Bass Pro Shops / Cabela’s

Mega Merger Strategy Is on Track for Outdoor Retail Giant(s).
Outdoor Specialist: Brand name apparel takes center stage at Bass Pro Shops, seen here at a Texas location.

HEADQUARTERS
Springfield, MO

DIGITAL FOOTPRINT
Our quick scan of Bass Pro and Cabela’s digital presence: Bass Pro Shops and Cabela’s websites have nearly identical homepages. In mid-March, both sites promo “2-Day Hot Buys” of 60% off products and a graphic prompts visitors to “Shop All Turkey Gear.” There are prompts to sign up for a store credit card and register for “Club” points. Social media accounts are rich with outdoor and hunting photos as well as tie-ins to retailer’s Nascar partnership. On YouTube, Cabela’s informational videos are standouts.

SOCIAL FOLLOWING
Twitter

Bass Pro: 334K
Cabela’s: 370K

Instagram
Bass Pro: 867K
Cabela’s: 1.1M

Facebook
Bass Pro: 3.3M
Cabela’s: 3.8M

IN-STORE REPORT
We visited a Bass Pro Shops store in San Antonio, TX.
Top Takeaways: Boats, most Bass Pro’s owned Ranger brand, fill the parking lot. A Paula Deen’s Family Kitchen restaurant is attached to the store. Fishing supplies are front and center at entry. Men’s apparel is dominated by the retailer’s Red Head brand in jeans, workwear and shorts. Flannel-lined pants are $29.97. Columbia, The North Face and Ascend, a house label, are also featured. Footwear dept. is stocked with Cabela’s Red Head brand as well as New Balance, Saucony, Under Armour, Muck, Merrell, Teva, Columbia, Sperry and Vionic.

The Rundown: Eighteen months after the mega merger of outdoor retail giants Bass Pro and Cabela’s, steps in the integration process are well underway. But from a brick-and-mortar standpoint, there doesn’t appear to be favorite banner. Bass Pro and Cabela’s each have 77 U.S. doors as of late March. There are another 16 stores across Canada with 10 being Cabela’s locations. In the U.S., the corporate parent appears to have taken a hard look at rationalizing its door count and the favorite outdoor specialty banner in particular states, much like Coke versus Pepsi in the cola category. Some states, like Tennessee with its six, only have Bass Pro stores. Others, such as Kentucky and Idaho with three each, only have Cabela’s locations. And the big outdoor state of Texas has 14 stores, evenly divided between Cabela’s and Bass Pro.

Background: Bass Pro, majority owned by Johnny Morris, paid $61.50 a share, or approximately $5.0 billion in aggregate, to acquire its outdoor rival Cabela’s on September, 2017. Thirteen months after the transaction, Moody’s Investor’s Service cited many strategic benefits of the combination, including margin improvement from cost and margin synergies related to the ongoing integration of Cabela’s operations and better pro-forma credit metrics than initially projected. With combined revenues of approximately $7.1 billion and an estimated 14 percent share of the U.S. retail sporting goods market, according to Euromonitor, the emerging entity is projected to benefit from its larger combined scale through meaningful cost savings and potential revenue synergies through 2020. Broad assortment ranging from hunt/fish and camping to golf, archery and key soft goods lowers the risk of declines in any one category.

Major 2018 Developments: Two of the biggest moves actually occurred in early 2019—an announcement that former Cabela’s distribution centers in Nebraska would shutter this spring and the January hiring of former Lowe’s chief customer officer Michael McDermott as the new president of omnichannel retail. Two developments last year signaled the company’s intent to make its vast network of retail square footage more productive—a July announced deal to add Sunglass Hut shops to 160 Bass Pro/Cabela’s stores and a subsequent report that Morris and Mark Wahlberg were huddling on possibly adding Wahlburgers’ restaurants in certain stores.

E-commerce: McDermott’s hire will likely have a significant impact in this area. It isn’t entirely clear what the combined entity’s e-commerce penetration is, but before the merger, Cabela’s was said to have a higher rate. While the staple, lower-margin hunting and shooting products won’t migrate online due to government purchase requisites (and could benefit from a steady exit from the category by Dick’s), Bass Pro/Cabela’s needs to make sure the outdoor set, especially younger consumers, don’t journey to Amazon and other websites for their online purchases.

What’s Next? As the integration of Cabela’s operations into the larger Bass Pro empire continues in 2019, Moody’s projects the business will benefit from Bass Pro’s execution with various cost-saving measures, more sales of higher-margined proprietary brands, stronger product assortment and growth in its boat business. Also, the investors service anticipates Bass Pro will be able to significantly reduce debt levels this year.