|I’m a fairly avid fisherman and hunter and know Cabela’s pretty well from a customer standpoint. Ten years back, Cabela’s and 'very similar competitor' Bass Pro Shops were “destination” shops where, according to the company, people came from a 250-mile radius to shop and just see the absolutely massive store which could entertain for half a day. Judging by the charter buses in the parking lot, this seemed true. I can remember 20 years ago driving out of the way to go to the Bass Pro Shops in Missouri to see it and being in awe.
Flash forward to today: every big metro area in Texas has one (Cabelas or Bass Pro). I assume it’s similar in other states although don’t know. Plus, Dick’s Sporting goods and Academy offer quite good prices and good selection for people in metro areas. True, people in the countryside still need to order catalog, but generally that is a shrinking population. I have a Cabela’s 25 miles away but would only go there if I need something specialized, such as far-offshore equipment which is hard to get inland because Academy’s/etc cater their inventory to the local area while Cabela’s does it to a far lesser degree.
I really like Cabela’s, but with the supply of sporting goods stores large and growing (I see a few competitors still opening stores locally), I think there is an oversupply that won’t be fixed until there are some store closings because generally Americans are fishing and hunting less and less (hence supply going up, demand down). So, if the company is at 8-10x PE run rate, is that good in this market?
On a short-term bright note, they should have sold a lot of guns the last two months. Every gun store in Texas was sold out after the Obama win. My friend went to the gun store the day after the election and said it was standing room only, and the store said, “minimum purchase is $1,000” and the store sold every gun they had that night. Another friend hit the local gun show and said crappy SKS/AKS rifles were selling for $700 when a year ago they were $100 - $200 each. Cabela’s surely sold more handguns, ammunition, assault rifles and accessories, etc.
Thanks for the write-up.|