Advance Auto Parts 2009 Annual Report Download - page 25

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12
We have implemented numerous initiatives as part of our business strategy, including four key strategies
introduced in 2008, 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 we are unable to implement these initiatives efficiently and
effectively, or if these initiatives are unsuccessful, 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. In addition to the aforementioned risk
factors, adverse changes in the following factors could undermine our business strategy and have a material adverse
affect on our business, financial condition, results of operations and cash flow:
• the competitive environment in the automotive aftermarket parts and accessories retail sector that may
force us to reduce prices below our desired pricing level or increase promotional spending;
• our ability to anticipate changes in consumer preferences and to meet customers’ needs for automotive
products (particularly parts availability) in a timely manner;
• our ability to maintain and eventually grow DIY market share; and
• our ability to continue our Commercial sales growth at a more rapid pace than DIY and attain a 50/50 DIY
and Commercial sales mix.
We will not be able to expand our business if our growth strategy is not successful, including the availability
of suitable locations for new store openings or the successful integration of any acquired businesses, which
could adversely affect our business, financial condition, results of operations and cash flows.
New Store Openings
We have increased our store count significantly from 814 stores at the end of Fiscal 1997 to 3,420 stores at
January 2, 2010. We intend to continue to increase the number of our stores and expand the markets we serve as part
of our growth strategy, primarily by opening new stores. We may also grow our business through strategic
acquisitions. We do not know whether the implementation of our growth 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:
• the availability of potential store locations;
• the negotiation of acceptable lease or purchase terms for new locations;
• the availability of financial resources, including access to capital at cost-effective interest rates; and
• our ability to manage the expansion and hire, train and retain qualified sales associates.
We are unsure whether 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 the competition we face as well as our
ability to properly merchandise, market and price the products desired by customers in these markets.
Acquisitions, Investments or Strategic Alliances
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 but not limited to:
• the difficulty of identifying appropriate strategic partners or acquisition candidates;
• securing adequate financing on cost-effective terms for acquisition or post-acquisition expenditures;
• the potential disruption to our ongoing business and diversion of our management's attention;
• the inability or failure to discover liabilities prior to completion of an acquisition, including the assumption
of legal liabilities;
• the difficulty of assimilating and integrating the operations of the respective entities to realize anticipated
economic, operational or other favorable benefits;