Cabela’s Incorporated reported financial results for the second quarter fiscal 2017.
For the quarter, on a GAAP basis, total revenue decreased 4.2 percent to $890.4 million, revenue from retail store sales decreased 6.7 percent to $601.7 million, internet and catalog sales decreased 3.9 percent to $135.7 million, and financial services revenue increased 9.0 percent to $147.2 million. For the quarter, comparable store sales decreased 9.3 percent.
For the quarter, net income decreased 24.9 percent to $28.3 million compared to $37.8 million in the year ago quarter, and earnings per diluted share were $0.41 compared to $0.55 in the year ago quarter. Adjusted for certain items, the company reported second quarter net income of $36.7 million and earnings per diluted share of $0.53 as compared to net income of $40.8 million and earnings per diluted share of $0.59 in the year ago quarter. Second quarter 2017 GAAP results included impairment and restructuring charges and other items totaling a $0.12 reduction in earnings per diluted share.
“Merchandise sales were challenging in the second quarter,” said Tommy Millner, Cabela’s chief executive officer. “Since the fall election, we have continued to see a slowdown in firearms and shooting related categories. This slowdown was even more pronounced in the second quarter due to the impact of inventory liquidation by a major competitor who has filed for bankruptcy as well as the anniversary of a number of events from a year ago, including the Orlando tragedy in June of 2016. Additionally, similar to broader retail industry trends, we continued to experience softness in most hunting related categories.”
For the quarter, consolidated comparable store sales decreased 9.3 percent and U.S. comparable store sales decreased 9.7 percent as compared to the same quarter a year ago. Firearms and shooting related products were responsible for nearly half of the overall comparable store sales decline.
Merchandise gross margin decreased by 20 basis points in the quarter to 32.7 percent compared to 32.9 percent in the same quarter a year ago. The small decrease was attributable to an increase in sales discounts and promotional activity.
For the quarter, growth in the average number of active credit card accounts for the Cabela’s CLUB Visa program was 1.6 percent and growth in average balance per active credit card account was 7.5 percent as compared to the same period a year ago. The average balance of credit card loans grew 9.2 percent to approximately $5.4 billion as compared to $5.0 billion in the year ago quarter. For the quarter, net charge-offs were 3.12 percent. Second quarter financial services revenue increased 9.0 percent over the year ago quarter. This increase was primarily driven by increases in interest and fee income, which was largely offset by increases in the provision for loan losses as well as interest expense.
“We are continuing to execute on initiatives that will lead to future revenue growth,” Millner said. “We are increasing our SKU count in high value lifetime guarantee products, increasing our drop ship assortments, reducing lead times for Cabela’s branded product, improving our firearms sales program, optimizing our Internet user experience and improving our selling culture in all channels. At the same time, we are continuing our focus on expense reductions by reviewing all business process, including indirect procurement and cost of goods sold.”
Cabela’s will not host a conference call with analysts and investors or provide guidance in connection with the results and does not plan to do so for future quarters while the acquisition of the company by Bass Pro Shops is pending.