On the heels of a disappointing financial quarter, the CEO of outdoor retailer Cabela’s says the company plans to stick to opening smaller-format stores.
Cabela's missed the target Wall Street set for profit and revenue during the second quarter of fiscal 2015.Cabela’s reported net income of $40.5 million, down 8% from $43.5 million the same quarter the prior year.
“Our new format stores continue to significantly outperform our legacy stores in sales and profit per square foot,” CEO Tommy Millner said. “During the second quarter, we opened five new stores, and we plan to open four stores in the third quarter and two stores in the fourth quarter. We are confident that these new format stores will drive improvements in profitability and return on invested capital.”
Growing cost of revenue helped drive down profit. Total revenue grew 10% to $836.28 million, from $761.2 million. Consolidated same-store sales dropped 0.9% due to Canadian currency fluctuations, although same-store sales in the U.S. increased 0.8%.
Cabela’s plans to open four stores in the third quarter of fiscal 2015 and two stores in the fourth quarter. In addition, Cabela’s expects construction on an 82,000-sq.-ft. store in Summerville, South Carolina to begin in 2015, and anticipates a fall 2016 opening. It will be the third Cabela’s store in South Carolina and will employ approximately 175 full-time, part-time and seasonal employees. The store, developed by MeadWestvaco, will be built in the company’s new-format layout, designed to offer customers an immersive outdoor experience.
“While our second quarter results fell short of expectations, we are encouraged by several positive trends in our business, including our fifth consecutive quarter of sequential improvement in U.S. same-store sales,” said Tommy Millner, Cabela’s CEO.