The growth in economy is not yet stable, the job market still looks relatively sluggish, and companies are lowering their headcounts in the name of restructuring. In such a scenario, Cabela’s Inc. (CAB) announcement of hiring of 250 employees came as a relief in an economy, which is desperately looking for a push. Although it is true that job creation for 250 people is not enough, it is also a known fact that something is better than nothing.
Cabela’s, one of the leading specialty retailers and direct marketers of hunting, fishing, camping, and related outdoor merchandise, will add headcount at its Charlestonstore, which it will open this summer, Associated Press reported. This is the second store the company will open in West Virginia. Earlier, it had opened a store in Wheelingin 2004.
Cabela’s had earlier, unveiled a new ‘Outpost’ store format spanning 40,000 square feet, which will adopt a “core-flex” merchandise strategy (selected core assortment of products and flexible seasonal merchandise) to target the under-penetrated markets.
The company also expects to accelerate its retail square footage growth plans by opening 5 next-generation stores (4 in the U.S. and 1 in Canada) during fiscal 2012, along with its first ‘Outpost’ store, in Union Gap, Washington, thereby, increasing its retail square footage by approximately 10%.
In fiscal 2013, the company expects to open six next-generation stores in the U.S.and three additional Outpost stores, which will result in retail square footage growth of 11% to 13%. During fiscal 2011, the company opened 3 next-generation stores (2 in the U.S.and 1 in Canada).
Cabela’s next-generation store format, multi-channel strategy and seasonal product assortments enable it to focus on increasing stores’ productivity and sales per square foot while lowering its labor costs.
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 remains confident about its improving balance sheet with the long-term return on invested capital expected to range from 12% to 14%. The new store model of standard sizes requires less capital investment and enhances store productivity.
We currently have an “Outperform” recommendation on the stock. Moreover, Cabela’s, which competes with Wal-Mart Stores Inc. (WMT) and Target Corporation (TGT), holds a Zacks #1 Rank that translates into a short-term ‘Strong Buy’ rating, and well defines the company’s sturdy balance sheet, feasible strategy and operating efficiencies.
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