For the quarter, retail store revenue increased 10.2% to $301.6 million led by a 6.1% increase in comparable store sales; direct revenue decreased 3.6% to $199.5 million as the Company reduced direct marketing costs 10.1% resulting in increased revenue per catalog page; and financial services revenue increased 15.4% to $44.1 million. Total revenue for the second quarter of 2009 increased 4.4% to $549.2 million compared to $526.0 million for the second quarter of 2008.

Net income for the second quarter of 2009 was $9.1 million, or $0.14 per diluted share, compared to $7.3 million, or $0.11 per diluted share, in the second quarter of 2008.

"We are very pleased to post another solid quarter," said Tommy Millner, Cabela's Chief Executive Officer. "Our 6.1% increase in comparable store sales, driven by strength in hunting equipment, represents our third consecutive quarter of positive gains. We continue to gain momentum in the hunting equipment category, as we take market share from our competitors and leverage our multi-channel model to provide our customers with a great value proposition."

Merchandise gross margin improved 62 basis points in the quarter. These improvements were realized across virtually all of the Company's product categories as a result of lower promotional costs, reduced transportation costs and reduced discounts and markdowns, all of which more than offset the mix shift to lower margin hard goods.

Additionally, the Company continues to reduce costs and improve operating efficiencies. Operating margin in the Company's retail segment increased 310 basis points as the Company reduced labor expense in its retail stores and increased productivity of its marketing materials. In the Company's direct segment, operating margin improved 360 basis points due to higher gross margin and increased revenue per catalog page.

"Our efforts to improve merchandise margins and operating efficiencies led to higher operating margin in both our direct and retail segments," Millner said. "Improved inventory levels led to reduced costs and fewer discounts and markdowns which helped increase merchandise margins, while our employees' hard work and extra efforts in controlling costs and improving operating efficiencies in all areas of our business helped improve operating margins."

Included in the quarter are two non-cash items that impacted the Company's reported financial results. The first is a non-cash charge related to the write down of excess real estate, and the second is a non-cash increase in the valuation of the Company's retained interest in securitized assets.

"As I shared with you last quarter, part of our strategy is to control costs, generate cash and improve return on invested capital," Millner said. "As a part of this strategy we performed a thorough review of all the land we own for future store locations to determine the future potential of these sites. We have completed this review and have made the decision not to build a store in Greenwood, Indiana. As a result of this decision, we recorded a pre-tax non-cash impairment charge of $11.7 million related to the write-down of excess land. This charge reduced earnings by $0.11 per diluted share in the quarter. "

Additionally, the Company's wholly-owned subsidiary, World's Foremost Bank, recently completed a competitive pricing analysis of its credit card portfolio and has made the decision to re-price the portfolio based on this analysis and changing market conditions. These pricing changes are expected to take effect in the third quarter. As a result, the valuation of the Company's interest-only strip associated with its securitized credit card receivables increased by $8.5 million in the quarter, which increased earnings by $0.08 per diluted share in the quarter.

The Company ended the quarter with total debt outstanding of $490 million as compared to $634 million at the end of the second quarter of 2008. In addition, the Company continued to tightly manage inventory as inventory decreased $44 million to $587 million as compared to $631 million at the end of the second quarter of 2008.

Due to ongoing efforts to control costs and tightly manage the balance sheet, cash flow used in operations improved significantly for the year to date period. For the six months ending June 27, 2009, cash flows used in operations were $47 million as compared to $143 million in the same period a year ago. Capital expenditures during the quarter were $10.0 million. The Company continues to expect capital expenditures for the year to be $40-50 million.

"As we look ahead into the third quarter, we are even more encouraged by the favorable trends in our retail and direct segments and our ability to tightly manage costs," Millner said. "For the full year, we now expect total revenue growth and comparable store sales to increase at a low single digit percentage rate as compared to our previous forecast for total revenue growth and comparable store sales to be approximately flat. We continue to expect direct revenue to decline at a low to mid-single digit rate and net charge-offs at World's Foremost Bank to be between 5.1% and 5.5% for the full year. While we continue to expect full year earnings per diluted share to be roughly equal with 2008, should the momentum we realized in the first half of the year continue into the second half, earnings per diluted share could exceed 2008 levels."

Conference Call Information

A conference call to discuss second quarter fiscal 2009 operating results is scheduled for today (Thursday, July 30) at 11:00 a.m. Eastern Time. A webcast of the call will take place simultaneously and can be accessed by visiting the Investor Relations section of Cabela's website at www.cabelas.com. A replay of the call will be archived on www.cabelas.com.

About Cabela's Incorporated

Cabela's Incorporated, headquartered in Sidney, Nebraska, is the world's largest direct marketer, and a leading specialty retailer, of hunting, fishing, camping and related outdoor merchandise. Since the Company's founding in 1961, Cabela's(R) has grown to become one of the most well-known outdoor recreation brands in the world, and has long been recognized as the World's Foremost Outfitter(R). Through Cabela's growing number of retail stores and its well-established direct business, it offers a wide and distinctive selection of high-quality outdoor products at competitive prices while providing superior customer service. Cabela's also issues the Cabela's CLUB(R) Visa credit card, which serves as its primary customer loyalty rewards program. Cabela's stock is traded on the New York Stock Exchange under the symbol "CAB".

Caution Concerning Forward-Looking Statements

Statements in this press release that are not historical or current fact are "forward-looking statements" that are based on the Company's beliefs, assumptions and expectations of future events, taking into account the information currently available to the Company. Such forward-looking statements include, but are not limited to, the Company's statements regarding capital expenditures being $40-50 million for 2009; total revenue growth and comparable store sales increasing at a low single digit percentage rate for 2009, direct revenue declining at a low to mid-single digit rate for 2009, net charge-offs at World's Foremost Bank being between 5.1% and 5.5% for 2009; and earnings per share for 2009 being roughly equal with or exceeding 2008 levels. Forward-looking statements involve risks and uncertainties that may cause the Company's actual results, performance or financial condition to differ materially from the expectations of future results, performance or financial condition that the Company expresses or implies in any forward-looking statements. These risks and uncertainties include, but are not limited to: the level of discretionary consumer spending; the strength of the economy, including increases in unemployment levels and bankruptcy filings; changes in the capital and credit markets or the availability of capital and credit; the Company's ability to comply with the financial covenants in its credit arrangements; counterparty risk on the Company's unsecured revolving credit facility; changes in consumer preferences and demographic trends; the Company's ability to successfully execute its multi-channel strategy; the ability to negotiate favorable purchase, lease and/or economic development arrangements for new retail store locations; expansion into new markets; market saturation due to new retail store openings; the rate of growth of general and administrative expenses associated with building a strengthened corporate infrastructure to support the Company's growth initiatives; increasing competition in the outdoor segment of the sporting goods industry; the cost of the Company's products; trade restrictions; political or financial instability in countries where the goods the Company sells are manufactured; adverse fluctuations in foreign currencies; increases in postage rates or paper and printing costs; supply and delivery shortages or interruptions caused by system changes or other factors; adverse or unseasonal weather conditions; fluctuations in operating results; the cost of fuel increasing; road construction around the Company's retail stores; labor shortages or increased labor costs; increased government regulation, including regulations relating to firearms and ammunition; inadequate protection of the Company's intellectual property; the Company's ability to protect its brand and reputation; changes in accounting rules applicable to securitization transactions, including related increases in required regulatory capital; the Company's ability to manage credit and liquidity risks; any downgrade of the ratings on the outstanding notes issued by the Company's financial services business' securitization trust; the ability of the Company's financial services business to securitize credit card receivables at acceptable rates or access the deposits market; decreased interchange fees received by the Company's financial services business as a result of credit card industry litigation; the impact of legislation, regulation and supervisory regulatory actions in the financial services industry including the Credit Card Accountability Responsibility and Disclosure Act of 2009 and the proposed financial regulatory reform; other factors that the Company may not have currently identified or quantified; and other risks, relevant factors and uncertainties identified in the Company's filings with the SEC (including the information set forth in the "Risk Factors" section of the Company's Form 10-K for the fiscal year ended December 27, 2008), which filings are available at the Company's website at www.cabelas.com and the SEC's website at www.sec.gov. Given the risks and uncertainties surrounding forward-looking statements, you should not place undue reliance on these statements. The Company's forward-looking statements speak only as of the date they are made. Other than as required by law, the Company undertakes no obligation to update or revise forward-looking statements, whether as a result of new information, future events or otherwise.

SOURCE: Cabela's Incorporated

Cabela's Incorporated
Investors:
Chris Gay, 308-255-2905
or
Media:
Joe Arterburn, 308-255-1204