Cabela’s Inc. (CAB) recently announced plans to open an 80,000-square-foot store at Regency Lakes Shopping Center in Wichita, Kansas, the home of big retailers such as Super Target and World Market stores as well as Hampton Inn & Suites.
The construction work is scheduled to commence in late July 2011, and is slated to be operational in early spring of 2012. This marks the second retail store of Cabela’s in Kansas, which is celebrating its 50th anniversary this year.
Cabela’s, a leading specialty retailer and direct marketer of hunting, fishing, camping, and related outdoor merchandise, plans to open stores in Allen, Texas; Springfield, Oregon; and Edmonton, Canada. The company hinted at its plans of opening another store in Canada in 2012.
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 achieve the targeted long-term return on invested capital of 12% to 14% through its next generation store format.
The new store model of standard sizes requires less capital investment, enhances store productivity and helps increase sales per square foot.
Cabela’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, which faces competition from Tractor Supply Company (TSCO), now aims to increase the merchandise gross margin by 200 to 300 basis points by the end of 2012. The company expects earnings to meet or beat consensus for fiscal 2010, and increase at a double-digit rate for 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 a lowering of delinquencies and a decline in charge-offs but we still remain cautious and maintain a Neutral rating.
However, Cabela’s holds a Zacks #2 Rank, which translates into a short-term ‘Buy’ recommendation.
CABELAS INC (CAB): Free Stock Analysis Report
TRACTOR SUPPLY (TSCO): Free Stock Analysis Report
Zacks Investment Research
