Their credit card portfolio is experiencing increased writeoffs.
Retail has been a four-letter word lately, but sporting goods retailer Cabela's reported growth in earnings and revenue in the second quarter, helped by growth in same-store sales and increased demand for hunting equipment. However, it recently reported that its credit card portfolio had increasing charge-offs in July, a thorny issue that discounter Target (NYSE: TGT) has faced in the past. The company is still looking for growing revenue and same-store sales in 2009 over last year, but expects earnings to be flat. The mixed outlook prompted a JPMorgan analyst to recently downgrade the stock projecting weakness in guns, ammo, and other discretionary items. A total of 90% of the 724 CAPS members rating Cabela's see it topping the S&P.