Cabela’s Inc. announces Q4 2014 financial results

SIDNEY, Neb. – Cabela’s Incorporated (NYSE:CAB) today reported financial results for fourth quarter fiscal 2014.

For the quarter, total revenue increased 7.2 percent to $1.3 billion; Retail store revenue increased 13.9 percent to $810.6 million; Direct revenue decreased 5.4 percent to $349.9 million; and Financial Services revenue increased 9.9 percent to $113.3 million. During the period, comparable store sales decreased 5.5 percent.

For the quarter, adjusted for certain items, net income decreased 16.4 percent to $79.3 million compared to $94.7 million in the year ago quarter, and earnings per diluted share were $1.11 compared to $1.32 in the year ago quarter. The company reported GAAP net income of $78.6 million and earnings per diluted share of $1.10 as compared to GAAP net income of $80.1 million and earnings per diluted share of $1.12 in the year ago quarter. Fourth quarter 2014 GAAP results included incremental expenses related to the relocation of our distribution center in Winnipeg, Manitoba, Canada, of $0.01 per diluted share. Fourth quarter 2013 GAAP results included provisions for interest and taxes related to an increase in tax reserves of $0.16 per diluted share and an impairment loss of $0.04 per diluted share related to a retail store site. See the supporting schedules to this earnings release labeled “Reconciliation of GAAP Reported to Non-GAAP Adjusted Financial Measures” for a reconciliation of the GAAP to non-GAAP financial measures.

For fiscal 2014, net income was $207.1 million compared to $238.3 million last year, and earnings per diluted share were $2.88 compared to $3.32 a year ago, each adjusted for certain items. The company reported GAAP net income of $201.7 million and earnings per diluted share of $2.81 as compared to GAAP net income of $224.4 million and earnings per diluted share of $3.13 a year ago. Fiscal 2014 GAAP results included provisions for interest and taxes related to an increase in tax reserves of $0.05 per diluted share and incremental expenses related to the relocation of our distribution center in Winnipeg, Manitoba, Canada, of $0.02 per diluted share. Fiscal 2013 GAAP results included adjustments to the Visa antitrust settlement liability resulting in a $0.03 per diluted share benefit, impairment and expense adjustments primarily related to two retail locations of $0.06 per diluted share, and provisions for interest and taxes related to an increase in tax reserves of $0.16 per diluted share. See the supporting schedules to this earnings release labeled “Reconciliation of GAAP Reported to Non-GAAP Adjusted Financial Measures” for a reconciliation of the GAAP to non-GAAP financial measures.

“For the quarter, we experienced growth in merchandise sales, solid performance from Cabela’s CLUB, ongoing strong performance from our next generation stores, and normalization of firearm and ammunition sales,” said Tommy Millner, Cabela’s CEO. “To achieve these results, we invested more in advertising and promotional spending than we had originally planned. This led to lower merchandise margins and earnings per share, but resulted in measurable market share gains. We are encouraged that comparable store sales thus far in 2015 have improved.”

During the quarter, merchandise gross margin decreased 150 basis points to 35.1 percent from 36.6 percent in the same quarter a year ago. The decrease in margin was primarily attributable to more aggressive discounting. Additionally, approximately 50 basis points of the decrease was due to the previously announced adjustment in the presentation of reimbursement between segments. As a reminder, this new presentation, initiated in the second quarter, will be ongoing and has no impact on consolidated operating income or earnings per diluted share. See the “Selected Financial Data” table for a more detailed explanation of this adjustment.

“For fiscal 2014, our 18 next generation stores opened for the full period averaged sales per square foot of $449 compared to sales per square foot of $313 in our legacy stores or 43 percent better performance,” Millner said. “Similarly, for the same period, our next generation stores averaged profit per square foot that was 59 percent better than our legacy stores. With this strong new store performance, we look forward to continuing our retail store expansion and are excited to begin opening our slate of 2015 stores in March.”