Bass Pro Shops' $5.5 billion, $65.50-per-share deal to acquire Cabela's (CAB) marks the publicly traded end of one of the great retail stories of the past decade.
From very humble beginnings in the early 1960s, when founder Dick Cabela began selling fishing flies from ads placed in outdoor magazines, the chain grew to 85 stores. Not run-of-the mill stores, either, but massive operations in which you easily could get lost.
The company marched to its own drummer and was routinely disliked by the Street at times because it did not conform to what retailers were supposed to do. The company's massive stores had a museum-like quality, which broke a cardinal retail rule about not wasting space. The company purchased large tracts of land on which to build its stores in an era where you no longer were supposed to do that, either. The company also bucked the notion that retailers should not run their own credit card operations with its World Foremost Bank, which acted as the issuer for the Cabela's Club Visa and had more than 1.94 million active accounts in 2015.
When the markets tanked in 2008-2009, CAB shares dropped below $6, a 77% decrease over a two-year period. While most stocks took a beating in that era, Cabela's suffered in part due to its credit card operations and fears of growing charge-offs as consumers struggled to pay their bills. After all, that's what the other credit card issuers were dealing with, and surely a hunting-and-fishing chain would also suffer the consequences.
Interestingly, but not surprisingly, it didn't. Charge-offs remained well-below what other card issuers were facing, which was evidence that hunters and fisherman pay their bills, especially those with high average FICO scores that the Cabela's card attracted. (Last year's average score was 795).
The big Bass deal, however, also precipitated the sale of Cabela's credit card operations to Capital One (COF) in a transaction that was announced yesterday.
I knew there was something special about this chain in 2009, when the father of one of my son's basketball teammates told me that he'd offered three of his young sons the option of going trick or treating for Halloween or heading to the "local" Cabela's store, which is at least an hour's drive. The boys chose Cabela's, and the four of them spent a full eight hours in the store, enjoying elk burgers at the in-store restaurant and ample time in the store's legendary "Bargain Cave."
The stock rewarded shareholders over the years, rising more than ten-fold between early 2009 and 2013 before falling to $40 last October and ultimately accepting the $65.50 Bass offer one year later. As a buyer during the 2009 doldrums, I was also an early seller, and only participated in a portion of the company's solid run, but that's another story.
While this is not the end of Cabela's and just an ownership change, it does mark yet another end of investor access to an iconic brand. Yes, I'm still smarting over Krispy Kreme's acquisition.