FEATURE - IPO set to bring new kind of bear to Wall Street
Date: 23-Jun-04
Country: USA
Cabela's Inc., which is slated for an initial public stock offering this week, aims to raise $133 million to expand its nine-store chain in a hunting, fishing and camping segment that has seen huge growth in recent years.
"There's a lot of institutional interest in the IPO. You don't have to go out and shoot deer to be able to evaluate the company," said Jay Ritter, a finance professor at the University of Florida. "Cabela's has a niche that in some respects limits the market. On the other hand, it's not subject to 13 clones eating away at its profit margins."
Cabela's stores are all about "shoppingtainment" - a potent blend of retail and entertainment that draws shoppers from 200 miles away to gawk at waterfalls, deer heads and scores of crossbows, fishing rods and rifles.
"Their stores are really destinations," said Mark Sullivan, editor and publisher of Sporting Goods Business magazine. "People plan a trip to Cabela's or to Bass Pro Shops," a rival outdoors chain.
The Cabela's headquarters store in Sidney, Nebraska, is the No. 1 tourist attraction in the state, according to Nebraska's Division of Travel and Tourism. In front of the store stands a twice-life-size bronze sculpture of two elk locking horns in what Cabela's calls a battle for "herd domination."
Bass Pro Shops boasts that its flagship store in Springfield, Missouri, is the top tourist destination in that state, with more than 4 million visitors per year.
The 40,000-square-foot Cabela's in Prairie du Chien, a far-western Wisconsin town whose name means prairie dog in French, is small by Cabela's standards but still includes a 30-foot stone indoor "mountain" covered with a stuffed polar bear, buffalo, deer and other wildlife.
In a "Tribute to America's Sportsmen" at the base of the hill, a sign lauds hunters for protecting the environment by culling large herds, noting that a portion of hunting and fishing license fees support wildlife protection efforts.
"(Hunting) is not about going out and blowing Bambi's head off," Sullivan said. "Hunters are very much into preservation and maintenance of the outdoors and of wildlife."
The 7.8-million share IPO is to trade on the New York Stock Exchange under the symbol "CAB" (CAB.N: Quote, Profile, Research) . The shares - which will be brought to market by a group led by Credit Suisse First Boston and J.P. Morgan - are expected to be brought to market at a range of $15 to $17 apiece.
POST 9/11 HUNTING BOOM
Mass merchants such as Wal-Mart Stores Inc. (WMT.N: Quote, Profile, Research) prefer to keep quiet about their weapon sales for fear of controversy, but Cabela's and other outdoor outfitters are not shy about celebrating a lifestyle that analysts say is growing fast.
"You're talking about at least 17 percent of households in America" who regularly fish, hunt or camp, said Britt Beemer, head of America's Research Group, which surveys consumers on shopping habits and other trends. Add in occasional campers or hikers and the figure climbs to 23 percent of U.S. households.
"In the last three years, since 9/11, the number of consumers in this category has grown by 20 percent," he said.
Cabela's posted 18 percent compound profit growth over the last five years, according to IPO documents filed with the U.S. Securities and Exchange Commission.
The company reported $1.4 billion in revenue last year, yet accounts for less than 10 percent of the industry, Sporting Goods' Sullivan said.
"The earnings are beautiful on this stock. They've got over a billion in revenues," said Sal Morreale, who tracks IPOs for Cantor Fitzgerald in Los Angeles. "There's a lot of buzz."
The company started in 1961 when Dick Cabela started selling fishing flies through newspaper classified ads. It now mails out more than 90 million catalogs a year to all 50 states and more than 125 countries.
Sullivan said Wall Street tends to underestimate the demand and profitability at outdoor stor
