Revenue up, income down for quarter at Cabela’s
Cabela’s Incorporated on Thursday reported financial results for the second quarter fiscal 2016.
For the quarter, total revenue increased 11.2 percent to $929.9 million; revenue from retail store sales increased 13.3 percent to $644.9 million; Internet and catalog sales increased 3.3 percent to $141.3 million; and Financial Services revenue increased 8.1 percent to $135.1 million. During the period, adjusted for the shift in weeks, U.S. comparable store sales increased 2.0 percent and consolidated comparable store sales increased 1.5 percent.
For the quarter, net income decreased 5.7 percent to $37.8 million compared to $40.1 million in the year ago quarter, and earnings per diluted share were $0.55 compared to $0.56 in the year ago quarter. Adjusted for certain items, the Company reported second quarter net income of $40.8 million and earnings per diluted share of $0.59 as compared to net income of $40.1 million and earnings per diluted share of $0.56 in the year ago quarter. Second quarter 2016 GAAP results included impairment and restructuring charges and other items totaling $0.04 in earnings per diluted share.
“Success in our expense management efforts allowed us to take a more aggressive price and promotion approach in the second quarter,” said Tommy Millner, Cabela’s CEO. “This approach led to improvements in transaction trends, positive comparable store sales, growth in Internet and catalog sales, and market share improvements. As we look to the balance of the year, we will continue to weigh opportunities to drive revenue through the utilization of our expense initiative savings.”
For the quarter, consolidated comparable store sales increased 1.5 percent and U.S. comparable store sales increased 2.0 percent as compared to the same quarter a year ago. This marks the first quarter of positive comparable store sales since the third quarter of 2013. This increase was attributable to strength in firearms and shooting related categories as well as the camping, powersports, and fishing categories. Internet and catalog sales increased 3.3 percent in the quarter as a result of strength in the aforementioned categories as well as the home/gifts and hunting apparel categories.
Merchandise gross margins decreased by 290 basis points in the quarter to 32.9 percent compared to 35.8 percent in the same quarter a year ago. This decrease was the result of a purposeful plan to right size inventory levels, improve transaction trends, drive positive comparable store sales, and generate positive Internet and catalog sales, all of which occurred in the quarter, the company said.
“Our expense and process improvement activities have exceeded our expectations,” Millner said. “It is important to note that the second quarter marks the third consecutive quarter of expense leverage at Cabela’s and the rate is accelerating. We have not only lowered our expense levels, but have also implemented process improvement activities to ensure that these savings are permanent. We are in the early stage of many of these initiatives and expect ongoing benefit in the balance of 2016 and beyond.”
In December 2015, Cabela’s announced that its board of directors was initiating a process to explore and evaluate a wide range of strategic alternatives to enhance value for the Company’s shareholders. That process has continued and is ongoing, the company said Thursday.
