Direct Strong For Cabela’s Despite Cutbacks

Cabela’s Inc., generated $624.3 million in revenue during its most recent third quarter, up from $611.8 million a year ago. The company’s net income jumped from $9.7 million to $18.8 million between the quarters. The most recent quarter ended Sept. 26.

At first blush, direct marketing doesn’t seem as strong a channel for the outdoors activity supplier. In both total dollars, and as a share of total revenue, the direct channel dropped. A year ago it pulled in $241.2 million, or 39.4% of the quarter’s revenue. During third-quarter 2009, it generated $226.2 million, or only 36.2% of the firm’s revenue.

But direct channels showed stronger operating income – both in terms of real year-over-year numbers and as a percentage of revenue. A year ago direct – which includes catalogs and online operations – generated $33.5 million in operating income, or 13.9% of the segment’s revenue. For the quarter just ended, this jumped to $34.2 million, or 15.1% of total direct revenue.

In comparison, retail sales rose from $328 million to $348 million, and retail operating income jumped from $30.1 million to $40.5 million. But when income was looked at as a percentage of revenue, the increase was not as dramatic as direct’s: Retail operating income rose from 9.2% of sales to 11.6%.

The Eavesdropper’s Take: During an earnings call, CEO Tommy Millner said the company would not be as aggressive in reducing catalog pages as it was in 2009. But it is going to continue to shift spending from paper catalogs to electronic channels. Traffic to the company’s Web site jumped 14.9%, Millner said, and he does not anticipate this slacking anytime soon.