Why Cabela Wants To Sell It Lucrative Credit Card Operations

Cabela Inc. is a retailer of hunting, fishing, shooting, camping and other related outdoor recreation merchandise. Instead of selling the 27-store chain on the block, Cabela decided to prioritize the sale of its lucrative and highly profitable credit card operation. This is surprising since the credit card operations are responsible for 30% of the store’s $3.6 billion sales.

Sources say that selling the credit card operation will make the Cabela easier to sell because it will relieve Cabela of regulatory foresight and increase its profits.  On the other hand, Cabela is seeking for certain conditions prior to the sale of its credit card operations. The company wants to retain the profit stream from the business. Those close to the company believe an eventual sale may never materialize.

Bass Pro Shop, the closest competitor of Cabela in the past has expressed interest on buying the company but is has stayed in the sideline as the banks carefully examine the credit card operations. Several issues are slowing down the selling process that started way back in October last year. Activist investor Elliot Management that bought 11% stake was pressing management to seek strategic alternatives including a sale. Whether or not Cabela is serious about selling the store will become clear in the next two months.

All of Cabela directors are up for election but Cabela has postponed its acceptance of board nominations until it sets the annual meeting date. Last year, the meeting was held in June. Meanwhile Bass remains to stay in the sidelines and wait for an opportunity.

Sources also revealed that Cabela is not so profitable because it is run like a family business. It has subpar inventory control systems. When Bass earns the opportunity to buy Cabela, it plans to modernize operations to increase profits. Consolidation in outdoor retailing certainly makes sense and with the credit card operations, it could be a win-win situation.

The credit card industry is a lucrative market considering that many people want to have something to pay for their purchases. However, credit card ownership has a certain amount of responsibility. To select the best credit card and save thousands of dollars, visit CreditCard.info .

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