A precipitous decline in gun and ammunition sales caused a 21.7% drop in first quarter same store sales at Cabela’s where profits were half the prior year level.
Firearms and ammunition sales declined 39% and 32%, respectively, during the first quarter ended March 29, and total company sales declined 9.6% to $725.8 million. Profits totaled $25.7 million, or 36 cents a share, compared to $49.8 million, or 70 cents a share, the first quarter the prior year.
“In the first quarter, we anniversary the most difficult comparisons versus the firearms and ammunition surge last year,” said Cabela’s CEO Tommy Millner. “As we cycle through the unprecedented comparisons from 2013, we are encouraged by our strong fundamentals.”
For example, Millner highlighted the company’s excellent new store performance, increased penetration of Cabela’s branded softgoods and growth in the Cabela’s CLUB loyalty program. He also noted that first quarter profits were within the company’s guidance range as tight expense management and strong profits from Cabela’s CLUB offset weaker revenue and lower merchandise margins.
Cabela’s branded softgoods now account for 58.7% of sales in the apparel and footwear category compared to 54% last year. The company’s new stores, of which there were 14 opened during the prior 12 months, performed well and generated sales per square foot of $497, according to the company.
“Another important aspect of achieving our 2014 targets is tightly managing growth in operating expenses,” Millner said. “As we expand into our national footprint, expense control will be vitally important, and we are pleased to see first quarter operating expenses less than our internal plan. In the first quarter, we kept operating expense growth to just 4.7% as we grew retail square footage 14%.”
Cabela’s can also thank its credit customers for honoring their obligations and paying bills on time. Net charge-offs in the Cabela's CLUB Visa program were at historically low levels of 1.8% compared to 1.86% in the prior year quarter. Additionally, greater than 30-day delinquencies continued to improve and were just 0.68% compared to 0.73% in the year ago quarter.