A handful of specialized retailers that cater to highly selective outdoor and gun enthusiasts have defied the general retail downturn by posting strong sales over the past several years.
While recent media coverage and interest in guns has driven sales of guns and ammunition higher, these specialty retailers had reported strong sales long before the tragic and senseless events brought added attention to the sector. So much so that these sporting gun stores report sales are stronger now than ever.
From a commercial real estate perspective, the popular sporting gun retailers are attracting interest from owners of empty so-called big box stores. Although the retailers themselves are aiming for more selective store growth.
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While Walmart and Kmart may sell more guns, specialty retailers such as Cabela’s, Big 5 Sporting Goods and Gander Mountain devote more square footage in their stores to firearm sales. Notably also, in some cases they have become a natural fit for some of the nation’s vacant big box space.
“The whole exercise for (the past) four years has been to position ourselves so that we could digest and manage profitable growth. There are mornings that I wake up and I think, it is unbelievable that we have a brand that is known everywhere I travel all over the world, and we only have 40 stores,” Thomas L. Millner, CEO and president Cabela's Inc., said at the company’s annual conference. Millner boasts of throwing the second best annual conference in the company’s headquarters state of Nebraska - just behind Warren Buffett’s.
The company has plans to open seven new stores this year: Columbus, OH; Louisville, KY; Grand Rapids, MI; Green Bay, WI, and two in Denver. Those openings don’t take into account, Cabela’s other store brand, Outpost Sports, which does not sell guns. Between the two brands, Cabela’s looks to open about 1 million square feet of retail space a year.
Millner readily agress the chain could grow a lot faster but he has no desire to do so.
"We have the access to capital to grow faster but I think growing faster than 10, 11, 12 stores a year, would be a big mistake for our company,” Millner said. “When I hear companies say they're going to roll out 30 of these and 20 of those and 40 of those, I've been in the outdoor industry long enough to know, that's an easy thing to say, it is a really hard thing to do.
“In fact, I would argue, it's probably not doable because the second that customer walks in and he knows on Lake Whatchamacallit 10 miles from his house, everybody fishes with a Woolybooger and that store doesn't have it, they're dead. They will never go back. It's that simple and yet, that difficult,” Millner said.
Millner said he has enormous regard for Nordstrom.
"Nordstrom has 225 stores in the United States. They don't try to build 50 stores a year,” he said. “They build a few stores and they do it really well. And I think, as we look forward and start this next chapter of growth, that's what you can expect from us and that's why you should expect that from us.”
There is little talk of store closures at Cabela’s. According to Ralph W. Castner, CFO and executive vice president, even its oldest, worst-performing stores generate positive cash flow.
Would they close any?
Not unless somebody came along and gave them a “great offer on the real estate,” Castner said. “In which case, you probably just fill a next-generation store three miles away and move all the employees over.”
Big 5, Gander Mountain Expanding West and East
During the fourth quarter of 2012, Big 5 Sporting Goods opened eight stores, including one relocation and closed one store. The new store openings were in Big Bear and Pomona, CA; Bothell, WA; Payson, AZ; Price, UT; Ruidoso, NM; and Stephenville, TX. It also opened a store in Auckland, CA, as part of a relocation. It ended the year with 414 stores in operation 12 Western states.
At this time, the El Segundo, CA-based retailer’s plans for fiscal 2013 call for it to open from 15 to 20 new stores, including three relocations and to close only the three relocated stores. The openings will be in the chain’s 12-state footprint but the company added that it has its eyes on contiguous markets “should an opportunity arise to gently expand the footprint."
Privately-held St. Paul, MN-based Gander Mountain is in the process of opening North Carolina’s first “Gander Mountain Firearms Super Center” in Monroe. Construction on converting the former 30,000-square-foot Best Buy facility at 3151 West U.S. Highway 74 is projected to open in late April.
Last month, Gander Mountain opened a Firearms Super Center in Reynoldsburg, OH. In 2012, the company opened eight new stores, three each in North Carolina and Alabama and one each in Indiana and Georgia. The company announced only one new location opening in 2011.
Gander Mountain currently has 120 stores in 24 states.
Gun Control: Headwind or Tailwind?
One factor that could forestall continued expansion is the debate that has ensued over gun control. When talk of gun control flared up following the sad and senseless shooting of 20 children and six adults at Sandy Hook Elementary School in Newtown, CT, this past December, gun and ammunition sales soared as gun enthusiasts reacted to the potential of stricter purchase regulations.
The abnormally high firearms and ammunition sales have made forecasting future sales somewhat challenging, the retailers said.
“If I have one frustration today, it is that all the noise around firearms and ammunition, you will lose sight of what's really happening here, which is the enormous progress we've made in a new store model that works, that beats our expectations and is predictable now from geographic location to geographic location and that's really important, that is the future of the company,” said Cabela’s Millner.
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