Abercrombie & Fitch 2008 Annual Report Download - page 10

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Table of Contents
• ability to hire, train and retain qualified associates;
• changes in consumer spending patterns and consumer preferences;
• ability to develop innovative, high-quality new merchandise in response to changing fashion trends;
• the impact of competition and pricing pressures;
• availability and market prices of key raw materials;
• interruption of the flow of merchandise from key vendors and manufacturers and the flow of
merchandise to and from distributors;
• ability of manufacturers to comply with applicable laws, regulations and ethical business practices;
• availability of suitable store locations under appropriate terms;
• currency and exchange risks and changes in existing or potential duties, tariffs or quotas;
• effects of political and economic events and conditions domestically and in foreign jurisdictions in
which the Company operates, including, but not limited to, acts of terrorism or war;
• unseasonable weather conditions affecting consumer preferences;
• disruptive weather conditions affecting consumers’ ability to shop; and
• effect of litigation exposure potentially exceeding expectations.
The following sets forth a description of certain risk factors that the Company believes may be
relevant to an understanding of the Company and its business. These risk factors, in addition to the factors
set forth above, could cause actual results to differ materially from those expressed or implied in any of
the Company’s forward-looking statements.
The Current Financial Crisis and General Economic Conditions Could Have a Material Adverse
Effect on the Company’s Business, Results of Operations and Liquidity.
Consumer purchases of discretionary items, including the Company’s merchandise, generally decline
during recessionary periods and other periods where disposable income is adversely affected. The
Company’s performance is subject to factors that affect worldwide economic conditions including
employment, consumer debt, reductions in net worth based on recent severe market declines, residential
real estate and mortgage markets, taxation, fuel and energy prices, interest rates, consumer confidence,
value of the U.S. dollar versus foreign currencies and other macroeconomic factors. Recently, these
factors have caused consumer spending to deteriorate significantly and may cause levels of spending to
remain depressed for the foreseeable future. These factors may cause consumers to purchase products
from lower priced competitors or to defer purchases of apparel and personal care products altogether.
The economic downturn could have a material effect on the Company’s results of operations and its
liquidity and capital resources. It could also impact the Company’s ability to fund its growth and/or result
in the Company becoming reliant on external financing, the availability of which may be uncertain.
In addition, the current economic environment may exacerbate some of the risk noted below,
including consumer demand, strain on available resources, international growth strategy, store growth,
interruption of the flow of merchandise from key vendors and foreign exchange rate fluctuations. The
risks could be exacerbated individually or collectively.
8
Source: ABERCROMBIE & FITCH CO /DE/, 10-K, March 27, 2009 Powered by Morningstar® Document Research℠