Advance Auto Parts 2006 Annual Report Download - page 34

could undermine our business strategy:
xgeneral economic conditions and conditions in our local markets, which could reduce our sales;
xthe competitive environment in the automotive aftermarket parts and accessories retail sector that may
force us to reduce prices beyond our normal control or increase promotional spending;
xchanges in the automotive aftermarket parts manufacturing industry, such as consolidation, which may
disrupt or sever one or more of our vendor relationships;
xour ability to anticipate and meet changes in consumer preferences for automotive products, accessories
and services in a timely manner; and
xour continued ability to hire and retain qualified personnel, which depends in part on the types of recruiting,
training, compensation and benefit programs we adopt or maintain.
We will not be able to expand our business if our growth strategy is not successful, which could negatively
impact our financial results.
We have increased our store count significantly from 1,567 stores at the end of 1998 to 3,082 stores at
December 30, 2006. We intend to continue to expand our base of stores as part of our growth strategy, primarily by
opening new stores. There can be no assurance that the implementation of this strategy will be successful. The actual
number of new stores to be opened and their success will depend on a number of factors, including, among other
things:
xour ability to manage the expansion and hire, train and retain qualified sales associates;
xthe availability of potential store locations in highly visible, well-trafficked areas; and
xthe negotiation of acceptable lease or purchase terms for new locations.
There can be no assurance that we will be able to open and operate new stores on a timely or sufficiently
profitable basis or that opening new stores in markets we already serve will not harm existing store profitability or
comparable store sales. The newly opened and existing stores' profitability will depend on our ability to properly
merchandise, market and price the products required in their respective markets.
Furthermore, we may acquire stores or businesses from, make investments in, or enter into strategic alliances
with, companies that have stores or distribution networks in our current markets or in areas into which we intend to
expand our presence. Any future acquisitions, investments, strategic alliances or related efforts will be accompanied
by risks, including:
xthe difficulty of identifying appropriate strategic partners or acquisition candidates;
xthe difficulty of assimilating and integrating the operations of the respective entities;
xthe potential disruption to our ongoing business and diversion of our management's attention;
xthe inability to maintain uniform standards, controls, procedures and policies; and
xthe impairment of relationships with team members and customers as a result of changes in management.
We cannot assure you that we will be successful in overcoming these risks or any other problems encountered
with these acquisitions, investments, strategic alliances or related efforts.
If overall demand for products sold by our stores slows, our business, financial condition and results of
operations will suffer.
Overall demand for products sold by our stores depends on many factors and may slow for any number of
reasons, including:
xthe weather, as vehicle maintenance may be deferred during periods of unfavorable weather;
xthe economy, as during periods of good economic conditions, more of our DIY customers may pay others
to repair and maintain their cars instead of working on their own cars. In periods of declining economic
conditions, both DIY and DIFM customers may defer vehicle maintenance or repair; and
xthe decline of the average age of vehicles, miles driven or number of cars on the road may result in a
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