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Cabela's to Expand Operations in Canada

Zacks Equity Research

Cabela's Incorporated (CAB), a leading outfitter of hunting, fishing and outdoor gear, intends to expand its operations in Canada. The company plans to open a 70,000 sq. foot store in Calgary, Alberta.

The new store will mark Cabela’s third outlet in the state of Alberta, the other two being located in Edmonton. The new outlet, which will come up near the Deerfoot Mall will be built on the model of Cabela’s next-generation stores and its construction is likely to begin in the later part of 2014. The store will generate employment for about 180 full-time and part-time employees when it opens in the fall of 2015.

Cabela’s forayed in Canada in 2007 and its headquarters are located in Winnipeg, Manitoba. In total, the company operates five stores in Canada,  including two in Edmonton and one each in Winnipeg, Saskatoon and Regina.

The company plans to open another 20 next-gen stores over a two year time frame, which includes stores in  Barrie, Ontario, (Jul 10, 2014), Nanaimo, British Columbia, (fall of 2014) and Moncton, New Brunswick (2015).

Strong performance of Cabela’s next-generation stores continues to cushion its top and bottom lines. Moreover, these next-generation stores are outperforming the company’s legacy stores in terms of both sales and profit per square feet. We remain optimistic about this next generation store format as it requires less capital investment, enhances store productivity, and helps to increase sales per square feet.

Earlier in June, the company announced its plans to open three domestic next-gen outlets in Huntsville, AL; Woodbury, NY and Oklahoma City, OK.

The company’s store expansion drive reflects its initiatives to expand in regions that have considerable growth potential. Moreover, the company is looking for opportunities to expand its store base to effectively penetrate into its target markets and generate healthy sales.

Currently, Cabela’s has a Zacks Rank #3 (Hold). Better-ranked stocks worth considering in the retail sector include Build-A-Bear Workshop Inc. (BBW), Five Below, Inc. (FIVE) and Office Depot, Inc. (ODP). All these carry a Zacks Rank #2 (Buy).

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