Abercrombie & Fitch 2011 Annual Report Download - page 23

existing systems, or acquiring new systems with new functionality. We are aware of the inherent risks
associated with replacing and modifying these systems, including inaccurate system information, system
disruptions and user acceptance and understanding. We believe we are taking appropriate action to mitigate
the risks through disciplined adherence to methodology, program management, testing and user
involvement, as well as securing appropriate commercial contracts with third-party vendors supplying the
replacement technologies. Information technology system disruptions and inaccurate system information, if
not anticipated and appropriately mitigated, could have a material adverse effect on our financial condition
and results of operations. Additionally, there is no assurance that a successfully implemented system will
deliver the anticipated value to us.
Our facilities, systems and stores, as well as the facilities and systems of our vendors and
manufacturers, are vulnerable to natural disasters, pandemic disease and other unexpected events,
any of which could result in an interruption to our business and adversely affect our operating results.
Our retail stores, corporate offices, distribution centers, infrastructure projects and direct-to-consumer
operations, as well as the operations of our vendors and manufacturers, are vulnerable to damage from
natural disasters, pandemic disease and other unexpected events. If any of these events result in damage to
our facilities, systems or stores, or the facilities or systems of our vendors or manufacturers, we may
experience interruptions in our business until the damage is repaired, resulting in the potential loss of
customers and revenues. In addition, we may incur costs in repairing any damage which exceeds our
applicable insurance coverage.
Our business is also vulnerable to any interruption related to an outbreak of a pandemic disease in
countries where we have retail locations or source our merchandise.
Our litigation exposure could have a material adverse effect on our financial condition and results of
operations.
We are involved, from time-to-time, in litigation incidental to our business, such as litigation
regarding overtime compensation and other employment or wage and hour related matters. Our current
exposure could change in the event of the discovery of damaging facts with respect to legal matters
pending against us or determinations by judges, juries or other finders of fact that are not in accordance
with management’s evaluation of the claims. Should management’s evaluation prove incorrect, our
exposure could greatly exceed expectations and have a material adverse effect on our financial condition,
results of operations or cash flows.
Our inability or failure to adequately protect our trademarks could have a negative impact on our
brand image and limit our ability to penetrate new markets.
We believe our trademarks, Abercrombie & Fitch®, abercrombie®, Hollister®, Gilly Hicks®and the
“Moose” and “Seagull” logos, are an essential element of our strategy. We have obtained or applied for
federal registration of these trademarks with the U.S. Patent and Trademark Office and the registries of
countries where stores are located or likely to be located in the future. In addition, we own registrations and
have pending applications for other trademarks in the U.S. and have applied for or obtained registrations
from the registries in many foreign countries in which our stores or our manufacturers are located. There
can be no assurance that we will obtain registrations that have been applied for or that the registrations we
obtain will prevent the imitation of our products or infringement of our intellectual property rights by
others. If a third party copies our products in a manner that projects lesser quality or carries a negative
connotation, our brand image could be materially adversely affected.
20