cabela’s 2q14 earnings preview, credit card portfolio valuation

8/12/2019 Cabelas 2Q14 Earnings Preview, Credit Card Portfolio Valuation

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Cabelas 2Q14 Earnings Preview; Card Portfolio Valuation6/30/2014

Cabelas Inc. (CAB) - $61.60

Why Read?

Cabelas, a retailer of outdoor, hunting and fishing equipment offers a compelling square footage growth story, increasing square

footage productivity, its own credit card company, and all at a reasonable price. We believe concerns that Cabelas is a one trickpony that only sells firearms is overdone. We expect Cabelas to beat expectations in FY14 and continue to roll out new stores atan accelerated pace.

"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""! Comparable Store Sales: Starting in 4Q12, Cabelas experienced a huge boost in firearm and ammunition sales after

consumers were worried about stringent firearm legislation resulting from the Sandy Hook school shooting, peaking in 1Q13with a +15% comparable store sales benefit from elevated firearm sales. As we lap these inflated numbers and firearm salesbegin to normalize, we expect to see a slight benefit against historical numbers in the ammunition and accessories businessfrom incremental first-time firearms owners supply needs. We are forecasting -13.0% comparable store sales in 2Q14 and -6.0% for FY14. We believe these estimates are conservative.

! Square Footage Growth:Cabelas has guided to high teens square footage growth in FY14. We estimate Cabelas will growsquare footage in FY14 by +18.5%. This growth will be all in the form of the new Next Generation store format whichproduces +42.5% higher sales per square foot and +46.7% higher profits per square foot than the older and larger legacystores.

! New Store Economics:The new smaller Next Generation store, averaging 80,000 square feet per unit, offers an enticingIRR. Based upon managements guidance, with a Year 1 $450 sales per square foot, 20% 4 wall margins, and $23.2m ininitial CapEx; the new Next Generation stores can generate ~18% 5-year IRRs. We have outlined the Managements, Bear,

and Bull cases for new store economics on (page 6).

! Margin boost:Firearms sales carry a lower merchandise margin than the average SKU at Cabelas. As customer spendingshifts from firearms to general sporting goods and clothing & footwear we expect to see an uptick in merchandise margin inthe second half of the year. We also believe margins will continue to benefit from growing private label penetration inSoftgoods. We have included full margin breakouts on (pages 13-15).

! Strength in Financial Services/Credit Card Portfolio Valuation:Unlike many retailers who partner with outside financialservice firms, such as TD, to create branded credit cards; Cabelas operates their own bank, WFB: Worlds Foremost Bank.WFB has ~$3.7bn in loans outstanding as of 1Q14, with an industry leading charge-off rate of 1.8% and an average FICOscore of 793. This segment has been a significant driver to Cabelas top and bottom line results, growing segment sales

+17.7% to $375.8mn and boasting a 27.8% EBIT margin in FY13. As Cabelas expands into more markets with their newsmaller format Next Generation stores, we expect credit card penetration and attachment rates to increase. Based uponprevious proprietary credit card sales, we believe the market is significantly undervaluing Cabelas Financial Services

segment.

! Estimates:We expect 2Q14E revenue of $784m vs. consensus of $774.4m. For 2Q14E we expect Cabelas to earn $0.51 vs.consensus of $0.51 and company guidance range of $0.45 to $0.55 EPS. For FY14E we expect $3.9bn in sales vs. aconsensus of $3.85bn and management guidance of mid to high single digit revenue growth ($3.77bn-$3.920bn). For FY14Ewe expect Cabelas to earn $3.68 vs. a consensus of $3.57 and management guidance of high single digit to low double digitgrowth ($3.53-$3.71).

! Cabelas Valuation:We believe the market is significantly undervaluing Cabelas square footage growth, customer loyalty,new store economics, and financial services unit. On page 12, we provide a SOTP analysis of the business, believing theRetail segments should be valued at 1.4x forward sales and 20x forward earnings while the Financial Services segmentshould be valued at 1.2x accounts receivables less funding liabilities. These assumptions provide at price target of $76, a 24%upside to current valuation.


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Comparable Store Sales:

1Q13, Cabelas experienced a huge spike up to +24% in comparable store sales driven by firearms sales. As we begin to lap theseinflated numbers, Cabelas is likely to comp negative through the first 3 quarters of the year. Through the first 4 weeks of 2Q14,comparable store sales are down -16% with management guiding for -10% to -13% comparable store sales for the quarter. Thiscompares to positive mid-teens QTD last year. Despite managements implied improving comparable store sales cadence through2Q14, improving weather, which will help clothing and footwear, and some product newness, we expect Cabelas to come in onthe low side of their 2Q14 guide at. -13% comparable store sales for 2Q14 mainly due to sustained firearms weakness across thesector.

New format stores that have entered the comparable store sale base are running typically +100 Bps to +600 Bps higher than theconsolidated comparable store sale base.

(Continued on next page)

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Square Footage Growth:

Before 2010 Cabelas store count remained relatively flat. Since 2010 Cabelas has opened 22 new stores, a 71% increase. Thisincrease has been fueled by their New Format stores, which range from 50,000-100,000 square feet (most are around 80,000). The

Legacy stores, range from 150,000 to 250,000 square feet and are more comparable to a BassPro sized footprint.

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With the addition of 22 stores since 2010, gross square footage has increased 33% from 2010 to 2013 while average store sizedecreased -17% due to the smaller nature of the Next Generation store format. During the same time period Retail sales increased58%, highlighting a dramatic growth in both the brand and selling economics of the new format stores.

One major concern for Cabelas is growing competition in for units with BassPro Shops. In the map above, you can see many ofthe new Cabelas store openings planned for 2014 and 2015 are new entrants into the Southeast where BassPro is deeply rooted.We expect these new stores will faced heightened competition particularly in General Outdoors and Clothing/Footwear categories,as well as weaker private label penetration, the last of which is a high margin contributor for Cabelas.

4 quarter trailing sales per store, besides Hunting Equipment, have all been in decline since 2010 but this is merely a function of

smaller store footprints.

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4 quarter trailing sales per square foot has been on the rise, particularly in Hunting Equipment and Clothing & Footwear, acategory that has been driven by large increases in branded product penetration.

We are happy to see sales per average store decline while sales per average square foot have been steadily increasing, showcasing amore efficient square footage growth strategy. As firearm sales have began to normalize in 4Q13, we have seen an uptick inClothing & Footwear (Although muted in 1Q14), despite lower foot traffic from the decline in firearm sales, which carries higher

gross margins. Additionally, the smaller Next Generation format stores are comping several hundred BPS higher than the largerLegacy stores. We expect this benefit to increase as Next Generation stores continue to make up a greater portion of thecomparable store base.

New Store Economics:

The New Format stores are producing significantly higher sales per square foot and profit per square foot metrics. Even moreenticing is their ability to enter smaller markets, with lower CapEx requirements, and competitive IRRs. Below we have included 3New Format store economics cases:

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Company Case Year 1 Year 2 Year 3 Year 4 Year 5Store Size (Gross Square Feet) 80,000 80,000 80,000 80,000 80,000

Sales Per Square Foot $450.00 $461.25 $472.78 $484.60 $496.72

Revenue $36,000,000 $36,900,000 $37,822,500 $38,768,063 $39,737,264

Growth % 2.5% 2.5% 2.5% 2.5%

Four Wall Operating Income $7,200,000 $7,380,000 $7,564,500 $7,753,613 $7,947,453Margin % 20% 20% 20% 20% 20%

Four Wall Return on Investment 31.0% 31.8% 32.6% 33.4% 34.3%

IRR 18.5%

CapEx $23,200,000

Bear Case Year 1 Year 2 Year 3 Year 4 Year 5Store Size 80,000 80,000 80,000 80,000 80,000


Revenue $32,000,000 $32,000,000 $32,000,000 $32,000,000 $32,000,000

Growth % 0.0% 0.0% 0.0% 0.0%

Four Wall Operating Income $5,760,000 $5,760,000 $5,760,000 $5,760,000 $5,760,000

Margin % 18% 18% 18% 18% 18%


IRR 6.4%

CapEx $24,000,000



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Bull Case Year 1 Year 2 Year 3 Year 4 Year 5Store Size 80,000 80,000 80,000 80,000 80,000


Revenue $40,000,000 $42,000,000 $44,100,000 $46,305,000 $48,620,250

Growth % 5.0% 5.0% 5.0% 5.0%

Four Wall Operating Income $8,800,000 $9,240,000 $9,702,000 $10,187,100 $10,696,455

Margin % 22% 22% 22% 22% 22%


IRR 37.6%

CapEx $20,000,000

Management has stated they are looking to lower CapEx requirements 10% on new stores from their range of $22-24m, leading toour $20m Bull case assumption. Other ways of lowering initial costs are through the usage of Local and State Economic

Development Bonds, which total $79m as of FY13 as well as Local and State funding grants, which totaled $44m as of FY13.

Margin stabilization:

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Firearms sales carry a lower merchandise margin than the average SKU at Cabelas. As shown in the graph above, merchandisegross profit margins decreased in 4Q12, the beginning of the surge in firearm sales, but continued to rise through FY13 on the backof higher volumes and demand. Merchandise margins decreased -132 BPS in 1Q14 after increasing in each FY13 quarter. Ascustomer spending shifts from firearms to General Outdoors and Clothing & Footwear we expect to see an uptick in merchandisemargin. In the back half of the year, further aided by increased private label penetration.

A slower start to spring resulted in a higher-than-expected sales mix of discontinued cold-weather

merchandise. Margin movement in the second half of 2014 will be driven by new product

performance in soft goods, as well as more normal promotional cadence. Thomas Millner CEO,

1Q14 conference call

We have included a full chart of management margin commentary at the end of this report on pages 13-15.

Retail contribution margin has increased from 11.74% in FY09 to 19.18% in FY13. During the same period Direct segmentcontribution margin has remained relatively steady rising from 15.21% in FY09 to 16.15% in FY13. Financial Servicescontribution margin is the shining star of the business segments, with 27.78% margins in FY13. The dip in Financial Servicesmargins in the chart above is from the $12.5m Visa settlement in 4Q12.


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Strength in Financial Services:

The average balance of credit card loans has increased from $2.47bn in FY10 to $3.75bn in 1Q14. We have seen a healthy mixbetween average number of active accounts and average account balance over this time period. Notice average number of activeaccounts increases during 4Qs, the average account balance decreases, reflecting the incremental smaller balance accounts

activated for holiday spending.

Charge-off rates have declined from 4.23% in FY10 to 1.80% in 1Q14. This is near industry lows and reflective of the incrediblyhigh 793 average FICO score for Cabelas credit card holders.

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Revenue per average active account has increased +35%, from $165 in 4Q10 to $224 in 1Q14.

The increase in revenue per average active account has mainly been driven by stronger NIM and interchange income growth as

well as growing average balances.


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What is even more amazing is that the decrease in charge off rates and revenue growth has been driven by growth in the lower twobuckets of their FICO buckets, the 692-758 and Below 691 bucket. Impressively, the Restructured segment, which only makes up1.1% of total loan balance but 12.1% of past due balances as of 1Q14, up +100 Bps sequentially but its total loan growth has beensteadily decreasing at a double digit pace.

Card Portfolio Valuation: Typically credit card portfolios have been valued at 1.0x associated account receivables less securedfunding obligations. In 2006 Kohls sold their card portfolio to JP Morgan Chase for $1.6m. In 2013 Target sold their cardportfolio to HSBC for $5.7bn. Based upon these prior transactions we believe Cabelas Financial Services unit is worth at least

$1.0bn, 30% of their current market cap. Additionally, we believe the unit is worth a significant premium to prior transactionsbased upon its industry best FICO and charge-off rates. We believe that at a 12.0x multiple to FY13 Operating Income or 1.2x A/Rmultiple, the Financial Services unit should be worth closer to $1.25bn.

Card Portfolio Cabela's Kohl's ('06) Target ('12)Accounts Receivables 3,744,501 1,600,000 5,700,000

Funding Obligations 2,707,250 n/a 1,500,000

Net 1,037,251 1,600,000 4,200,000

Valuation in Sale $1,037,251E ~ $1,600,000 ~ $5,700,000

Valuation to A/R 1.0x 1.0x 1.0x

Valuation to Card Revenue 2.8x 6.1x 3.1x

Valuation to Card Operating

Income 9.9x 12.0x 7.5x


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Cabelas Valuation:

We believe Cabelas, although trading at a slight premium to its peers, is undervalued at current levels. Considering its high teenssquare footage growth, growing productivity, and industry best credit card company; we believe shares should trade at least 25%above their current value. If Cabelas were to monetize their credit card business they could receive around $1.25bn, which couldbe used to buy back ~20% of the remaining Retail business AND pay off all of their debt. While we do not see this situationplaying out under current circumstances, we highlight it to underscore the margin of safety embedded in Cabelas currentvaluation.

Sum of Parts Valuation

Cabela's Retail Business Cabela's Financial ServicesTotal

ValueCOMPSForward

P/SForward

P/E50% P/S,50% P/E COMPS

CardA/R

BGFV 0.27 11.9 Kohls ('06) 1.0

DKS 0.82 16.3 Target ('12) 1.0

HIBB 1.50 18.8

SPWH 0.50 16.0

Average 0.77 15.8

CAB 0.98 18.48 CAB 1.0E

Premium 27% 17% Premium 0%

CAB Retail @ Avg. $2,684,338 $2,900,895 $2,792,616 CAB Financials @ Avg. $1,037,251 $3,829,867

Per Share $37.25 $40.25 $38.75 Per Share $14.39 $53.15

CAB Retail @ Current $3,401,918 $3,401,918 $3,401,918 CAB Financials @ Current $1,037,251 $4,439,169


Shares Outstanding 72,064 Premium to average 16%

Consumer Fox Valuation Estimates

Cabela's Retail Business Cabela's Financial Services

Total

ValueCOMPS

Forward

P/S

Forward

P/E

50% P/S,

50% P/E COMPS

Card

A/RBGFV 0.27 11.9 Kohls ('06) 1.0

DKS 0.82 16.3 Target ('12) 1.0

HIBB 1.50 18.8

SPWH 0.50 16.0

Average 0.77 15.8

CAB 1.40 20.00 CAB 1.2E

Premium 81% 27% Premium 20%

CAB Retail @ CFEstimates $4,860,000 $3,682,416 $4,271,208 CAB Financials @ CF Estimates $1,244,701 $5,515,909


Shares Outstanding 72,064 Premium to Current 24%

We believe at these levels Cabelas offers a compelling square footage growth story coupled with increasing operationimprovements. With a P/E ratio of just 16.6x our FY14E earnings estimates of $3.68, we believe now is an opportune entry pricefrom a promising retail growth story in a growing market.


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Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014

Category Category Category Category Category

Positive Positive Positive Positive Positive

hunting hunting hunting Hunting

Negative Negative Negative Negative Negative

ammo firearms firearms

ammo ammo

Operating Breakdown Operating Breakdown Operating Breakdown Operating Breakdown Operating Breakdown


increase merch profit increase merch profit increase merch profit


new store costs new store costs new store costs new store costs Decrease merch profit

new store costs

Margin Breakdown Margin Breakdown Margin Breakdown Margin Breakdown Margin Breakdown


inventory planning inventory planning inventory planningincreased private label

penetrationincreased private label

penetration

vendor colab vendor colab vendor colab

no more CLUB freeshipping

increased private labelpenetration

Less Promos

price optimization price optimization price optimization


increased guns and ammo increased guns and ammo increased guns and ammolower margin guns and

ammo

Retail Retail Retail Retail Retail


hunting hunting hunting


ammo deceleration ammo deceleration ammo deceleration

Direct Direct Direct Direct Direct


hunting improved internet traffic hunting

improved internet traffic


ammo deceleration ammo decelerationdecceleration internet

traffic Increased internet traffic

lower avg. ticket


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Q1 2012 Q2 2012 Q3 2012 Q4 2012

Category Category Category Category

Positive Positive Positive Positive


Negative Negative Negative NegativeDirect-Clothing and

footwear

Direct-Clothing and

footwear

Direct-Clothing and

footwear

Operating Breakdown Operating Breakdown Operating Breakdown Operating Breakdown


increase merch profit increase merch profit increase merch profit increase merch profit

Negative Negative Negative Negative

new store costs new store costs new store costs new store costs

Direct Direct Direct

Margin Breakdown Margin Breakdown Margin Breakdown Margin Breakdown


inventory planning inventory planning inventory planning inventory planning

vendor colab vendor colab vendor colab vendor colab

Less Promo price optimization price optimization Labor Costs

price optimization

Negative Negative Negative

increased guns and ammo increased guns and ammo increased guns and ammo increased guns and ammo

increased power sports

Retail Retail Retail Retail




Direct Direct Direct Direct


Promotional sales to CLUB improved internet traffic


Competitor winterwear liquidation Offset shipping Revenues

clothing and footwear clothing and footwear clothing and footwear


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Q1 2011 Q2 2011 Q3 2011 Q4 2011

Category Category Category Category


huntingLess promo hurt retail comp

sales hunting

Clothing/footwear

Negative Negative Negative NegativeDirect-Clothing andfootwear

Operating Breakdown Operating Breakdown Operating Breakdown Operating Breakdown


increase merch profit increase merch profit increase merch profit increase merch profit


new store costs new store costs new store costs new store costs


Margin Breakdown Margin Breakdown Margin Breakdown Margin Breakdown


inventory planning inventory planning inventory planning Expense Leveragevendor colab vendor colab vendor colab

Less markdown Less markdown Less markdown

price optimization price optimization price optimization


increased guns and ammo increased guns and ammo

increased freight from fuel costs

Retail Retail Retail Retail


hunting hunting hunting hunting

clothing and footwear clothing and footwear clothing and footwear

fishing/marine fishing/marineNegative Negative Negative Negative

Less promo hurt comp



higher internet higher internet higher internet


Lower callcenter Lower callcenter Lower callcenter

lower guns and ammo lower guns and ammo lower guns and ammo

lower fishing

lower camping


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Cabela's(CAB)

24-Jun-14

53week

s

2009

2010

2011

Q12012

Q22012

Q32012

Q42012

2012

Q12013

Q22013

Q32013

Q42013

2013

Q12014

Q22014E

Q32014E

Q420

14E

2014E

2015E

StoreCount:

02-Jan-1

0

01-Jan-11

31-Dec-11

31-Mar-12

30-Jun-12

29-Sep-12

29-Dec-12

29-Dec-12

30-Mar-13

29-Jun-13

28-Sep-13

28-Dec-13

28-Dec-13

28-Mar-14

UnitedStatesLegacy

30

30

32

27

27

28

28

28

UnitedStatesNextGeneration

0

0

0

10

10

18

18

21

CanadaLegacy

0

0

0

1

1

0

0

CanadaNextGeneration

0

1

2

2

3

3

2

2

3

3

4

4

4

4

TotalStores

30

31

34

36

37

40

40

40

44

45

48

50

50

53

58

64

64

64

77

UnitedStatesLegacy

4,155,000

4,155,000

4,235,000

4,235,000

UnitedStatesNextGeneration

823,000

823,000

1,415,000

1,415,000

CanadaLegacy

44,000

44,000

0

0

CanadaNextGeneration

120,000

120,000

240,000

240,000

GrossSquareFootage

4,300,00

0

4,400,000

4,682,000

4,800,000

4,900,000

5,100,000

5,142,000

5,142,000

5,400,000

5,500,000

5,800,000

5,890,000

5,890,000

6,100,000

6,5

00,0

00

6,9

80,0

00

6,9

80,0

00

6,9

80,0

00

8,0

20,0

00

AverageSquareFootage-Legacy

0

149,964

149,964

151,250

151,250

AverageSquareFootage-NextGeneration

0

78,583

78,583

75,227

75,227

AvgSquareFootageperUnit

143,333

141,935

137,706

133,333

132,432

127,500

128,550

128,550

122,727

122,222

120,833

117,800

117,800

115,094

112,0

69

109,0

63

109,0

63

109,063

104,1

56

IncomeStatement:

MerchandiseSales

2,447,63

5

2,412,486

2,505,733

535,277

542,662

652,313

1,048,651

2,778,903

711,713

663,684

749,141

1,081,094

3,205,632

620,365

681,8

95

860,7

86

1,3

08,3

82

3,4

71,4

28

4,1

54,9

05

FinancialServiceRevenue

171,414

227,675

291,746

83,455

79,267

85,932

70,745

319,399

85,772

88,578

98,403

103,057

375,810

98,578

97,8

37

106,4

71

108,3

19

411,2

04

439,5

09

OtherRevenue

13,191

23,081

13,687

4,772

5,325

2,933

1,350

14,380

5,012

4,543

3,284

5,296

18,135

6,880

5,0

00

5,0

00

5,00

0

21,8

80

22,0

00

NetSales

2,632,24

0

2,663,242

2,811,166

623,504

627,254

741,178

1,133,246

3,125,182

802,497

755,605

849,178

1,189,130

3,596,410

725,823

784,7

32

972,2

57

1,4

21,7

01

3,9

04,5

13

4,6

16,4

14

CostGoodsSold

(1,602,62

1)

(1,575,449)

(1,613,249)

(350,759)

(340,377)

(409,929)

(668,733)

(1,769,798)

(458,695)

(413,465)

(469,932)

(688,737)

(2,030,829)

(407,965)

(424,1

29)

(538,3

10)

(830,256)

(2,2

00,6

59)

(2,6

08,0

57)

Non-RecurringItems

0

0

0

0

0

0

(12,500)

(12,500)

0

1,200

1,650

317

3,167

0

0

0

0

0

0

GrossProfit

1,029,61

9

1,087,793

1,197,917

272,745

286,877

331,249

452,013

1,342,884

343,802

343,340

380,896

500,710

1,568,748

317,858

360,6

03

433,9

47

591,4

45

1,7

03,8

54

2,0

08,3

57

Selling,distribution,&administrative

(870,147)

(895,405)

(954,125)

(226,169)

(229,049)

(264,136)

(327,507)

(1,046,861)

(264,687)

(275,468)

(303,772)

(357,071)

(1,200,784)

(277,005)

(302,3

34)

(332,7

45)

(380,098)

(1,2

92,1

82)

(1,5

39,5

47)

ImpairmentandRestructuring

(66,794

)

(5,626)

(12,244)

0

0

0

(20,324)

(20,324)

0

(937)

0

(4,931)

(5,868)

0

0

0

0

0

0

Non-RecurringItems

0

0

0

0

0

0

0

0

0

0

(521)

0

(735)

0

0

0

0

0

0

OperatingIncome

92,678

186,762

231,548

46,576

57,828

67,113

104,182

275,699

79,115

66,935

76,603

138,708

361,361

40,853

58,2

70

101,2

02

211,3

47

411,6

72

468,8

10

InterestIncome/(Expense)

(23,109

)

(27,442)

(24,427)

(4,504)

(6,444)

(5,227)

(3,948)

(20,123)

(5,356)

(3,914)

(4,979)

(7,605)

(21,854)

(3,685)

(4,0

00)

(4,0

00)

(4,0

00)

(15,6

85)

(16,0

00)

OtherNonOperating

6,955

7,360

7,346

1,401

1,450

1,288

1,999

6,138

1,539

1,108

1,028

346

4,021

2,102

1,5

00

1,5

00

1,50

0

6,6

02

6,0

00

IncomeBeforeTax

76,524

166,680

214,467

43,473

52,834

63,174

102,233

261,714

75,298

64,129

72,652

131,449

343,528

39,270

55,7

70

98,7

02

208,8

47

402,5

89

458,8

10

IncomeTax(Expense)/Benefit

(26,907

)

(54,521)

(71,847)

(14,647)

(18,964)

(20,389)

(34,201)

(88,201)

(25,451)

(19,584)

(22,766)

(51,337)

(119,138)

(13,521)

(18,9

62)

(33,5

59)

(71,0

08)

(137,0

49)

(155,9

96)

NetIncome

49,617

112,159

142,620

28,826

33,870

42,785

68,032

173,513

49,847

44,545

49,886

80,112

224,390

25,749

36,8

08

65,1

44

137,8

39

265,5

39

302,8

15

NetIncomepershare-Dil

0.74

1.62

2.00

0.40

0.47

0.60

0.95

2.42

0.70

0.62

0.70

1.12

3.13

0.36

0.5

1

0.9

0

1.90

3.6

8

4.1

6

Weightedshares-Basic

67,008

67,792

69,195

69,454

70,034

69,895

70,042

69,856

70,158

70,504

70,576

70,608

70,461

70,767

70,9

67

71,1

67

71,367

71,0

67

71,8

67

Weightedshares-Diluted

67,453

69,087

71,274

71,287

71,542

71,556

71,701

71,710

71,373

71,688

71,758

71,728

71,779

71,758

71,9

67

72,1

67

72,367

72,0

64

72,8

67

ProfitabilityMetrics:

GrossProfitMargin

39.12%

40.84%

42.61%

43.74%

45.74%

44.69%

40.99%

43.37%

42.84%

45.28%

44.66%

42.08%

43.53%

43.79%

45.9

5%

44.6

3%

41.60%

43.6

4%

43.5

0%

MerchandiseMargin

34.58%

35.08%

35.62%

34.48%

37.39%

37.16%

36.23%

36.34%

35.56%

37.70%

37.31%

36.59%

36.76%

34.24%

37.8

0%

37.4

6%

36.54%

36.6

4%

37.2

3%

SG&AExpenseRatio

-33.06%

-33.62%

-33.94%

-36.27%

-36.52%

-35.64%

-28.90%

-33.50%

-32.98%

-36.46%

-35.71%

-30.03%

-33.37%

-38.16%

-38.5

3%

-34.2

2%

-26.7

4%

-33.0

9%

-33.3

5%

OperatingMargin(ex-Items)

6.06%

7.22%

8.67%

7.47%

9.22%

9.05%

12.09%

9.87%

9.86%

8.82%

8.89%

12.05%

10.14%

5.63%

7.4

3%

10.4

1%

14.87%

10.5

4%

10.1

6%

Depreciation&AmortExpense

70,566

69,872

71,343

18,448

19,401

20,264

21,156

79,269

21,092

22,804

24,171

25,340

93,407

24,000

25,0

00

28,0

00

30,000

107,0

00

108,0

00

EBITDA(ex-Items)

163,244

256,634

302,891

65,024

77,229

87,377

137,838

367,468

100,207

88,539

99,645

163,731

452,336

64,853

83,2

70

129,2

02

241,3

47

518,6

72

576,8

10

SalesMetrics:

TotalCompanySales

3.1%

1.2%

5.6%

6.3%

11.6%

9.2%

15.2%

11.2%

28.7%

20.5%

14.6%

4.9%

15.1%

-9.6%

3.9

%

14.5

%

19.6

%

8.6

%

18.2

%

ComparableStoreSales

3.5%

1.6%

2.8%

4.2%

4.7%

3.9%

12.0%

2.8%

24.0%

10.5%

3.9%

-10.1%

3.9%

-21.7%

-13.0

%

-3.0

%

3.0%

-6.0

%

3.0

%

ComparableStoreSalesStoreOnly

-12.4%

ComparableStoreSalesex-Firearms

5.0%

9.0%

9.0%

5.3%

-3.5%

-8.5%

MerchandiseSales

2.8%

-1.4%

3.9%

5.1%

11.1%

7.9%

16.0%

10.9%

33.0%

22.3%

14.8%

3.1%

15.4%

-12.8%

2.7

%

14.9

%

21.0

%

8.3

%

19.7

%

FinancialServices

7.8%

32.8%

28.1%

15.3%

12.8%

20.3%

-8.9%

9.5%

2.8%

11.7%

14.5%

45.7%

17.7%

14.9%

10.5

%

8.2

%

5.1%

9.4

%

6.9

%

OtherSales

0.7%

75.0%

-40.7%

-8.8%

56.0%

1.7%

-37.5%

5.1%

5.0%

-14.7%

12.0%

292.3%

26.1%

37.3%

10.1

%

52.3

%

-5.6

%

20.7

%

0.5

%

RetailSalesperAvgGrossSqFt

323

324

339

73

79

91

130

376

92

89

97

122

403

74

82

98

130

390

416

BalanceSheetHighlights:

Cash&MarketableSecurities

582,185

136,419

304,679

157,216

347,389

265,675

288,750

288,750

363,747

345,504

409,733

199,072

199,072

484,586

Inventory

440,134

509,097

494,828

539,410

577,120

721,701

552,575

552,575

613,065

696,101

815,594

644,883

644,883

742,021

797,9

05

960,4

46

731,2

32

731,2

32

867,7

90

InventoryPerAvg.SquareFeet

113.8

119.0

144.3

107.9

116.3

127.7

144.4

110.3

123.8

126.7

142.5

104.8

InventoryperFwdQtrCGS

158.5%

140.8%

107.9%

120.5%

148.3%

148.1%

118.4%

158.1%

175.0%

148.2%

115.7%

150.1%

InventoryTurnover

3.0

3.1

2.9

3.1

3.1

2.8

2.8

TotalDebt

348,279

345,152

344,922

340,243

340,119

451,597

336,535

336,535

328,329

383,264

532,563

331,065

331,065

549,009

549,0

09

549,0

09

549,0

09

549,0

09

574,0

09

TotalDebt%TotalInvCapital

26%

25%

23%

22%

21%

26%

20%

20%

19%

21%

26%

17%

17%

25%

25%

24%

23%

23%

21%

TotalShareholder'sEquity

984,421

1,024,548

1,181,316

1,235,493

1,247,667

1,303,483

1,375,979

1,375,979

1,428,640

1,470,848

1,525,950

1,606,334

1,606,334

1,631,944

1,6

68,7

52

1,7

33,8

95

1,8

71,7

34

1,8

71,7

34

2,1

74,5

49

Valuation:

MarketPriceperShar

$14.26

$21.75

$25.42

$38.15

$37.81

$54.68

$40.74

$40.74

$60.78

$64.76

$63.34

$65.64

$65.64

$65.06

$60.0

0

$60.0

0

$60.00

$60.0

0

$60.0

0

MarketCap-AvgDiluted

961,887

1,502,632

1,811,791

2,719,605

2,705,007

3,912,675

2,921,081

2,921,460

4,338,040

4,642,500

4,545,145

4,708,214

4,711,544

4,668,578

4,3

17,9

94

4,3

29,9

94

4,3

41,9

94

4,3

23,8

66

4,3

71,9

94

BookValueperShare

$14.59

$14.83

$16.57

$17.33

$17.44

$18.22

$19.19

$19.19

$20.02

$20.52

$21.27

$22.39

$22.38

$22.74

$23.1

9

$24.0

3

$25.86

$25.9

7

$29.8

4

PricetoSales

0.4

0.6

0.6

1.0

0.9

1.3

0.9

0.9

1.3

1.4

1.3

1.3

1.3

1.3

1.2

1.2

1.1

1.1

0.9

PricetoMerchandiseSales

0.4

0.6

0.7

1.1

1.0

1.5

1.1

1.1

1.5

1.5

1.4

1.5

1.5

1.5

1.4

1.3

1.3

1.2

1.1

EntValueper4-QtrEBITDA

4.5

6.7

6.1

9.1

7.9

11.5

8.1

8.1

10.7

11.3

11.0

10.7

10.7

11.4

11.8

11.1

9.4

9.4

8.6

P/ERatio-4QtrTrailing

19.4

13.4

12.7

17.6

16.2

22.2

16.8

16.8

22.4

22.6

21.4

21.0

21.0

23.3

22.4

20.8

16.3

16.3

14.4

PricetoFwdSales

0.4

0.5

0.6

0.8

0.8

1.1

0.8

0.8

1.2

1.3

1.2

1.2

1.2

1.2

1.0

1.0

0.9

0.9

PricetoForwardMerchandiseSales

0.4

0.6

0.7

0.9

0.9

1.2

0.9

0.9

1.4

1.5

1.4

1.4

1.4

1.3

1.1

1.1

1.0

1.0

EntValueperfwd4-QtrEBITDA

2.8

5.7

5.0

7.2

6.5

9.6

6.6

6.6

10.3

11.4

10.6

9.3

9.3

9.1

9.2

8.8

8.5

8.4

P/ERatio-fwd4QtrTrailing

8.8

10.9

10.5

14.0

13.2

18.4

13.0

13.0

21.8

24.1

21.9

17.8

17.8

17.6

16.1

15.2

14.5

14.4

Dividends

DividendYield


17/17

)A

Disclaimer:The information contained herein reflects the views of Consumer Fox as of the date of publication. These views aresubject to change without notice at any time subsequent to the date of issue. All information provided in this presentation is for

informational purposes only and should not be deemed as investment advice or a recommendation to purchase or sell the securities

mentioned or to invest in any specific security or investment product. While the information presented herein is believed to bereliable, no representation or warranty is made concerning the accuracy of any data presented. In addition, there can be noguarantee that any projection, forecast or opinion in this presentation will be realized. All trade names, trade-marks, service marks,and logos herein are the property of their respective owners who retain all proprietary rights over their use. This presentation isconfidential and may not be reproduced without prior written permission from Consumer Fox. It should be noted that ConsumerFox has no position in any security of the company mentioned in the report/presentation.

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kwasman 2q14 rept

2Q14 Results Presentation

2Q14 Earnings Release

Corporate Presentation 2Q14

2Q14 Quarterly Financial Reports

Earnings Presentation - 2Q14

2Q14 Roadmap to Valuation

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