Cabela's Incorporated (NYSE:CAB) today reported record second quarter fiscal 2010 earnings.

For the quarter, consolidated operating income increased 62% to $30.7 million compared to $18.9 million in the second quarter of 2009. Operating margins increased 240 basis points to 5.8% compared to 3.4% in the second quarter of 2009. Increases in operating profit were due to the strong performance of World's Foremost Bank, higher merchandise gross margins and lower impairment and restructuring charges. For the quarter, net income increased 98% to $18.0 million, or $0.26 per diluted share, compared to $9.1 million, or $0.14 per diluted share, in the second quarter of 2009.

For the quarter, adjusted for divestitures, total revenue decreased 3.3% to $526 million; retail store revenue decreased 2.5% to $294 million; direct revenue decreased 11.7% to $172 million; and comparable store sales decreased 4.6%. Financial services revenue increased 28% to $56 million.

?We are pleased that our strong focus on improving return on capital is working,? said Tommy Millner, Cabela's Chief Executive Officer. ?This success is a result of our efforts to improve inventory productivity, expand the profitability of our retail stores and increase merchandise gross margins. While the number of transactions at retail was lower than our expectations during the quarter, we are pleased that average ticket in our retail business was up nearly 5%. For the quarter, retail profitability improved 270 basis points, return on invested capital improved 120 basis points and overall Company operating margin expanded 240 basis points. We expect these positive trends to continue for the remainder of the year.?

?Merchandise margins expanded 80 basis points to 35.9% in the quarter, the biggest increase we have seen in recent years,? Millner said. ?It is particularly pleasing that margins increased in 4 of our 5 merchandise categories during the quarter. Three ongoing initiatives contributed significantly to margin expansion in the quarter: better inventory management, which reduced the need to mark down product, improvements in vendor collaboration and advancements in price optimization during the season. These broad-based improvements give us confidence that margin expansion will continue throughout this year and next.?

?We are less pleased with the revenue decrease we experienced in our direct segment, since this was primarily of our own doing,? Millner said. ?We went a bit too far in our inventory reduction initiatives, which resulted in fill rates in our direct business being significantly lower than prior year. Additionally, we mailed fewer clearance catalogs in the quarter due to reduced levels of problematic inventory. Also, our direct business was impacted by a decrease in the sale of ammunition and reloading supplies. We expect the impact of these factors to largely disappear by the fall selling season.?

Exclusive of impairment and other special charges, for the quarter, net income was $19.4 million compared to $11.2 million in the second quarter of 2009 and diluted earnings per share were $0.28 compared to $0.17 in the second quarter of 2009. A detailed reconciliation is provided at the end of this release.

For the quarter, managed financial services revenue as a percentage of managed credit card loans improved 160 basis points primarily due to lower provision for loan losses, higher interchange, interest, and fee income and lower interest expense. For the quarter, average net charge-offs were 4.78% compared to 5.24% in the second quarter of 2009. This is the lowest absolute charge-off rate realized in the past year. As a result of continued favorable charge-off trends and a more favorable outlook for charge-offs for the remainder of the year, provision for loan losses for the quarter was $16.6 million. Given continued favorable trends related to charge-offs, average net charge-offs at World's Foremost Bank are expected to be between 5.0 and 5.5% for 2010 as compared to previous guidance of 5.25 to 5.75%.

As of July 3, 2010, inventories totaled $513 million, a decrease of 13% compared to inventories of $587 million as of June 27, 2009. For the year to date period, cash flow from operations improved $73 million. Total debt as of July 3, 2010, was $383 million compared to $490 million as of June 27, 2009, a decrease of $107 million or 22%.

?We are pleased with our continued progress controlling costs, driving operational excellence, strengthening our balance sheet and increasing Cabela's brand loyalty through the operations of World's Foremost Bank,? Millner said. ?Given our strong second quarter results, we expect earnings per share for 2010, exclusive of impairment and other special charges, to meet or exceed current expectations.?

Conference Call Information

A conference call to discuss second quarter fiscal 2010 operating results is scheduled for today (Thursday, July 29, 2010) at 11:00 a.m. Eastern Time. A webcast of the call will take place simultaneously and can be accessed by visiting the Investor Relations section of Cabela's website at www.cabelas.com. A replay of the call will be archived on www.cabelas.com.

About Cabela's Incorporated

Cabela's Incorporated, headquartered in Sidney, Nebraska, is the world's largest direct marketer, and a leading specialty retailer, of hunting, fishing, camping and related outdoor merchandise. Since the Company's founding in 1961, Cabela's® has grown to become one of the most well-known outdoor recreation brands in the world, and has long been recognized as the World's Foremost Outfitter®. Through Cabela's growing number of retail stores and its well-established direct business, it offers a wide and distinctive selection of high-quality outdoor products at competitive prices while providing superior customer service. Cabela's also issues the Cabela's CLUB® Visa credit card, which serves as its primary customer loyalty rewards program. Cabela's stock is traded on the New York Stock Exchange under the symbol ?CAB?.

Caution Concerning Forward-Looking Statements

Statements in this press release that are not historical or current fact are "forward-looking statements" that are based on the Company's beliefs, assumptions and expectations of future events, taking into account the information currently available to the Company. Such forward-looking statements include, but are not limited to, the Company's statements regarding trends in retail profitability, return on invested capital and operating margins continuing for the remainder of the year, margin expansion continuing throughout this year and next, the impact of factors negatively impacting the direct business to largely disappear by the fall selling season, average net charge-offs at World's Foremost Bank to be between 5.0 and 5.5% for 2010 and earnings per share for 2010 to meet or exceed current expectations. Forward-looking statements involve risks and uncertainties that may cause the Company's actual results, performance or financial condition to differ materially from the expectations of future results, performance or financial condition that the Company expresses or implies in any forward-looking statements. These risks and uncertainties include, but are not limited to: the level of discretionary consumer spending; the state of the economy, including increases in unemployment levels and bankruptcy filings; changes in the capital and credit markets or the availability of capital and credit; the Company's ability to comply with the financial covenants in its credit agreements; changes in consumer preferences and demographic trends; the Company's ability to successfully execute its multi-channel strategy; the ability to negotiate favorable purchase, lease and/or economic development arrangements for new retail store locations; expansion into new markets and market saturation due to new retail store openings; the rate of growth of general and administrative expenses associated with building a strengthened corporate infrastructure to support the Company's growth initiatives; increasing competition in the outdoor segment of the sporting goods industry; the cost of the Company's products; political or financial instability in countries where the goods the Company sells are manufactured; increases in postage rates or paper and printing costs; supply and delivery shortages or interruptions caused by system changes or other factors; adverse or unseasonal weather conditions; fluctuations in operating results; increased government regulation, including regulations relating to firearms and ammunition; inadequate protection of the Company's intellectual property; material security breaches of computer systems; the Company's ability to protect its brand and reputation; changes in accounting rules applicable to securitization transactions, including related increases in required regulatory capital; the Company's ability to manage credit, liquidity, interest rate, operational, legal and compliance risks; increasing competition for credit card products and reward programs; the Company's ability to increase credit card receivables while managing fraud, delinquencies and charge-offs; the Company's ability to securitize its credit card receivables at acceptable rates or access the deposits market at acceptable rates; decreased interchange fees as a result of credit card industry regulation and/or litigation; the impact of legislation, regulation and supervisory regulatory actions (including with respect to the compliance examination conducted by the Federal Deposit Insurance Corporation in the second quarter of 2009) in the financial services industry, including the Credit Card Accountability Responsibility and Disclosure Act of 2009, new and proposed regulations affecting securitizations and the recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act; other factors that the Company may not have currently identified or quantified; and other risks, relevant factors and uncertainties identified in the Company's filings with the SEC (including the information set forth in the "Risk Factors" section of the Company's Form 10-K for the fiscal year ended January 2, 2010, and in Part II, Item 1A, of the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended April 3, 2010), which filings are available at the Company's website at www.cabelas.com and the SEC's website at www.sec.gov. Given the risks and uncertainties surrounding forward-looking statements, you should not place undue reliance on these statements. The Company's forward-looking statements speak only as of the date they are made. Other than as required by law, the Company undertakes no obligation to update or revise forward-looking statements, whether as a result of new information, future events or otherwise.

CABELA'S INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands Except Par Values)
(Unaudited)
ASSETS		July 3,				January 2,			June 27,
		2010				2010			2009
CURRENT
Cash and cash equivalents		$	274,440			$	582,185		$	480,756
Held-to-maturity investment securities			224,905				-			-
Accounts receivable, net of allowance for doubtful accounts of $1,186, $1,364 and $1,802
			18,615				31,925			34,364
Credit card loans, net of allowances of $1,374 and $1,193			-				135,935			138,896
Credit card loans (includes restricted credit card loans of the Trust of $2,412,135), net of allowance for loan losses of $96,000
			2,329,491				-			-
Inventories			512,739				440,134			586,613
Prepaid expenses and other current assets (includes restricted cash of the Trust of $25,882 at July 3, 2010)
			165,088				150,913			145,468
Income taxes receivable and deferred income taxes			8,936				-			-
Total current assets			3,534,214				1,341,092			1,386,097
Property and equipment, net			812,409				811,765			864,501
Land held for sale or development			29,917				30,772			37,550
Retained interests in securitized loans, including asset-backed securities			-				176,034			121,465
Economic development bonds			107,397				108,491			115,650
Other assets			20,039				23,731			© Business Wire 2010 Latest news on CABELAS I 08/31 Cabela's Inc. Announces Dates for World's Foremost Bank Analyst/Investor Day and.. 07/29 Cabela's Inc. Announces Plans for Store in Edmonton, Alberta, Canada 07/29 Cabela's Inc. Reports Strong Profitability Increases 07/26 Cabela's CEO Tommy Millner Appointed to Wildlife and Hunting Heritage Conservati.. 07/13 Cabela's Inc. Announces Earnings Date for Second Quarter Fiscal 2010 Financial R.. 05/26 Cabela's Inc. to Present at the 30th Annual Piper Jaffray Consumer Conference 05/18 Cabela's Inc. Announces Results of 2010 Annual Meeting of Shareholders 05/12 Cabela's Inc. Announces Successful Renewal of Variable Funding Facility With Wel.. 2008 Cabela's Chooses MicroStrategy as Enterprise Reporting Standard 2007 Cabela's Inc. Announces Resignation of Senior Vice President		Chart CABELAS I Short term Mid-term Long term Full-screen chart Income Statement Evolution More Fundamentals EPS Reviews More Estimates Reviews