Hunting companies overextending themselves?
02-26-2007, 10:19 AM
#1
Giant Nontypical
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Join Date: Feb 2003
Posts: 5,716
Hunting companies overextending themselves?
I remember when I was a kid, I was nuts about hunting, bows, knives, anything outdoorsy. I remember saving up grass-cutting money all summer, then making my dad drive me halway across the globe to the nearest archery pro shop where I bought my first bow (a plastic, round-wheeled PSE). That was around 1992.
At that time, that archery shop was it. It was the only choice - everybody went there. If you didn't like it, you were either ordering from the Gander Mountain catalog, or going without.
I also remember anxiously waiting for the latest Cabelas catalog, Smoky Mountain Knife catalog, Gander Mountain, among othersto come in the mail, so I could rip through the pages, gawking at all the great things that I would never own. LOL
Enter 2007: There are at least 3 gander mountain stores within a 35-minute drive. There are probably 5 Dikk's Sporting Goods stores within that same distance(each with a huge hunting/outdoors section). I know of at least a dozen archery shops, and there's a gigantic Cabela's an hour down the road.
Seriously, have that many more people taken to hunting since 1992?
Are there that many merchandising dollars to be made, that a single 50-mile area can bear that many brick-and-mortar stores and shops?
Granted, Iprobably do live in the Hunting capital of the World, with more hunters per square mile than anywhere else in the country, but still.
Does anybody knowoff hand how Gander Mountain has fared since they stopped the catalog business and went strictly brick-and-mortar? It just seems to me like these companies are racing to buildand increase their market presence, but that the market might not actually be able to bear it.
Just something I was thinking about...
At that time, that archery shop was it. It was the only choice - everybody went there. If you didn't like it, you were either ordering from the Gander Mountain catalog, or going without.
I also remember anxiously waiting for the latest Cabelas catalog, Smoky Mountain Knife catalog, Gander Mountain, among othersto come in the mail, so I could rip through the pages, gawking at all the great things that I would never own. LOL
Enter 2007: There are at least 3 gander mountain stores within a 35-minute drive. There are probably 5 Dikk's Sporting Goods stores within that same distance(each with a huge hunting/outdoors section). I know of at least a dozen archery shops, and there's a gigantic Cabela's an hour down the road.
Seriously, have that many more people taken to hunting since 1992?
Are there that many merchandising dollars to be made, that a single 50-mile area can bear that many brick-and-mortar stores and shops?
Granted, Iprobably do live in the Hunting capital of the World, with more hunters per square mile than anywhere else in the country, but still.
Does anybody knowoff hand how Gander Mountain has fared since they stopped the catalog business and went strictly brick-and-mortar? It just seems to me like these companies are racing to buildand increase their market presence, but that the market might not actually be able to bear it.
Just something I was thinking about...
02-26-2007, 11:07 AM
#2
Nontypical Buck
Join Date: Dec 2006
Location: Lubbock, Texas
Posts: 1,401
RE: Hunting companies overextending themselves?
Gander Mountain is pretty interesting. Not sure when they stopped their catalog business but the stock has had a pretty wild ride over the last couple years. It had an Initial Public Offering at $20 per share in April of 2004 and closed that first day at $24.10. It steadily dropped over the nextyear and ahalf to $5.25 in October of 2005. Since then it bounced around reaching close to $10 over the winter of 2005 spring of 2006 and then dropping back down to it's all time low of $5.08 this summer (August 7, 2006). Since then it has done pretty well, more than doublingto it's current price of $11.15. That's their stock prices. The company has actually lost money that entire period.
Cabela's stock has been relatively stable in comparison. They hit their low of $15 in November 2005 and have climbed back to $25.07 currently. Their high was $29.35 in July of 2004.
The big "D" sporting goods stock has actually performed the best. Their stock started at $32 back in the summer of 2004 and hit a low of $27 in October 2005 and has since climbed all the way up to $54.35 currently.
Cabela's and Dks sporting goods both are actually making money. Cabela's PE ratio is 20.01 and Dks is 29.97; compare this to Target at a PE of 20.88 and Walmart with a PE of 18.29 and it looks like Cabela's is a potential buy right now with what seems to be some potential growth as well as a good solid price per earnings.
Oh well, I don't know if you wanted an in depth stock analysis, but I was curious and started researching and got sidetracked.
FWIW, Nathan
Cabela's stock has been relatively stable in comparison. They hit their low of $15 in November 2005 and have climbed back to $25.07 currently. Their high was $29.35 in July of 2004.
The big "D" sporting goods stock has actually performed the best. Their stock started at $32 back in the summer of 2004 and hit a low of $27 in October 2005 and has since climbed all the way up to $54.35 currently.
Cabela's and Dks sporting goods both are actually making money. Cabela's PE ratio is 20.01 and Dks is 29.97; compare this to Target at a PE of 20.88 and Walmart with a PE of 18.29 and it looks like Cabela's is a potential buy right now with what seems to be some potential growth as well as a good solid price per earnings.
Oh well, I don't know if you wanted an in depth stock analysis, but I was curious and started researching and got sidetracked.
FWIW, Nathan
02-26-2007, 11:19 AM
#3
Giant Nontypical
Join Date: Dec 2004
Location: Ohio
Posts: 7,876
RE: Hunting companies overextending themselves?
There more than hunting. I was at cabela's last week. Carharts were on sale at a very good price. Fishing seemed to be why most were there. A lot of campers as well. The registers though were not nearly as busy as I've seen them in the past, sooooo.....maybe things are starting to hit the fan.
There was one guy in the electronics department that if his attitude was any indication of how positive things were I'd say they were pretty crappy. Talked to another guy about a canoe. He showed me just how good a job Germ does there. He couldn't get the computor to work right.
There was one guy in the electronics department that if his attitude was any indication of how positive things were I'd say they were pretty crappy. Talked to another guy about a canoe. He showed me just how good a job Germ does there. He couldn't get the computor to work right.
02-26-2007, 11:20 AM
#4
Giant Nontypical
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Join Date: Feb 2003
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RE: Hunting companies overextending themselves?
Thanks Nate - that provides a pretty good look into how these companies are actually doing.
Dikk's is over-valued w/ P/E at 29, but like you said, Cabela's is pretty healthy.
From what I saw from Gander Mountain (GMTN) - it looks like their P/E is on the high-side, near 30(also over-valued), and that their return on investment and return on equity are low - well below their industry peers. Maybeshowing some cracks in the foundation??
http://stocks.us.reuters.com/stocks/overview.asp?symbol=GMTN
I wouldn't put much stock into the P/E that I cited for GMTN, b/c there is a lot of conflicting data from site-to-site, and most of them have it listed as 0 or unavailable. Not sure why.
Interesting stuff, eh?
Dikk's is over-valued w/ P/E at 29, but like you said, Cabela's is pretty healthy.
From what I saw from Gander Mountain (GMTN) - it looks like their P/E is on the high-side, near 30(also over-valued), and that their return on investment and return on equity are low - well below their industry peers. Maybeshowing some cracks in the foundation??
http://stocks.us.reuters.com/stocks/overview.asp?symbol=GMTN
I wouldn't put much stock into the P/E that I cited for GMTN, b/c there is a lot of conflicting data from site-to-site, and most of them have it listed as 0 or unavailable. Not sure why.
Interesting stuff, eh?
02-26-2007, 11:22 AM
#5
Join Date: Aug 2005
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RE: Hunting companies overextending themselves?
02-26-2007, 11:57 AM
#6
Giant Nontypical
Join Date: Feb 2003
Location: Phoenixville, PA USA
Posts: 5,541
RE: Hunting companies overextending themselves?
It doesn't surprise me that Cabela's is turning a profit. Every time I go to the one near me the registers are packed. Dck's also has a full lot at every location I see. The one thing these places all have in common is diversity. At Dck's you can get a bow, new golf clubs, a baseball bat, or a treadmill. At Cabela's you can get something for just about any outdoor hobby. That is probably why they do so well. They appeal to a large audience.
Quicksilver, I see you're from da Burgh. What is the shop you had to drive to out there?
Quicksilver, I see you're from da Burgh. What is the shop you had to drive to out there?
02-26-2007, 12:02 PM
#7
Nontypical Buck
Join Date: Dec 2006
Location: Lubbock, Texas
Posts: 1,401
RE: Hunting companies overextending themselves?
ORIGINAL: quiksilver
Thanks Nate - that provides a pretty good look into how these companies are actually doing.
I wouldn't put much stock into the P/E that I cited for GMTN, b/c there is a lot of conflicting data from site-to-site, and most of them have it listed as 0 or unavailable. Not sure why.
Interesting stuff, eh?
Thanks Nate - that provides a pretty good look into how these companies are actually doing.
I wouldn't put much stock into the P/E that I cited for GMTN, b/c there is a lot of conflicting data from site-to-site, and most of them have it listed as 0 or unavailable. Not sure why.
Interesting stuff, eh?
The ones that you see for them are purely guesswork.
02-26-2007, 12:04 PM
#8
Giant Nontypical
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Join Date: Feb 2003
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RE: Hunting companies overextending themselves?
Thanks for clarifying NP - I was wondering why all the confusion. Good stuff man. Think that's a side-effect of them (Gander)building too many stores, or maybe their lack of diversification (Cabelas and Dikk's each seem to carry a more diverse product line - especially Dikk's- everything from skiwear to paintball to watersports to ball bats, exercise equipment, golf, football, camping)
Probably just a side-effect of there being a finite amount of hunting dollars to go around, and retailers having to diversity to stay afloat. Cabelas even opened a bank offering financial services.
BRY - Used to be a place inSW PAcalled Burgie's Archery (sp?). Burgie's was THE place for bows in the area. Out of business for a long time now - Burgie retired. Big tin building in the middle of nowhere. I still have my first Burgie's buck contest t-shirt - if you entered the contest and got a buck (no matter if it was a 3" pencil-spike) you got a free t-shirt for checking it in.
Probably just a side-effect of there being a finite amount of hunting dollars to go around, and retailers having to diversity to stay afloat. Cabelas even opened a bank offering financial services.
BRY - Used to be a place inSW PAcalled Burgie's Archery (sp?). Burgie's was THE place for bows in the area. Out of business for a long time now - Burgie retired. Big tin building in the middle of nowhere. I still have my first Burgie's buck contest t-shirt - if you entered the contest and got a buck (no matter if it was a 3" pencil-spike) you got a free t-shirt for checking it in.
02-26-2007, 12:09 PM
#9
Banned
Join Date: Apr 2006
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RE: Hunting companies overextending themselves?
If it wasn't economically feasible and profitable they wouldn't be building the stores. Banks don't loan $$ they can't get back.
Yep, I'd say there is a demand for the stores and the sportsman are beating a path to their doors. These stores like Cabelas, Gander Mountain, and Scheels are beautiful works of art indoors and out. NO expenses have been spared.Now if they could get some more assault weapons in stock, they would make even more money.[8D]
Yep, I'd say there is a demand for the stores and the sportsman are beating a path to their doors. These stores like Cabelas, Gander Mountain, and Scheels are beautiful works of art indoors and out. NO expenses have been spared.Now if they could get some more assault weapons in stock, they would make even more money.[8D]
02-26-2007, 01:15 PM
#10
Giant Nontypical
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Join Date: Feb 2003
Posts: 5,716
RE: Hunting companies overextending themselves?
Not necessarily that simple, Don. Big companies have no problem securing the capital to take on ventures like building an elaborate new store, because they have the equity to back it.
However, just because they can get a loan doesn't mean that they're not going overboard building new stores all over the place or mis-managing their assets.
In my humble opinion, I see Cabela's as the true hunting market leader - they've got a really good supply chain thing going bybootstrapping their brick-and-mortar stores to their warehousing facilities, and strategically spacing them out. They've kept the catalog sales up while establishing a solid market presence on the ground. They're working to diversify through outfitting, banking, food sales, etc... They've made the stores so elaborate that they have become tourist attractions (the one in WV is the state's #1 tourist attraction).
On the other hand, Gander totally scrapped the catalog business and put down a zillion stores (more than the market could bear, IMO) - making the quantum leap from catalog sales to all over-the-counter. None of their stores are impressive enough to draw crowds from afar, and most of their core areas have been invaded by Cabelas, Dikk's or other competitors. Now they're paying the price.
Dikk's is a different animal, and is the leader in the sports sector, b/c they're hogging up hunting dollars while they're also able to capitalize on everything else from golf to weightlifting to running shoes.
Three different business plans at work, all of which appear to be at least self-sustaining. Neat to see it all in action.
However, just because they can get a loan doesn't mean that they're not going overboard building new stores all over the place or mis-managing their assets.
In my humble opinion, I see Cabela's as the true hunting market leader - they've got a really good supply chain thing going bybootstrapping their brick-and-mortar stores to their warehousing facilities, and strategically spacing them out. They've kept the catalog sales up while establishing a solid market presence on the ground. They're working to diversify through outfitting, banking, food sales, etc... They've made the stores so elaborate that they have become tourist attractions (the one in WV is the state's #1 tourist attraction).
On the other hand, Gander totally scrapped the catalog business and put down a zillion stores (more than the market could bear, IMO) - making the quantum leap from catalog sales to all over-the-counter. None of their stores are impressive enough to draw crowds from afar, and most of their core areas have been invaded by Cabelas, Dikk's or other competitors. Now they're paying the price.
Dikk's is a different animal, and is the leader in the sports sector, b/c they're hogging up hunting dollars while they're also able to capitalize on everything else from golf to weightlifting to running shoes.
Three different business plans at work, all of which appear to be at least self-sustaining. Neat to see it all in action.