in the three months ended March 29, 2014. This increase in depreciation expense was included in
selling, distribution, and administrative expenses in the consolidated statements of income and was recognized in
the Retail segment. There was no additional depreciation expense adjustment recognized after March 29, 2014. At
December 27, 2014, this liability totaled $16 million. Refer to Note 14 “Impairment and Restructuring Charges” of
the Notes to Consolidated Financial Statements for additional information regarding this matter.
We recognized an impairment loss totaling $1 million in 2013 related to the store closure of our former
Winnipeg, Manitoba, Canada, retail site. The impairment loss of $1 million included leasehold improvement
write-offs as well as lease cancellation and restoration costs. This impairment loss was recognized in the Retail and
the Corporate Overhead and Other segments.
Local economic trends, government regulations, and other restrictions where we own properties may impact
management projections that could change undiscounted cash flows in future periods which could trigger possible
future write downs.
Operating Income
Operating income is revenue less cost of revenue; selling, distribution, and administrative expenses; and
impairment and restructuring charges. Operating income for our merchandise business segments excludes costs
associated with operating expenses of distribution centers, procurement activities, and other corporate overhead costs.
Comparisons and analysis of operating income are presented below for the years ended:
2014 2013
Increase
(Decrease) % Change
(Dollars in Thousands)
Total operating income $ 335,395 $ 361,361 $ (25,966) (7.2)%
Total operating income as a percentage of total revenue 9.2% 10.0% (0.8)%
Operating income by business segment:
Retail $ 417,655 $ 428,361 $ (10,706) (2.5)
Direct 112,717 157,227 (44,510) (28.3)
Financial Services 111,650 104,402 7,248 6.9
Operating income as a percentage of segment revenue:
Retail 17.8% 19.2% (1.4)%
Direct 13.2 16.1 (2.9)
Financial Services 26.9 27.8 (0.9)
Operating income decreased $26 million, or 7.2%, in 2014 compared to 2013, and operating income as a
percentage of revenue decreased 80 basis points to 9.2% for 2014. The decreases in total operating income and
total operating income as a percentage of total revenue were primarily due to an increase in selling, distribution,
and administrative expenses, a decrease in revenue from our Direct business segment, and a decrease in our
merchandise gross profit. These decreases to operating income were partially offset by increased operating income
contributions from our Financial Services segment. Selling, distribution, and administrative expenses increased in
2014 compared to 2013 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 should continue to benefit operating income in upcoming periods. We plan to
continue our retail expansion, our omni-channel initiatives, and our Cabela’s branded product investments as we
focus on expense management and emphasize corporate frugality.