OMAHA, Neb. – Cabela’s, the outdoor sporting goods chain known for its elaborate in-store wildlife displays, may be seeking a buyer.
The retailer has been under pressure since late October when the investment firm Elliott Management started pushing for money-generating manoeuvrs from Cabela’s, possibly the sale of its credit card unit or the entire company. Elliott owns 6 per cent of Cabela’s shares and holds options to buy another 5 per cent.
The company has been attempting to cut spending due to weak sales and in September it laid off 70 people, eliminating about 4 per cent of its corporate workforce.
Cabela’s has its headquarters in Sidney, Nebraska, a town with a population of less than 7,000. Cabela’s accounts for almost a third of that number in jobs.
CEO Tommy Millner said in a written statement that Cabela’s continues to honour its commitments and that it remains focused on its business.
Millner, who has led Cabela’s since 2009, said the company’s board maintains faith in its current strategy, but will consider other options.
“The Board is committed to taking actions to enhance value for shareholders and believes it is an appropriate time to explore potential strategic options that may drive further value,” Millner said.
Stifel analyst Jim Duffy said he thinks Cabela’s stock continues to be undervalued because the credit card unit alone is worth between $38 and $40 a share. Duffy said both private equity firms and competitors might be interested in buying Cabela’s.
The entire retail sporting goods sector has been under pressure for some time.
Shares of Dick’s Sporting Goods Inc., Hibbett Sports Inc. and Big 5 Sporting Goods Corp. are all down between 20 per cent and 35 per cent over the past year. In that regard, Cabela’s has fared better.
Shares of Cabela’s Inc., of which the founding family still holds a nearly 24 per cent stake, are down 11 per cent this year. But they’ve risen more than 18 per cent in the last month on speculation of a buyout.
The company was founded in 1961 when Dick Cabela started selling fishing flies through the mail from his kitchen table with his wife, Mary, and brother, Jim.