This report contains "forward-looking statements" that are based on our beliefs, assumptions, and expectations of future events, taking into account the information currently available to us. All statements other than statements of current or historical fact contained in this report are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. The words "believe," "may," "should," "anticipate," "estimate," "expect," "intend," "objective," "seek," "plan," and similar statements are intended to identify forward-looking statements. Forward-looking statements involve risks and uncertainties that may cause our actual results, performance, or financial condition to differ materially from the expectations of future results, performance, or financial condition we express or imply in any forward-looking statements. These risks and uncertainties include, but are not limited to:

· the level of discretionary consumer spending;
· the state of the economy, including increases in unemployment levels and bankruptcy filings;
· changes in the capital and credit markets or the availability of capital and credit;
· our ability to comply with the financial covenants in our credit agreements;
· counterparty risk on our unsecured revolving credit facility;
· changes in consumer preferences and demographic trends;
· our ability to successfully execute our multi-channel strategy;
· the ability to negotiate favorable purchase, lease, and/or economic development arrangements for new retail store locations;
· expansion into new markets;
· market saturation due to new retail store openings;
· the rate of growth of general and administrative expenses associated with building a strengthened corporate infrastructure to support our growth initiatives;
· increasing competition in the outdoor segment of the sporting goods industry;
· the cost of our products;
· trade restrictions;
· political or financial instability in countries where the goods we sell are manufactured;
· adverse fluctuations in foreign currencies;
· increases in postage rates or paper and printing costs;
· supply and delivery shortages or interruptions caused by system changes or other factors;
· adverse or unseasonal weather conditions;
· fluctuations in operating results;
· the cost of fuel increasing;
· road construction around our retail stores;
· labor shortages or increased labor costs;
· increased government regulation, including regulations relating to firearms and ammunition;
· inadequate protection of our intellectual property;
· our ability to protect our brand and reputation;
· changes in accounting rules applicable to securitization transactions, including related increases in required regulatory capital;
· our ability to manage credit and liquidity risks;
· any downgrade of the ratings on the outstanding notes issued by our Financial Services business' securitization trust;
· our ability to securitize our credit card receivables at acceptable rates or access the deposits market;
· decreased interchange fees received by our Financial Services business as a result of credit card industry regulation and/or litigation;
· impact of legislation, regulation, and supervisory regulatory actions in the financial services industry including the Credit Card Accountability Responsibility and Disclosure Act of 2009 (the "CARD Act") and the proposed financial regulatory reform;
· other factors that we may not have currently identified or quantified;
· other risks, relevant factors, and uncertainties identified in our filings with the SEC (including the information set forth in the "Risk Factors" section of our Annual Report on Form 10-K for the fiscal year ended December 27, 2008, in Part II, Item 1A, of our Quarterly Report on Form 10-Q for the fiscal quarter ended June 27, 2009, and in Part II, Item 1A, of this report), which filings are available at the SEC's website at www.sec.gov.

Given the risks and uncertainties surrounding forward-looking statements, you should not place undue reliance on these statements. Our forward-looking statements speak only as of the date of this report. Other than as required by law, we undertake no obligation to update or revise forward-looking statements, whether as a result of new information, future events, or otherwise.

The following discussion and analysis of financial condition, results of operations, liquidity, and capital resources should be read in conjunction with our audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 27, 2008, as filed with the SEC, and our unaudited interim condensed consolidated financial statements and the notes thereto appearing elsewhere in this report.

Our critical accounting policies and use of estimates utilized in the preparation of the condensed consolidated financial statements as of September 26, 2009, remain unchanged from December 27, 2008.

We are a leading specialty retailer, and the world's largest direct marketer, of hunting, fishing, camping, and related outdoor merchandise. We provide a quality service to our customers who enjoy an outdoor lifestyle by supplying outdoor products through our multi-channel retail business consisting of our Retail and Direct business segments. Our Retail business segment is comprised of 30 stores, 29 located in the United States and one in Canada. Our Direct business segment is comprised of our catalog mail order business and our highly acclaimed Internet website.

Our Financial Services business segment also plays an integral role in supporting our merchandising business. Our Financial Services business segment is comprised of our credit card services which reinforces our strong brand and strengthens our customer loyalty through our credit card loyalty programs.

Financial Overview

                                            Three Months Ended
                                        September        September         Increase            %
                                         26, 2009         27, 2008        (Decrease)         Change
                                                           (Dollars in Thousands)
Revenue:
Retail                                 $    347,988     $    327,974     $      20,014            6.1 %
Direct                                      226,194          241,228           (15,034 )         (6.2 )
Total merchandise sales                     574,182          569,202             4,980            0.9
Financial Services                           48,186           41,896             6,290           15.0
Other revenue                                 1,928              702             1,226          174.6
Total revenue                          $    624,296     $    611,800     $      12,496            2.0

Operating income                       $     31,921     $     20,845     $      11,076           53.1

Net income per diluted share           $       0.28     $       0.15     $        0.13           86.7



                                            Nine Months Ended
                                    September 26,       September 27,        Increase           %
                                        2009                2008            (Decrease)        Change
                                                         (Dollars in Thousands)
Revenue:
Retail                             $       925,147     $       855,973     $     69,174            8.1 %
Direct                                     651,058             684,780          (33,722 )         (4.9 )
Total merchandise sales                  1,576,205           1,540,753           35,452            2.3
Financial Services                         126,209             120,857            5,352            4.4
Other revenue                               10,658              11,681           (1,023 )         (8.8 )
Total revenue                      $     1,713,072     $     1,673,291     $     39,781            2.4

Operating income                   $        63,195     $        56,783     $      6,412           11.3

Net income per diluted share       $          0.49     $          0.40     $       0.09           22.5

Revenue in our merchandising businesses increased $5 million, or 0.9%, for the three months ended September 2009 compared to the three months ended September 2008, and $35 million, or 2.3%, for the nine months ended September 2009 compared to the nine months ended September 2008. The net increases in total merchandise sales comparing the respective periods were due to 1) increases in comparable store sales led by increases in the hunting equipment category for the three and nine month 2009 periods compared to the 2008 periods, 2) the opening of our Billings, Montana, retail store in May 2009, as well as the opening of new stores in August 2008 and May 2008, and 3) increases in Internet sales. Partially offsetting these increases were decreases in catalog mail order sales. Financial Services revenue increased $6 million, or 15.0%, for the three months ended September 2009 compared to the three months ended September 2008 primarily due to increases in securitization income and net interest income. For the nine months ended September 2009 compared to the nine months ended September 2008, Financial Services revenue increased $5 million, or 4.4%, primarily due to an increase in securitization income partially offset by a decrease in net interest income.

Our operating income for the three months ended September 2009 increased $11 million, or 53.1%, compared to the three months ended September 2008. The increase in total operating income was primarily due to increases in revenue from our Retail business and Financial Services segments, a decrease in catalog and Internet related marketing costs due to a managed reduction in catalog page count, and improved efficiencies in compensation and advertising in our Retail business. These improvements were partially offset by lower revenue from our Direct business segment, lower merchandise gross margin, and an asset impairment charge. Operating income for the nine months ended September 2009 increased $6 million, or 11.3%, compared to the nine months ended September 2008. The increases in total operating income and total operating income as a percentage of total revenue were primarily due to increases in revenue from our Retail business and Financial Services segments, a decrease in catalog and Internet related marketing costs due to a managed reduction in catalog page count, and improved efficiencies in compensation and advertising in our Retail business. These improvements were partially offset by lower revenue from our Direct business segment, asset impairment charges and retirement and severance benefits, and lower merchandise gross margin. We finalized plans on certain future retail store sites during the second quarter of 2009 and consequently evaluated the recoverability of related properties and improvements resulting in the recognition of write-downs related to these assets totaling $12 million. For the first nine months of 2009, we recorded asset impairment charges of $13 million and severance and related benefits of $1 million. Economic trends could change undiscounted cash flows in future periods which could trigger possible future write downs.

Our primary focus is on managing our business efficiently to enhance near-term and long-term results for our shareholders. Our focus for 2009 is to continue to make progress on the following initiatives:

· improve our advertising strategy by using more targeted campaigns throughout our multi-channel model to increase store traffic;
· improve retail store sales and profitability through enhanced product assortment, a more streamlined flow of merchandise to our retail stores, and reduced operating expenses;
· manage the merchandise gross margins of our sales channels effectively;
· improve inventory management by actively managing quantities and product deliveries through enhanced leveraging of existing technologies, and by reducing unproductive inventory; and
· reduce catalog costs with a nominal impact on revenue.

Retail Store Efficiencies - One primary objective is to enhance our retail store efficiencies and improve our operating results. We are working on this objective by enhancing and optimizing our retail store merchandising processes, management information systems, and distribution and logistics capabilities. We continue to improve our visual merchandising within the stores and to flex more merchandise at our stores by adding more seasonal product assortments. Also, we continue to streamline the flow of merchandise to our stores increasing productivity and reducing labor costs as a percentage of revenue. To enhance our customer service at our retail stores, we are continuing to focus on customer service through training and mentoring programs.

For the three and nine months ended September 2009 compared to the respective 2008 periods, operating income for our Retail business segment increased $10 million and $13 million, respectively.

Leverage Our Multi-Channel Model - We offer our customers integrated opportunities to access and use our retail store, catalog, and Internet channels. Our in-store pick-up program allows customers to order products through our catalogs and Internet site, and have them delivered to the retail store of their choice without incurring shipping costs, thereby helping to increase foot traffic in our stores. Conversely, our expanding retail stores introduce customers to our Internet and catalog channels. We are capitalizing on our multi-channel model by building on the strengths of each channel, primarily through improvements in our merchandise planning system. This system, along with our replenishment system, allows us to identify the correct product mix in each of our retail stores, and also help maintain the proper inventory levels to satisfy customer demand in both our Retail and Direct business channels.

Next Generation Stores - To enhance our returns on capital we have developed a next generation store format which incorporates the following objectives:

· develop a store model that is adaptable to more markets, faster to start-up, and more efficient to operate to reduce our investment, improve productivity through higher merchandise density, and increase sales per square foot; and
· provide shopper-friendly layouts with regionalized product mixes, concept shops, and new product displays/fixtures featuring an improved look.

We incorporated these next generation store concepts into our two most recent retail stores - Billings, Montana, which opened in May 2009, and Rapid City, South Dakota, which opened in August 2008.

Direct Business - We are working on the following key growth objectives to expand our catalog and Internet channels:

· natural growth by offering industry-leading selection, service, value, and quality;
· acquisition, retention, and reactivation of customers through our multi-channel platform;
· category expansion to capitalize on the general outdoor enthusiast;
· develop and execute strategies to broaden our exposure to different growing networks, e-commerce platforms, and international e-commerce growth;
· an enhanced focus on the Canadian market by building on our Canada acquisition; and
· targeted marketing designed to increase sales of certain on-line market sectors.

Our Direct revenue decreased $15 million and $34 million, respectively, during the three and nine months ended September 2009 compared to the three and nine months ended September 2008 primarily due to a decrease in catalog mail order sales resulting from planned decreases in catalog pages and, to a lesser extent, a decrease in catalog circulation, customers buying more ammunition, firearms, and related products from our retail locations, and customers buying smaller quantities of higher margin soft goods. The managed decreases in catalog pages and circulation resulted in a decrease of $6 million and $13 million, respectively, in catalog-related costs comparing the three and nine months ended September 2009 to the three and nine months ended September 2008.

Our Credit Card Business - We continue working toward increasing our Financial Services revenue by attracting new cardholders through low cost marketing efforts with our Retail and Direct businesses. By continuing our conservative underwriting and account management standards and practices, we are controlling costs in our Financial Services segment through active management of our credit card delinquencies and charge-offs.

Worldwide Credit Markets and Macroeconomic Environment - Since April 2009, the credit markets have become more active and we were successful in completing a Term Asset-Backed Securities Loan Facility ("TALF") securitization as well as renewing two variable funding conduits. Although we believe there have been significant improvements in the credit markets, we remain cautious and will continue to closely monitor our debt covenant compliance provisions and our access to the credit markets. Our Financial Services business will continue to monitor developments in the securitization and certificates of deposit markets to ensure adequate access to liquidity.

Developments in Legislation and Regulation - On May 22, 2009, the Credit Card Accountability Responsibility and Disclosure Act of 2009 was signed into law. Certain provisions of the CARD Act became effective on August 20, 2009. Other provisions become effective in February 2010 and August 2010. On July 15, 2009, the Federal Reserve issued interim final rules for the August 20, 2009, CARD Act provisions. The Federal Reserve issued proposed rules on September 29, 2009, for the provisions effective February 22, 2010. In addition, legislation was introduced on September 24, 2009, by the House Financial Services Committee to accelerate the effective date to December 1, 2009, for the remaining provisions of the CARD Act, which are currently scheduled for February 2010 and August 2010. Among other things, the CARD Act:

· requires creditors to provide written notice to consumers 45 days before increasing an annual percentage rate on a credit card account or making a significant change to the terms of a credit card account. Creditors must also inform consumers of their right to cancel the credit card account before the increase or change goes into effect in the same notice. If a consumer cancels the account, the creditor is generally prohibited from applying the increase or change to the account.
· requires creditors to mail or deliver periodic statements for credit card accounts at least 21 days before payment is due.
· restricts annual percentage rate increases on outstanding balances except under limited circumstances;
· restricts interest rate increases during the first year an account is opened except under limited circumstances;
· requires creditors that increase annual percentage rates to review accounts at least every six months to determine whether the annual percentage rate should be reduced;
· requires creditors to obtain the credit card account holders opt-in in order to assess an over-limit fee and places restrictions on fees charged for over-limit transactions;
· restricts fees that may be charged for making a payment;
· requires creditors to allocate payments in excess of the required minimum payment to balances with the highest annual percentage rate before balances with a lower rate;
· requires fees to be "reasonable" and "proportionate" to the account holder's violation of the cardholder agreement;
· requires payment due dates to be the same day each month;
· requires posting of all agreements on the Internet;
· restricts issuance of a credit card to a consumer under the age of 21; and
· requires expanded statement disclosures, such as minimum payment warning.

The CARD Act also requires the Federal Reserve to conduct various studies, including studies regarding interchange fees, credit limit reductions, financial literacy, marketing, and credit card terms and conditions. Future legislation or regulations may be issued as a result of these studies. In addition to the CARD Act, the Federal Reserve also issued an amendment to Regulation Z at the end of 2008. This amendment will require additional enhanced disclosures to consumers on cardholder agreements, statements, and applications effective July 2010.

WFB is evaluating the effects of the CARD Act on its existing practices, cardholder agreements, annual percentage rates, and revenue. The full impact of the CARD Act on WFB is unknown at this time as the rules for several of the provisions have not been promulgated by the Federal Reserve, service providers need to implement operational changes, and the full impact on consumer behavior and the actions of our competitors is unknown. Compliance with the CARD Act provisions could result in reduced interest income and other fee income. WFB issued a change in terms effective July 2009 to lessen the effects of the CARD Act.

On June 17, 2009, the Treasury Department released its white paper for reform of the financial system that, among its many proposed changes, promotes heightened supervision and regulation of financial firms, establishes supervision and regulation for financial markets, protects consumers from financial abuse, and eliminates the ability for a credit card bank such as WFB to be owned by a nonbanking entity. The reform proposes to strengthen capital and other regulatory standards for all banks and bank holding companies. The reform also proposes to strengthen the supervision and regulation of securitization markets by requiring originators to retain 5% of the credit risk of securitized exposures, increasing reporting by asset-backed securities issuers, aligning compensation of securitization participants with the long-term performance of underlying loans, increasing the regulation of rating agencies, and reducing the use of ratings in the regulations and supervisory practices. Due to the complexity and controversial nature of the proposed reform, modifications are likely and the final legislation may differ significantly from this proposal. If the currently proposed reforms were adopted, Cabela's would no longer be allowed to own WFB, unless we were willing and able to become a bank holding company under the Bank Holding Company Act of 1956, as amended ("BHCA"). The adoption of the proposal to eliminate the credit card bank exemption from the BHCA could force us to divest our Financial Services business. Any such forced divestiture would materially adversely affect our business and results of operation.

Impact of New Accounting Pronouncements - We believe implementing the updates to ASC Topic 810, Consolidations, and ASC Topic 860, Transfers and Servicing, effective the beginning of fiscal year 2010, will require the consolidation of WFB's securitization trusts. Consequently, we believe there will be a material impact on our total assets, total liabilities, retained earnings and other comprehensive income, and components of our Financial Services revenue. We have evaluated the impact that the adoption of these accounting standards will have on our compliance with the financial covenants in our credit agreements and unsecured notes and do not believe that these standards, if they were effective as of September 26, 2009, would have, after providing permitted notices to our lenders, caused us to be in breach of any financial covenants in our credit agreements and unsecured notes. We can offer no assurances that the impact from the provisions of these standards will not cause us to breach financial covenants in our credit agreements and unsecured notes in the future.

On September 15, 2009, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, and the Federal Reserve (collectively, the "federal agencies") issued a Notice of Proposed Rulemaking, Risk-Based Capital Guidelines; Capital Adequacy Guidelines; Capital Maintenance; Regulatory Capital; Impact of Modifications to Generally Accepted Accounting Principles; Consolidation of Asset-Backed Commercial Paper Programs; and Other Related Issues relating to proposed changes to risk based capital as a result of ASC Topic 810 and 860. With the consolidation of the assets and liabilities of the Trust on WFB's balance sheet, under both the existing and proposed regulatory capital requirements, WFB's required capital would be increased. The effect of changes to regulatory capital requirements resulting from the proposed rules issued by the federal agencies, if adopted in their current form, will cause us to reallocate capital from our Retail and Direct businesses to meet the capital needs of our Financial Services business, or require us to raise additional debt or equity capital, which in turn could significantly alter our growth initiatives. Also, if WFB fails to satisfy the requirements for the well-capitalized classification under the regulatory framework for prompt corrective action, WFB's ability to issue certificates of deposit could be affected. We expect to have sufficient access to capital at the end of December 2009 to provide the necessary capital contribution to WFB so WFB can meet the regulatory capital requirements for the well-capitalized classification for the first quarter of 2010. We expect to amend our existing credit agreement so we can contribute sufficient capital to WFB.

Operations Review

The three months ended September 2009 and September 2008 each consisted of 13
weeks, and the nine months ended September 2009 and September 2008 each
consisted of 39 weeks. Our operating results expressed as a percentage of
revenue were as follows for the periods presented.

                                                 Three Months Ended                  Nine Months Ended
                                           September 26,      September       September 26,       September
                                               2009            27, 2008            2009            27, 2008

Revenue                                           100.00 %         100.00 %           100.00 %         100.00 %
Cost of revenue                                    61.84            61.47              60.62            60.14
Gross profit (exclusive of depreciation
and amortization)                                  38.16            38.53              39.38            39.86
Selling, distribution, and
administrative expenses                            32.95            35.12              34.88            36.47
Impairment and restructuring charges                0.10                -               0.82                -
Operating income                                    5.11             3.41               3.69             3.39
. . .