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Outdoor Retailer Cabela’s Is Considering a Sale

Outdoor Sports Store Cabela's Opens To Big Crowds In BerlinOutdoor Sports Store Cabela's Opens To Big Crowds In Berlin
A diorama inside a Cabela's store in Berlin, MA.Photograph by Boston Globe via Getty Images

Hunting and camping retailer Cabela’s is considering a sale – of itself. The move comes less than a month after the company unveiled plans to restructure in a bid to lower expenses.

Bloomberg has reported that Cabela’s (CAB) is weighing potential takeover interest and mulling if it should begin a sales process. The news agency, citing people familiar with the matter, said that the retailer hasn’t yet authorized a formal strategic review. Still, the company is working with its regular advisers at Guggenheim Partners, Bloomberg said.

Cabela’s shares rallied on the news in after-hours trading. Through Thursday’s close, the stock had suffered a 21% decline this year. The company’s closest publicly traded peers, Dick’s Sporting Goods (DKS) and Hibbett Sports (HIBB), are also experiencing double-digit declines for 2015.

Cabela’s has struggled of late to generate the strong sales growth that it had previously enjoyed for ammunition and firearms In early 2013, for example, Cabela’s reported the highest same-store sales growth since going public in 2004 – bolstered by high demand for those goods. There had been concerns at the time about stricter gun control laws, though a bill that would have expanded background checks for gun purchases was defeated by the Senate in April 2013. That legislation would have been the biggest push to restrict firearm sales in nearly two decades in the U.S.

Since then, Cabela’s has lost that sales boost, resulting in some cooling demand. In 2014, there was a decrease of $255 million in comparable store sales, led by a drop in the hunting equipment product category. Cabela’s generated 44% of the company’s sales from the hunting category last year.

And while sales increased 9.1% to $2.6 billion for the first nine months of this year, profits over the same period declined. That drop explains why Cabela’s launched a restructuring plan to run a leaner business.