July 30, 2009 / 12:29 PM / 9 years ago

UPDATE 4-Cabela's profit tops expectations, ups rev outlook

* Q2 adjusted EPS $0.24 vs Wall Street $0.06

* Revenue rises 4.4 pct, same-store sales up 6.1 pct

* Says full-year EPS could top 2008

* Shares surge 13 percent, hit 20-month high (Adds CEO quote, detail on charge-offs, adjusts shares, adds byline)

By Ben Klayman

CHICAGO, July 30 (Reuters) - Outdoor gear retailer Cabela’s Inc CAB.N posted a bigger-than-expected 25 percent increase in quarterly profit, helped by cost-cuts and demand for hunting equipment, sending its shares to their highest in almost two years.

The company also raised its 2009 revenue outlook and said earnings for the year could top last year’s earnings.

“These guys had what appears to be a fantastic quarter,” Feltl and Co analyst Mark Smith said, citing strength across all segments, especially the hunting equipment category, and better-than-expected results within the credit card business.

“The fact that they’re talking about ‘if this momentum continues we’ll see earnings growth’ is very good news for investors,” added Smith, who has a “buy” rating on the stock.

Cabela’s sells gear and apparel for fishing, hunting and other outdoor activities in stores, through its catalog and on the Web. In recent quarters, sales of firearms and ammunition have given results a boost, but charge-offs at its financial services arm have cut into profit.

Net income rose to $9.12 million, or 14 cents a share, in the second quarter, from $7.28 million, or 11 cents a share, a year earlier.

Excluding one-time items, the company earned 24 cents a share, far above the 6 cents analysts, on average, had expected, according to Reuters Estimates.

“We continue to gain momentum in the hunting equipment category, as we take market share from our competitors,” Chief Executive Tommy Millner said in a statement.

During a call with analysts, Millner cited lower costs and reduced markdowns due to leaner inventory levels.

“We’re running the company on less inventory,” he said. “Having less inventory and having more inventory of the right stuff just leads you to make a lot less dumb decisions, quite frankly.”

Revenue rose 4.4 percent to $549.2 million, above the $531.3 million analysts had expected. Retail store revenue rose 10.2 percent, led by a 6.1 increase in same-store sales.

The company said delinquencies at its financial services arm were stabilizing while charge-offs in June were at the lowest level since February. Cabela’s said it still expects net charge-offs to increase, ranging between 5.1 percent and 5.5 percent for 2009.

For the full year, the company expects revenue and same-store sales to increase at low-single-digit percentage rates, up from its previous forecast for flat performance.

Cabela’s, based in Sidney, Nebraska, still expects full-year earnings per share to roughly equal 2008 results — or about $1.14 — but said profit could rise if the first-half momentum continues.

Analysts had been expecting 2009 earnings of $1.05 per share.

The company’s shares, which were already up 152 percent from January, surged as much as 21 percent, hitting $17.73 — their highest since November 2007 — in morning trading on the New York Stock Exchange.

By early afternoon they were up 10.8 percent to $16.26. (Additional reporting by Alexandria Sage; editing by Ted Kerr, Derek Caney and Steve Orlofsky)

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