Abercrombie & Fitch 2013 Annual Report Download - page 7

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ITEM 1A. RISK FACTORS
FORWARD-LOOKING STATEMENTS AND RISK FACTORS.
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;
• changing fashion trends and consumer preferences, and the ability to manage our inventory commensurate with
customer demand, could adversely impact our sales levels and profitability;
• fluctuations in the cost, availability and quality of raw materials, labor and transportation, could cause manufacturing
delays and increase our costs;
• our growth strategy relies significantly on international expansion, which requires significant capital investment, 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 operations are subject to numerous risks that could adversely impact sales;
• 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 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 sales, including direct-to-consumer, 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;
• our ability to attract customers to our stores depends, in part, on the success of the shopping malls or area attractions in
which most of our stores are located;
• our net sales fluctuate on a seasonal basis, causing our results of operations to be susceptible to changes in Back-to-
School and Holiday shopping patterns;
• our failure to protect our reputation could have a material adverse effect on our brands;
• we rely on the experience and skills of our senior executive officers, the loss of whom could have a material adverse
effect on our business;
• interruption in the flow of merchandise from our key vendors and international manufacturers could disrupt our supply
chain, which could result in lost sales and could increase our costs;
• In a number of our European stores, associates are represented by workers’ councils and unions, whose demands could
adversely affect our profitability or operating standards for our brands;
• we depend upon independent third parties for the manufacture and delivery of all our merchandise;
• our reliance on two distribution centers domestically and two third-party distribution centers internationally makes us
susceptible to disruptions or adverse conditions affecting our distribution centers;
• we may be exposed to risks and costs associated with credit card fraud and identity theft that would cause us to incur
unexpected expenses and loss of revenues;
• 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 litigation exposure could have a material adverse effect on our financial condition and results of operations;
• 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;
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