Advance Auto Parts 2007 Annual Report Download - page 32

Item 1A. Risk Factors.
Risks Relating to Our Business
We may not be able to successfully implement our business strategy, including increasing comparable store
sales, enhancing our margins and increasing our return on invested capital, which could adversely affect our
business, financial condition, results of operations and cash flows.
We have implemented numerous initiatives to increase comparable store sales, enhance our margins and
increase our return on invested capital in order to increase our earnings and cash flow. If these initiatives are
unsuccessful, or if we are unable to implement the initiatives efficiently and effectively, our business, financial
condition, results of operations and cash flows could be adversely affected.
Successful implementation of our business strategy also depends on factors specific to the retail automotive
parts industry and numerous other factors that may be beyond our control. Adverse changes in the following factors
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 and/or needs for automotive products
(particularly parts availability), accessories and services in a timely manner;
xour ability to stimulate DIY customer traffic; 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 814 stores at the end of 1997 to 3,261 stores at December
29, 2007. We intend to continue to expand our base of stores as part of our growth strategy, primarily by opening
new stores. We may not assure you 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.
We may not assure you 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.
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