After the Winnipeg, Manitoba store and the upcoming Edmonton, Alberta store, Cabela’s Inc. (CAB) recently announced the opening of its third store in Saskatoon, Canada and plans to hire more than 100 people for the store.
Cabela’s is all set to entice the residents of Saskatoon, Saskatchewan and its surrounding area by offering them its commendable and renowned customer service coupled with an array of products, such as hunting, camping, boating and wildlife-watching gear and outdoor clothing and gifts and furnishings.
The construction for its 50,000-square-foot store is expected to commence in July 2011. The company is celebrating its 50th anniversary this year and plans to open stores in Allen, Texas and Springfield, Oregon.
Boasting a healthy balance sheet, viable strategy and improving operating efficiencies, Cabela’s, offers investors one of the strongest growth profiles in the specialty retail industry. The company remains on course to surpass the high-end of the targeted long-term return on invested capital of 12%–14% through its next generation store format.
The new store model of standard sizes requires less capital investment, enhances store productivity and helps to increase sales per square foot.
The company’s multi-channel model facilitates consumers to purchase directly from retail stores or order products through catalog and Internet channels, and have them delivered to the retail store of their choice without incurring shipping costs. This multi-channel approach gives the company an advantage over its competitors.
Cabela’s in order to focus on improving store operations owing to strained macroeconomic conditions, has slowed the pace of store expansion. The company opened eight retail stores in fiscal 2007, two in 2008, and one each in 2009 and 2010. However, with the gradual recovery in the economy, the company now plans to open 3 retail stores in 2011.
The company is also concentrating on alleviating its bad debt risk in the credit card business. Although, the improvement in the economy has led to lowering of delinquencies and a decline in charge-offs, we continue to remain cautious and maintain our long-term ‘Neutral’ rating on the stock.
Moreover, Cabela’s, which faces competition from Tractor Supply Company (TSCO), holds a Zacks #3 Rank, that translates into a short-term ‘Hold’ rating, and correlates with our long-term view.
CABELAS INC (CAB): Free Stock Analysis Report
TRACTOR SUPPLY (TSCO): Free Stock Analysis Report
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