One year ago, outdoor supply firm Cabela’s sales of firearms and ammunitions received such a boost that the company noted the phenomenon in its earnings. Turns out this wasn’t a short-lived phenomenon: “As we anniversary the strong sales of firearms and ammunition, we have been pleased that sales declines in these categories have been less than expected,” said Tommy Millner, Cabela’s CEO, during an earnings conference call.
On the direct side, a $10 million investment in the Cabela’s Web site is close to paying off. The company has spent a year and a half redesigning its e-commerce operations. When launched later this summer, the new site will offer improved navigation tools, enhanced product presentation and graphics, international commerce capabilities, and better e-commerce functionality.
The focus on direct is already paying off: The company’s direct operations pulled in $222.7 million during first-quarter 2010, a slight dip from the $225.4 million it recorded during first-quarter 2009. But the results from a year ago included contributions from Cabela’s taxidermy and Wild Wings businesses, which contributed $7 million in revenue during first-quarter 2009. Excluding their contribution, direct sales rose 2.1% from a year ago.
The company is also moving toward newer, smaller “event-driven” catalogs which are designed to drive Web site traffic. It retired three titles, replacing them with slimmer offerings. “We were able to reduce the number of catalog pages mailed, but increased total circulation, leading to continued improvements in direct marketing costs,” Millner added.
Improvements, indeed: The page count reduction resulted in a $3 million savings, according to the company’s quarterly filing. As a result, direct marketing costs made up 12.6% of direct revenue during its most recent quarter, compared with 13.8% of revenue a year ago. Acquisition activity rose 16%, but average order ticket slipped by 1.3%, according to Millner. In comparison, Cabela’s average retail sales ticket rose by 4.9%.
Retail sales during the quarter amounted to $271.3 million, down from $275.5 million in first-quarter 2009. Merchandise revenue dipped from $500.9 million a year ago to $494 million. Total revenue for the quarter, which includes financial services’ contribution, was $559.6 million, compared with $539.5 million. The company’s net income rose from $5.1 million to $8.1 million.
