Bass Pro Hooks Cabela’s – Now What?

Is This the End for an Iconic Outdoor Brand?

We love the outdoors and we also love to buy things that enhance our enjoyment of our favorite outdoor sport, whether it be fishing, hunting or camping. Oh, that look we get on our faces when we walk into a Bass Pro or Cabela’s store ! We’re like kids in a candy store …only worse. There’s always this warm, inviting feeling that overcomes me whenever I walk through their doors. Maybe you’ve had the same experience.

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Yes, I love these two stores! It’s not just their mind-boggling array of outdoor gear, apparel and everything else you could possibly need or want. No, they are not like any other retail store you’ve ever been in. The fact is, they’re more than just  stores – they’re more like some outdoor-themed Disney World chock-full of toys for adults!

Whenever I visit one of these stores, I don’t feel like I’m just shopping for fishing tackle or camping gear. No, it’s more like an adventure… or the feeling of one. Maybe it’s all that taxidermied and mounted wildlife everywhere or the indoor mountains … or the giant aquariums featuring fish I’ve actually had the pleasure of catching. I could spend hours in them and not tire.

Sadly though, in case you haven’t heard, soon there will only be one of these iconic companies standing. Well, sort of…but not completely. You see, Bass Pro is buying Cabela’s. That’s right, Cabela’s will no longer exist as a company, though it will most likely live on as a brand name.cabelas store image

The deal is still a few months away from being finalized. The companies say the buyout will be good for both. I don’t doubt it will. As buyouts usually go, it will also be good for the shareholders of two outdoor gear giants, as well as for the Wall Street banks involved.

But not everyone will come out winners – there are always losers in buyouts and mergers. Sure Bass Pro will keep Cabela’s stores open in locations where it makes sense financially, but I feel for those employees in states where the companies have overlapping operations such as in Texas, Ohio and Georgia. There will be job losses as Bass Pro will inevitably have to close stores in some of those areas.

And what will happen to the community of Sidney, Nebraska where Cabela’s has its headquarters and employs a third of the town, or roughly 2000 people? I doubt very much Bass Pro will want keep two headquarter bases. We’ll have to wait and to see, I guess.

From Humble Beginnings

Cabela’s, World’s Foremost Outfitter, has been around a long time. It was born  in 1961 when Dick Cabela started selling hand-tied fishing flies by mail order out of his kitchen.

The company grew rapidly, and today  Cabela’s is a publically traded company on the New York Stock Exchange and operates about 87 distinctive outdoor retail stores in the U.S. and Canada. This is in addition to the company’s international reach into over 125 countries with its catalogs and website.

Who hasn’t heard of Bass Pro Shops. The closely held company with humble roots similar to Cabela’s was founded in 1972 in Springfield, MO by Johnny Morris out of the back of his father’s liquor store.

Fast forward, today the company owns about 100 outdoors-themed retail stores in addition to its Tracker Marine Centers, the Big Cedar Lodge, a 4600 acre wilderness resort, and the White River Marine Group, the largest manufacturer  by volume of recreational and fishing boats in the world. Tracker and Mako are two of Bass Pro’s most popular boat brands.

Tough Times for the World’s Foremost Outfitter

Well, sales and profits at Cabelas have been declining over the last few years, and that’s not something that Wall Street or shareholders take too kindly. For a publically-traded company, the all-important analysts’ earnings expectations missed too often is unforgivable. The company has facing been mounting pressure from shareholders for some time now.

Efforts at cost-cutting and other measures have done little to improve the company’s fortunes as store, online and catalog sales continue to fall. The only bright spot in Cabela’s business has been its World’s Foremost Bank/Cabela’s Club credit card arm which continues to grow modestly.

The retail sector is a tough environment to be in, to begin with. Furthermore both Bass Pro and Cabela’s have faced increased competition from the likes of Dick’s Sporting Goods, Wal-Mart, online giant Amazon and other retailers who have been aggressively expanding their outdoor product offerings, cutting into the companies’ profit margins.

The retail space has recently seen a legion of bankruptcies, store closings and consolidation. Sears- Kmart, Sports Authority and Gander Mountain (acquired by Camping World Holdings) by are but a few of the brands affected by over-expansion and increased competition. A case of too many retailers chasing too few dollars.

While it may seem like the buyout came out of nowhere, that’s not so. Cabela’s had been quietly weighing its options and putting out feelers since early 2015, over a year before officially announcing its intention to merge with Bass Pro in a deal worth $5.5 billion (that figure has since been reworked downward to $5 billion as the deal to separately sell Cabela’s World’s Foremost Bank subsidiary to Capitol One hit a snag).

The buyout, however, is on track and is expected to be approved by Cabela’s stockholders in a special meeting vote on July 11th of this year. Barring some last minute regulatory snafu, the deal is expected to close before the end of 2017.

Bigger Outdoor Gear Market Share, More Competitive

So, what does the acquisition mean for Bass Pro, Cabela’s and outdoors lovers going forward?

As for the Cabela’s, the name will likely remain above the storefront even if as a company it no longer exists. Cabela’s is a highly recognizable brand in the outdoor recreation retail sphere, and it has created a loyal customer base in its 50-plus years of operation. It would make sense that Bass Pro would want to keep and continue to market the brand. In that sense, I believe there will still be a Cabela’s store for people to shop.

Business-wise, they’re a good fit. While there are always uncertainties related to mergers, the two operations complement each other well, and the marriage should produce a stronger, more financially stable company in the long run.

Cabela’s is a little more slanted toward hunting while Bass Pro is synonymous with fishing. The merger will create a company that will command almost a quarter of the market share in the camping, fishing and hunting space.

Bass Pro is dominant in the Midwest and East Coast, but Cabela’s has a bigger presence in Western states and Canada. Buying Cabela’s significantly increases Bass Pro’s footprint across North America.

A bigger, operationally stronger company created by the merger will be better positioned to take on ecommerce megastore Amazon as well as big bricks and mortar chains like as Dick’s and Wal-Mart as it realizes better operating synergies, efficiencies of scale, and cost savings.

Sure there will be some store location closures and behind the scenes business tweaks, but since they already share very similar business backgrounds and retail cultures, I believe that, for the most part, there will be little disruption to the shopping experience that both of these iconic brands have spent decades cultivating.

In other words, for those of us who love these two stores and shopping for outdoor gear, we should be still able to walk into either store in the near future and continue enjoy that “kid in a candy store” feeling.

We’d like to hear your thoughts on the buyout. What do you think of these two great outdoor brands coming together?

 

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