Abercrombie & Fitch 2011 Annual Report Download - page 15
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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.
As we expand internationally, we may incur significant costs related to starting up and maintaining
foreign operations. Costs may include, but are not limited to, obtaining prime locations for stores, setting
up foreign offices and distribution centers, as well as hiring experienced management. We may be unable
to open and operate new stores successfully, or we may face operational issues that delay our intended pace
of international store openings, and, in any such case, our growth may be limited, unless we can:
• identify suitable markets and sites for store locations;
• address the different operational characteristics present in each country to which we expand,
including employment and labor, transportation, logistics, real estate, lease provisions and local
reporting or legal requirements;
• negotiate acceptable lease terms, in some cases in locations in which the relative rights and
obligations of landlords and tenants differ significantly from the customs and practices in the United
States;
• hire, train and retain competent store personnel;
• gain and retain acceptance from foreign customers;
• manage inventory effectively to meet the needs of new and existing stores on a timely basis;
• expand infrastructure to accommodate growth;
• foster current relationships and develop new relationships with vendors that are capable of
supplying a greater volume of merchandise;
• generate sufficient operating cash flows or secure adequate capital on commercially reasonable
terms to fund our expansion plan;
• manage foreign currency exchange risks effectively; and
• achieve acceptable operating margins from new stores.
Failure to implement our international expansion plan consistent with our internal expectations,
whether as a result of one or more of the factors listed above or other factors could adversely affect our
ability to achieve the objectives that we have established for ourselves.
Our direct-to-consumer sales are subject to numerous risks that could adversely impact sales.
We sell merchandise for each brand over the Internet, both domestically and internationally. Our
direct-to-consumer operations are subject to numerous risks, including:
• reliance on third-party computer hardware/software providers;
• rapid technological change and the implementation of new systems and platforms;
• diversions of sales from our stores;
• liability for online content;
• violations of state, federal or international laws, including those relating to online privacy;
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