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Old 06-24-2004, 09:48 AM
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Post Cabela's IPO

IPO set to bring new kind of bear to Wall Street
Mon 21 June, 2004 08:55

PRAIRIE DU CHIEN, Wisconsin (Reuters) - About 1,000 miles from Wall Street, the next retailer scheduled to go public sells guns, survival gear and even camouflage baby clothes in a setting complete with a stuffed polar bear and a well-stocked trout stream.

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". 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 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 stores, and misunderstands the loyalty of hunting and fishing customers.

"The Wall Street mentality is urban," he said. "They might look at hunting and not really get it. They think it's Bubba out there with a six-pack of Bud blowing a couple of rounds at a deer. That's the antithesis of what Cabela's is all about."

Still, competition remains fierce. Privately held Bass Pro Shops has grown faster than Cabela's and is better known in many parts of the United States. Bass has 22 stores in 13 U.S. states, and plans to open four more locations this year. The company says 63 million people shop its stores annually.

Cabela's catalog and Internet business made up about 70 percent of its sales in the first quarter, but it is still slowly opening stores. It plans to open its 10th store, in West Virginia, this August, and recently announced plans for two new stores in Texas that will open next year.

Another rival, Gander Mountain, a Minnesota-based retailer of guns, fishing rods and camping gear, went public in April. Shares jumped 37 percent in its market debut.

The big question is whether a successful Cabela's IPO would tempt Bass Pro Shops to go public too.

"That rumor has floated for quite some time," said Larry Whitely, a spokesman for Bass Pro Shops. "We're going to stay privately held."

________

Many are now speculating whether or not the shareholders will tolerate the high costs associated with the return of damaged goods. There may be fees associated with these services in the very near future, so hold onto your receipts and warranties.
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Old 06-24-2004, 10:08 AM
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HHHHMMM. I will get a copy of the prospectus... I am interested in Projections and cost ratio's.... but I would do this just as an exercise . Not sure it will fly.... witness Nevada Bobs, etc.... a lot of these sports supermarkets don't have the clientle to support large expansions and this will definitly increase costs irrespective of the money coming in from the IPO..... LL Bean..Orvis...I don't think they are public..... anyway, this will be a big killing for the restricted stock holders and Founders of the company who are now holding Private stock....not to mention the investment bankers and brokers who will attempt to maintain the market with this offering in the next several weeks.... I would wait.
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Old 06-24-2004, 10:13 AM
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John, I agree on all your points. I don't know why I was so surprised to hear this news, but I was.

I don't get my gear from them, but I know plenty of people who do.
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Old 06-24-2004, 10:24 AM
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The question I always have in these is how much "institutional" interest is there going to be from say big pension plans and mutual fund investors. That is the Portfolio managers of these funds usually have a good bead for the long term...or is this simply a "hot Issue" which can be turned over for a profit in the short run. Are intitutional investors buying by putting into one of their investment bins under high risk or early turnover.
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Old 06-24-2004, 10:31 AM
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That's it boys.... WE'RE GOING PUBLIC
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  #6  
Old 06-24-2004, 11:15 AM
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That's it...that's the ticket!!!!!!!! Low risk, high return , visavis mental health and friendship.... fishing!!!! Fun, sanity, adventure, good humor, lot's of laughs. Juro, how will we price the stock???? Sounds like we can't since it's priceless!
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