Outdoor financials: Cabela's Q1 profit jumps 57 percent, plus Garmin

Cabela's reported a 57-percent increase in first-quarter net income, and Garmin reported a drop in its first-quarter net income and revenue.
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Cabela's Q1 profit jumps 57 percent

Cabela's (NYSE: CAB) reported a 57-percent increase in first-quarter net income, helped by soaring revenue from its financial services segment.

The company also said rising Internet sales increased its direct-to-consumer revenue for the first time in six quarters. It’s seeing increases in sales of boating, fishing and camping equipment, footwear, and gifts and furnishings, it added.

Cabela’s posted net income of $8.1 million, or $0.12 per share, in the quarter ended April 3. That compares with $5.13 million, or $0.08 per share, in the year-ago period. Excluding a $12 million special charge related to its credit card unit, the company earned $0.29 per share.

Revenue rose to $559.6 million from $539.5 million, as a big jump in financial services revenue offset a drop in merchandise sales. Same-store sales fell 1.7 percent.

Revenue in the financial services division, which oversees its Cabela's Club Visa card customer loyalty rewards program, increased 77 percent to $59.9 million due to higher interest and fee income and a lower provision for bad debt.

Cabela’s said retail sales slipped nearly 2 percent to $271.3 million, but direct catalog and Internet revenue rose 2 percent to $222.7 million.

During the quarter, the Federal Deposit Insurance Corp. issued a report to Cabela's expressing concern that its credit card division improperly assessed various overlimit fees, penalty interest rates and late fees over six years, and also used an improper collection practice. Cabela's said it is in talks with the FDIC to resolve these matters. The company took the $12 million charge in the first quarter to cover what it estimates would be its maximum liability if it cannot resolve the issues with the FDIC.

Cabela's said it has eliminated or modified all of the practices of concern to the FDIC.

Looking ahead, Cabela’s said that based on strong first-quarter results, it expects to meet or exceed earnings expectations for 2010.



Garmin reports drop in Q1 earnings, revenue


Despite a strong showing by the majority of its business units, Garmin (Nasdaq: GRMN) reported a drop in first-quarter net income and revenue, dragged down by a 15-percent revenue decline in its automotive and mobile unit.

The outdoor/fitness segment posted revenue growth of 28 percent in the quarter on the heels of 10-percent growth during 2009. Its marine segment grew 9 percent, and aviation was up 12 percent.

The company reported a net income of $37.3 million, or $0.19 per share, for the three months ended in March, down from $48.5 million, or $0.24 per share, a year ago. Excluding the impact of foreign currency swings and tax items, earnings came to $0.38 per share, up from $0.25.

Overall revenue fell to $431.1 million from $436.7 million.

"The first quarter of 2010 provided mixed results, but we view the overall trends in the business as positive indicators for the remainder of the year," CEO Min Kao said in a statement.

The company said it still expects to achieve its full-year guidance for both revenue and earnings. Margins improved on reduced warranty estimates.

Shares of Garmin were down to $32.05 in early trades on May 5 -- the lowest level for the stock in two months. It closed at $34.19, down $3.29, or 8.78 percent.



--Compiled by Wendy Geister

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