Abercrombie & Fitch 2011 Annual Report Download - page 10

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ITEM 1A. RISK FACTORS
F
ORWARD
-L
OOKING
S
TATEMENTS
A
ND
R
ISK
F
ACTORS
.
We caution that any forward-looking statements (as such term is defined in the Private Securities
Litigation Reform Act of 1995) contained in this Annual Report on Form 10-K or made by us, our
management or our spokespeople involve risks and uncertainties and are subject to change based on
various factors, many of which may be beyond our control. Words such as “estimate,” “project,” “plan,”
“believe,” “expect,” “anticipate,” “intend” and similar expressions may identify forward-looking
statements. Except as may be required by applicable law, we assume no obligation to publicly update or
revise our forward-looking statements.
The following factors could affect our financial performance and could cause actual results to differ
materially from those expressed or implied in any of the forward-looking statements:
• changes in economic and financial conditions, and the resulting impact on consumer confidence and
consumer spending, could have a material adverse effect on our business, results of operations and
liquidity;
• if we are unable to anticipate, identify and respond to changing fashion trends and consumer
preferences in a timely manner, and manage our inventory commensurate with customer demand,
our sales levels and profitability may decline;
• fluctuations in the cost, availability and quality of raw materials, labor and transportation, could
cause manufacturing delays and increase our costs;
• equity-based compensation awarded under the employment agreement with our Chief Executive
Officer could adversely impact our cash flows, financial position or results of operations and could
have a dilutive effect on our outstanding Common Stock;
• our growth strategy relies significantly on international expansion, which adds complexity to our
operations and may strain our resources and adversely impact current store performance;
• our international expansion plan is dependent on a number of factors, any of which could delay or
prevent successful penetration into new markets or could adversely affect the profitability of our
international operations;
• our direct-to-consumer sales are subject to numerous risks that could adversely impact sales;
• we have incurred, and may continue to incur, significant costs related to store closures;
• our development of a new brand concept such as Gilly Hicks could have a material adverse effect on
our financial condition or results of operations;
• fluctuations in foreign currency exchange rates could adversely impact our financial condition and
results of operations;
• our business could suffer if our information technology systems are disrupted or cease to operate
effectively;
• comparable store sales may continue to fluctuate on a regular basis and impact the volatility of the
price of our Common Stock;
• our market share may be negatively impacted by increasing competition and pricing pressures from
companies with brands or merchandise competitive with ours;
7