Cabelas Acquires Canadian Retailer

Aug 23, 2007 1:26 AM  By

Canada is turning into a strategic vantage point for outdoor sporting gear merchant Cabela’s. The Sidney, NE-based merchant announced plans to buy S.I.R. Warehouse Sports Store, a Winnipeg-based specialty retailer of hunting, fishing, camping, and related outdoor merchandise.

Cabela’s plans to close the transaction in 30 to 60 days. The deal is the second venture in Canada for Cabela’s since it already plans to build one of its trademark destination retail stores at the proposed Lac Mirabel development in Montreal.

S.I.R. was founded in 1924 by Sydney Isaac Robinson and has grown into one of Canada’s leading outdoor outfitters through its mail-order operation and 44,000-square-foot retail store in the heart of Winnipeg’s busiest shopping district. A family-owned and operated business, S.I.R is headed by Earl Robinson, son of the company’s founder, who serves as president.

Sales at Cabela’s rose 15% in fiscal 2006 to $2.06 billion. Net income climbed 18.2% to $85.8 million, and direct sales increased 4.2%, to $1.09 billion.

The purchase will allow Cabelas to “accelerate growth of our retail, catalog and Internet business in Canada,” says CEO Dennis Highby in a statement.

S.I.R.’s facilities will become the headquarters for Cabela’s Canadian operations. Founded in 1961, Cabela’s went public in 2004.

Industry watchers view the deal as a win-win situation.

“This seems to be a good fit,” says Stuart Rose, managing director for investment bank Tully & Holland. “Cabela’s is built around destination stores and direct mail sales. This acquisition seems to fit both criteria. Cabela’s is hot right now with good sales growth, but does not have a history of acquisitions. This seems like a good starting point.”

Chris Shannon, managing director for investment bank Berkery, Noyes & Co., agrees.

“This is a perfect fit for Cabela’s and a way to further expand in Canada,” he says. “I’m very familiar with the Canadian market and S.I.R. will be a very good complement. It would probably have been even better to do this a few years ago when the U.S. dollar was stronger vs. the Canadian dollar.”