Cabela's stock chart

As Cabela’s reports its fourth-quarter earnings Thursday, questions about a sale of the entire company — or parts of it — most likely will take precedence over sales of guns, apparel and outdoors equipment.

The report will be the first time management has spoken publicly since the Sidney, Nebraska-based retailer announced in early December that it would undergo a “strategic review,” which often points to a sale of the company or parts of it. The move came after activist hedge fund Elliott Management in October declared an 11 percent stake in the company and said it would press for big changes.

Wall Streeters and residents of Sidney who are waiting to hear word on the future of the company should get some clues — if not the entire answer — on Thursday.

“It’s very rare that they would say nothing,” said Damien Park, managing partner at Hedge Fund Solutions in Philadelphia, which advises companies and investors on shareholder activism.

In such quarterly reports, company executives speak on a conference call with Wall Street analysts who pepper company leaders with questions.

“They’re going to have questions and they’re going to come out ahead of it,” Park said of Cabela’s, which employs about 2,000 people in Sidney, a town of 6,800 about six hours west of Omaha.

Elliott, the New York-based hedge fund, has said nothing beyond an initial government filing announcing its stake. In that filing, it noted potential ways to “unlock” the value of Cabela’s — including a sale of the company, or parts of it.

Since then, Bloomberg News has reported that Bass Pro Shops is interested in buying the company. Reuters also reported that Cabela’s was shopping itself around to private-equity firms. Cabela’s hasn’t commented on the sale talk. Elliott also hasn’t commented.

The company found itself under activist pressure after its stock price had fallen 37 percent in 2015 before Elliott announced its stake. Some have said the chain expanded too quickly and its sales suffered.

Elliott’s silence since the October announcement of its Cabela’s holdings might signal that the hedge fund is satisfied with the company’s actions so far, some hedge fund watchers say.

Andrew Burns, a senior research analyst with D.A. Davidson Co. in Portland, Oregon, who follows the company, said he’s expecting an update Thursday on the so-called strategic review process. But he said he isn’t expecting the announcement of a finalized deal — like a sale. Cabela’s probably needs more time to hammer something out, Burns said.

“That’s going to be top of mind for investors,” he said. “I wouldn’t expect any sort of conclusions, but maybe a little more than just the press release,” which announced the strategic review.

Another analyst who follows the company, Nathan Yates of Forward View Consulting, in Virginia, agreed.

“We’re very interested in any discussion of selling Cabela’s or just the financial services side of the business,” he said. “The company’s management will need to address a potential sale at least vaguely.”

If there is a sale, Yates and Burns both said they expect the retail and financial services units to be sold together, rather than splitting the successful World’s Foremost Bank off from the retail sector.

The bank, which is the third-largest in Nebraska, operates Cabela’s Club Visa card. The credit card business raked in a profit of nearly $110 million in 2015, according to regulatory filings. Yates said the financial division’s operating margin was 34.2 percent in the third quarter of 2015, while retail stores had a 16.4 percent margin.

Margin refers essentially to how much a company makes for every dollar it spends.

“I’d rather see the whole firm sold than just disposing of the World’s Foremost Bank, because the financial services offerings are very high-margin,” Yates said.

Burns said while he agrees that a breakup of the company is less likely, it also isn’t out of the question.

“With the activist pressure, it might be something they ultimately do in 2016 to appease investors,” Burns said.

So far this year, Cabela’s stock is down 6.8 percent. It closed up 5.9 percent Tuesday, at $43.55 a share, on the New York Stock Exchange.

As for the fourth quarter of last year that will be the subject of Thursday’s earnings, Wall Street analysts are expecting earnings of $1.21 per diluted share, according to FactSet. That’s up from $1.11 for the same period in 2014.

Investors also are likely to be paying close attention to a December gun sales surge that may have benefited Cabela’s, Burns said.

Background checks for prospective firearms purchases throughout the month were more than 43 percent ahead of the same month in 2014, a report by Northcoast Research found. The surge may have been a result of gun control talk after the San Bernardino, California, mass shooting and the 2016 election cycle, which continues to heat up.

Burns said he expects the uptick in gun sales to continue through the general election. Whether gun sales help the retailer’s struggling apparel sales will be the question.

“Ideally for Cabela’s, you have more store traffic and more people buying guns as well as ammunition and apparel and everything else.”

Northcoast Research, though, said the gun sales surge “should be viewed as temporary — and this one does not seem to be bolstering other merchandise categories.”

The company’s apparel sales were disappointing on its third-quarter earnings call, which Chief Executive Tommy Millner blamed on unseasonably warm weather that led to a dip in cold weather clothing purchases.

Cabela’s in that quarter missed Wall Street earnings expectations, as it had in three of the past four quarters to that point.

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