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The Sidney, Neb.-based company, which also operates a store in Lacey, earned $35.6 million in the quarter, or 50 cents a share, compared to $21.6 million or 31 cents a share in the third quarter of 2010.
Those results exclude a $3 million impairment charge in which the company wrote down the value of some land in Denver, the one-time site for a future store that company officials have decided to sell. Including the impairment charge and Cabela’s earned $33.3 million or 47 cents per share, compared to $19.7 million or 29 cents per share in the year-ago period.
Chief Executive Tommy Millner told analysts during a conference call Thursday morning that the elimination of the store promotion helped to significantly increase its merchandise gross margins -- the difference between what the company paid for and sold per item.
The promotion that was halted offered customers a $150 discount on a $500 purchase, Millner said. "This promotion generated negative gross profit dollars and that’s not good for the company long term," he told analysts.
The company also touted the strength of what it calls its "next-generation" stores, stores it has been opening since 2009 and that tend to measure 80,000 square feet, 100,000 square feet or 125,000 square feet, somewhat smaller than its traditional legacy stores, such as the store in Lacey. The Lacey store measures about 195,000 square feet.
The next-generation store’s new designs, resulting in "ease of shopping," have been 30 percent to 40 percent more productive than its legacy stores, Millner said. Cabela’s plans to open five next-generation stores next year, including an 100,000-square-foot store in Tulalip.
Total revenue in the quarter rose 6.2 percent to $678.6 million revenue. Of that, retail store revenue rose 6.8 percent to $393.8 million; direct revenue -- online and telephone orders -- fell 1.7 percent to $210.9 million; and financial services revenue -- the company operates its own Visa card -- increased 33.7 percent to $71.4 million. Total revenue also was adjusted because a home restoration catalogue business was sold.
Meanwhile, Millner said sales of firearms, ammunition, power sports, fishing gear and men’s apparel were strong, while weaker for optics, archery, tree stands and hunting equipment.
One analyst asked Millner what effect slower firearm and ammunition sales might have on the business. Millner said he thought that was going to happen five years ago, but sales remain strong. The company expects that trend to continue next year because it’s an election year, Chief Financial Officer Ralph Castner said.
Although the broader stock market rose sharply Thursday, Cabela’s stock, which trades under the ticker symbol CAB, fell $1.03 or nearly 4 percent to $25 per share.
