Advance Auto Parts 2010 Annual Report Download - page 26

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11
revenue and profitability. Competitive disadvantages may also prevent us from introducing new product lines,
require us to discontinue current product offerings, or change some of our current operating strategies. If we do not
have the resources or expertise, or otherwise fail to develop successful strategies to address these competitive
disadvantages, we may lose customers, our revenues and profit margins may decline and we may be less profitable
or potentially unprofitable.
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 as part of our business strategy 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.
For that portion of our inventory manufactured outside the United States, geopolitical changes, changes in trade
regulations, currency fluctuations, shipping related issues, natural disasters, pandemics and other factors beyond our
control may increase the cost of items we purchase or create shortages which could have a material adverse effect on
our sales and profitability.
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, the successful integration of any acquired businesses or the
continued increase in supply chain capacity and efficiency, 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 1,729 stores at the end of Fiscal 2000 to 3,563 stores at
January 1, 2011. 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.