The following members will be charged with leading the review and analysis of the following aspects of the industry and the three corporations:
Introduction and Industry/Company Overview – Dan
Company Investing Activities – Mike
Company Financing Activities – Adam
Company Operating Activities – Team
Conclusion and Best Company – Team
Final Presentation – Team
Overview of Industry
The retail industry is primarily engaged in the marketing and sale of goods directly to consumers or businesses. The type of goods sold can vary from tackle boxes to sofas.
The industry is highly competitive. With few barriers to entry and narrow profit margins, the retail sector tends to be one of monopolistic competition leading to perfect competition. Therefore, the social impact of a company (i.e. philanthropy, charity, etc.) has little influence on profits. The consumer tends to go to the store with the lowest prices, regardless of the means in which the prices are obtained.
The retail sector is being analyzed in this report because historically, this industry has been a safe haven for investors during uncertain times in the stock market (Kramer). Conversely, during the current tumultuous market, retail stocks have been falling (Street.com, turn tail retail). There may be many causes for this apparent contradiction, including inflation, poor investments by the companies, consumer trepidation, and many more.
Company description:
Costco
Costco provides wholesale quantities of products at wholesale prices. Headquartered in Issaquah Washington, Costco has almost 490 warehouse stores serving over 47 million cardholders. The company has stores in thirty seven U.S. states as well as Canada, Japan, Mexico, South Korea, Puerto Rico, Taiwan, and the United Kingdom.
The company’s emphasis on low cost, limited selection products with required membership to limit shrink is what separates Costco from many other companies in the retail sector; including Cabella’s and Dicks Sporting Goods. The lower cost of goods relative to competitor may provide a strategic advantage for Costco if America’s economy continues towards recession. A copy of Costco’s annual statement for 2006 and other investor information may be found here.
Dick’s Sporting Goods, Inc.
Dick’s Sporting Goods, Inc. is a chain of sporting goods superstores offering equipment for nearly every kind of team and individual sport. The store also offers equipment for outdoor activities such as hunting, fishing and hiking. A wide variety of fitness equipment and name-brand apparel is also offered by the store. As of August 4, 2007, the company operated 315 stores in 34 states, primarily throughout the eastern half of the United States. The company also owns Golf Galaxy, a multi-channel golf specialty retailer, with 77 stores in 29 states, ecommerce websites and catalog operations (Dick's Sporting Goods). The company currently employs 8,359 (Yahoo Finance) persons and has annual sales of approximately $3.1 billion. A copy of the company's annual report may be found here.
The company’s emphasis is on offering a diverse line-up of premium sports apparel and products at a competitive price. Dick’s is a “one-stop shop” for individual involved in multiple sports.
Cabela's
The company initially operated from the kitchen table of Dick and Mary Cabela of Chappell, Nebraska began its direct business in 1961 by offering fishing flies through advertisements in national outdoor publications. In 1963 they published their first catalog and subsequently incorporated as a Nebraska corporation in 1965. 1987 brought about the opening of their first destination retail location in Kearney, Nebraska. The company further expanded their market with the launch of their online store in 1998. The company was reincorporated as a Delaware corporation in January, 2004 and made its debut on the New York Stock Exchange on June 25, 2004 under the symbol CAB.
Cabela’s is the worlds largest direct marketer and a leading specialty retailer of hunting, fishing, camping, and related outdoor merchandise at 26 locations in 18 states and Canada with an additional 7 planned openings for 2008. Headquartered in Sidney, Nebraska, Cabela’s Incorporated operates a family of 9 subsidiary companies and employs 11,700 people.
1. Cabela's Retail, Inc. was formed in 1996 to consolidate the management and operation of their growing number of retail store destinations. Cabela's Retail, Inc. is a Nebraska corporation.
2. Cabela's Catalog, Inc. was formed in 1999 to consolidate the management and operation of Cabela's extensive mail-order catalog business. It is a Nebraska corporation.
3. Cabelas.com, Inc. was formed in 1999 to consolidate the management and operation of their rapidly expanding Internet sales business. Cabelas.com, Inc. is a Nebraska corporation.
4. Cabela's Outdoor Adventures, Inc. was created in 1999 to serve as a travel agency specializing in big-game hunting, wing shooting, fishing and trekking trips. It is a Nebraska corporation.
5. Cabela's Ventures, Inc. was formed in 1996 to own, manage, develop and broker real estate adjacent to their destination retail stores. Cabela's Ventures, Inc. is a Nebraska corporation.
6. Cabela's Wholesale, Inc. was formed in 1999 to consolidate the management and operation of Cabela's wholesale purchasing activities. Cabela's Wholesale Inc. is a Nebraska corporation.
7. Van Dyke Supply Company, Inc. is a wholly owned subsidiary of Cabela's Incorporated. Based in Woonsocket, South Dakota, Van Dyke Supply Company offers home restoration products though catalog marketing. It is a South Dakota corporation. Cabela's Marketing and Brand Management, Inc. was formed in 1999 to consolidate the management of Cabela's brand enhancement activities.
8. Cabela's Marketing and Brand Management, Inc. is a Nebraska corporation.
9. World's Foremost Bank is a wholly owned banking subsidiary of Cabela's Incorporated. It was formed in 2001 to manage and administer a stand-alone credit card business. World's Foremost Bank is a limited purpose, state-chartered bank.
Cabela’s operates in a number of large and highly fragmented and intensely competitive markets. They compete directly or indirectly with other broad-line merchants, large-format sporting goods stores and chains, mass merchandisers, warehouse clubs, discount stores and department stores, small specialty retailers and catalog and Internet-based retailers. They believe that their competitive advantages are their wide and distinctive merchandise selection and the superior customer service associated with their brand. Additionally, their multi-channel model provides them with an unparalleled ability to allow customers to choose the most convenient sales channel. With its growing brick and mortar business it has become more difficult dealing with the growing inventory management of 250,000 sku’s and 5,000 vendors. In a highly competitive specialty retailing market, it is imperative to sales success that its retail locations maintain high in-stock standards while increasing operational efficiencies in the supply-chain model, which will provide for the ability to leverage greater profitability through increased sales revenue. In a market with multiple mature retailers, they are at a disadvantage in this area and if they wish to continue to exploit their wide and distinctive merchandise selection, they will need to improve in this area. An additional unique challenge facing Cabela’s is the risk associated with World’s Foremost Bank and the management of its branded Visa cards.
Annual Report
Works Cited
Cabela's Masters Inventory Management. By: Kusterbeck, Stacey, Apparel Magazine, 15432009, Apr2007, Vol. 48, Issue 8 Mctague, Jim.
“Cabela’s Targets Growth with Plans to Add Stores.” The Wall Street Journal Online 26 Aug. 2007.
Cabelas. Home page. 18 Nov. 2007. 2007
"Costco Wholesale Company." Hoovers.Com. 10 Nov. 2007
Dick's Sporting Goods Inc. Home Page. "Investor Relations." 20 Nov. 2007.
"Don’t Turn Tail on Retail." Thestreet.Com. 6 Nov. 2007. 10 Nov. 2007
Kramer, Jim J. Jim Kramer's Real Money. New York: Simon & Schuster, 2005.
Yahoo Finance. Dick's Sporting Goods Inc. Profile. 20 Nov. 2007.
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