No animals harmed in this filming
Amazingly CAB has only 50 stores (4 in Canada) and plans to open their first stores in the South-East this year, see chart of stores below. CAB's estimate that they can grow to 225 stores with 14 new stores opening every year adding around 1 million square feet. These stores will be smaller than current stores but will provide for a better return on investment.
By the way we own a bank
CAB also owns a bank and issues its own general purpose credit card which is amazingly the 13th largest in the US by purchase volume ahead of such names such as Target. 97% is spent outside of CAB but this suggests strong loyalty as the more customers spend on the card the more points they generate to receive free merchandise. CAB awarded their customers nearly $200 million of freebies in 2012. Charge offs are also a lot lower than industry averages at 1.87% in 2012 this compares to AMEX at 2.1%. During the financial crisis credit card charge off rates were only 5.5-6% when peers were reporting 15%. Around 30% of CAB sales come from their credit card.
A retailer with its own computer game and credit card this retailer definitely has game.
As an investor this is important as it means the brand has authenticity with its customers. It is even more important in a world of show rooming where customers go and try on clothing and then buy it cheaper online. CAB is well protected as 33% of what it sells is its own branding. The percentage as a total of overall is even higher as it does not sell its own branded weapons though it does sell some ammunition.
Like Australia's BCF but with hunting and guns
45% of sales are hunting equipment this includes guns and ammunition. Sales spiked at the end of 2012 due to the re-election of Obama and concerns that he would push through stricter gun laws. This has not yet occurred but it has proven to be a boon for CAB sales. Apparently more than 2.7 million criminal checks on prospective gun buyers was carried out in December for a total of 19 million background checks in 2012. Apparently sales could have been even higher if there was adequate supply. CAB will have tough comps for the next two quarters see chart below as consumers stockpiled weapons.
Amazingly CAB has only 50 stores (4 in Canada) and plans to open their first stores in the South-East this year, see chart of stores below. CAB's estimate that they can grow to 225 stores with 14 new stores opening every year adding around 1 million square feet. These stores will be smaller than current stores but will provide for a better return on investment.
By the way we own a bank
CAB also owns a bank and issues its own general purpose credit card which is amazingly the 13th largest in the US by purchase volume ahead of such names such as Target. 97% is spent outside of CAB but this suggests strong loyalty as the more customers spend on the card the more points they generate to receive free merchandise. CAB awarded their customers nearly $200 million of freebies in 2012. Charge offs are also a lot lower than industry averages at 1.87% in 2012 this compares to AMEX at 2.1%. During the financial crisis credit card charge off rates were only 5.5-6% when peers were reporting 15%. Around 30% of CAB sales come from their credit card.
A retailer with its own computer game and credit card this retailer definitely has game.
Jason
Disclosure: Decisive does not own a position in Cabela's (CAB) stock
The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.
