Smaller-Format Stores' Success Prompts Cabela's Expansion Plans

Cabela's expansive retail stores provide unique shopping experiences, including indoor waterfalls and shooting galleries – so much so that some stores double as tourist destinations. But the outdoors retailer is finding that its smaller-format stores are performing 30% to 40% better than its traditional locations in several key areas, so Cabela's plans to build on these results by opening additional smaller-format stores.

"Our next-generation stores, opened since 2009, are outperforming our legacy stores on a sales per square foot and profit per square foot basis by 30% to 40%, and have meaningfully higher return on capital," said Cabela's CEO Thomas Millner during a recent conference call discussing the retailer's Q3 financial results. "As a result, we expect to accelerate retail store expansion in the U.S. and Canada in 2013, beyond the 2012 level of five stores."

Responding to a question during the call, CFO Ralph Castner said Cabela's traditional stores produced sales of approximately $325 per square foot.

Cabela's currently operates 34 stores, as well as a popular catalog and online business. Planned store openings in 2012 and 2013 would increase retail square footage by approximately 10% each year. During Q3, retail store revenue increased 6.8% compared to the same period the previous year, to $393.8 million, but comp store sales declined 1.6%. Total revenue increased 6.2% to $678.6 million.

The retailer has also focused on improving its online customer experience. Tests of limited-time, web-only promotions boosted online traffic by 8%, according to Millner. In addition, "now a customer can see a product's stock [level] before they add it to their cart, and that was a feedback point we had gotten from our customers," he noted.

Content improvements include Deer Nation and the rut report, a program Cabela's has launched in conjunction with Field & Stream and Outdoor Life magazines, "to make the headquarters for deer hunters in the critical deer fall selling season," he added.

For related content: Cabela's Plans $10M Web Site Re-launch Initiative

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