Dive Brief:

• Outdoor and hunting retailer Cabela’s on Thursday reported second quarter 2016 earnings of 55 cents per diluted share, missing Wall Street analyst expectations for 62 cents per share.

• Total revenue increased 11.2% in the second quarter to $929.9 million, Cabela's said. U.S. same-store sales climbed 2% and consolidated comparable store sales rose 1.5% year over year. Revenue from retail store sales increased 13.3% to $644.9 million in Q2. Internet and catalog sales rose 3.3% to $141.3 million, and financial services revenue from the retailer's credit card business jumped 8.1% to $135.1 million.

• Cabela's also said Thursday that a strategic review in preparation for a possible sale remains ongoing, but gave no further details.

Dive Insight:

Rumors that Cabela’s could be sold have circulated for months, and for the first time the retailer acknowledged as much in documents filed last month with the Securities and Exchange Commission, although it has not commented on any sale so far.

Rival Bass Pro Shops—an outdoor retailer quite similar to Cabela’s—has long been the rumored suitor working with Goldman Sachs Group’s private equity unit to reach a deal. In addition, the New York Post last month reported that private equity firms Apax Partners and TPG Capital have met with Cabela’s in pursuit of a possible acquisition.

Firearm sales have emerged as a controversial aspect of Cabela's business in light of multiple mass shootings in the U.S. Some private equity firms have balked at gun-related investments. Furthermore, the founding Cabela family still holds a 24% stake in the company, which could impact Elliott Management's reported plans for a sale if the family's opinions do not match with the hedge fund management firm’s.

The acquisition rumors have pumped up Cabela’s sale price, prompting Barron’s last month to urge a sell. "Shareholders should seriously consider taking profits at recent price levels," Barron's said. "Our analysis suggests that any offer isn’t likely to come at much of a premium and that Cabela’s—whether alone or in tandem—still faces many challenges.” 

The Omaha World Herald notes that Citigroup, Bank of America, Capital One Financial, TD Bank and Synchrony Financial also are taking a close look at Cabela’s credit card business. Since Nordstrom sold its credit card portfolio to a Canadian bank last year, Cabela’s is the only U.S. retailer that still operates a bank in order to issue its own credit cards.

In relation to Cabela's Q2 2016 results, CEO Tommy Millner focused his remarks on the company's progress in cutting costs, which he said boosted sales and market share.

“Our expense and process improvement activities have exceeded our expectations,” Millner said in a statement. “It is important to note that the second quarter marks the third consecutive quarter of expense leverage at Cabela’s and the rate is accelerating. We have not only lowered our expense levels, but have also implemented process improvement activities to ensure that these savings are permanent. We are in the early stage of many of these initiatives and expect ongoing benefit in the balance of 2016 and beyond.”

But Cabela's still faces stiff competition, in some areas from its own stores: Last year executives said the company would slow its expansion efforts after finding that its new superstores are taking sales from existing locations.