Advance Auto Parts 2015 Annual Report Download - page 26

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to us, of our ability to integrate those new locations into our existing supply chain network or of our ability to increase the
productivity and efficiency of our overall supply chain network to desired levels.
We are dependent on our suppliers to supply us with products that comply with safety and quality standards at
competitive prices.
We are dependent on our vendors continuing to supply us quality products on terms that are favorable to us. If our
merchandise offerings do not meet our customers’ expectations regarding safety and quality, we could experience lost sales,
increased costs and exposure to legal and reputational risk. All of our suppliers must comply with applicable product safety
laws, and we are dependent on them to ensure that the products we buy comply with all safety and quality standards. Events
that give rise to actual, potential or perceived product safety concerns could expose us to government enforcement action and/
or private litigation and result in costly product recalls and other liabilities. To the extent our suppliers are subject to additional
government regulation of their product design and/or manufacturing processes, the cost of the merchandise we purchase may
rise. In addition, negative customer perceptions regarding the safety or quality of the products we sell could cause our
customers to seek alternative sources for their needs, resulting in lost sales. In those circumstances, it may be difficult and
costly for us to regain the confidence of our customers.
We depend on the services of many qualified executives and other Team Members, whom we may not be able to attract,
develop and retain.
Our success depends to a significant extent on the continued services and experience of our executives and other Team
Members. As of February 26, 2016, we employed approximately 73,000 Team Members. We may not be able to retain our
current qualified executive and other Team Members or attract and retain additional qualified executives and Team Members
who may be needed in the future. Our ability to maintain an adequate number of qualified executive and other Team Members
is highly dependent on an attractive and competitive compensation and benefits package. In addition, less than one percent of
our team members are represented by unions. If these team members were to engage in a strike, work stoppage, or other
slowdown, or if the terms and conditions in labor agreements were renegotiated, we could experience a disruption in our
operations and higher ongoing labor costs. If we fail or are unable to maintain competitive compensation, our customer service
and execution levels could suffer by reason of a declining quality of our workforce, which could adversely affect our business,
financial condition, results of operations and cash flows.
There is also a risk that we may experience difficulty in successfully implementing announced leadership changes
including a failure to ensure the effective transfer of knowledge necessary for the persons appointed to lead and provide results
in their new role, potential disruption to our business resulting from the announced changes and the impact of announced
leadership changes on our relationships with customers, suppliers and business partners.
The market price of our common stock may be volatile and could expose us to securities class action litigation.
The stock market and the price of our common stock may be subject to wide fluctuations based upon general economic and
market conditions. Downturns in the stock market may cause the price of our common stock to decline. The market price of our
stock may also be affected by our ability to meet analysts' expectations. Failure to meet such expectations, even slightly, could
have an adverse effect on the price of our common stock. In the past, following periods of volatility in the market price of a
company’s securities, securities class action litigation has often been instituted against such a company. If similar litigation
were instituted against us, it could result in substantial costs and a diversion of our management’s attention and resources,
which could have an adverse effect on our business.
Deterioration in global credit markets and changes in our credit ratings and deterioration in general macro-economic
conditions, including unemployment, inflation or deflation, consumer debt levels, high fuel and energy costs, and higher
tax rates could have a negative impact on our business, financial condition, results of operations and cash flows.
Deterioration in general macro-economic conditions impacts us through (i) potential adverse effects from deteriorating and
uncertain credit markets, (ii) the negative impact on our suppliers and customers and (iii) an increase in operating costs from
higher energy prices.
Impact of Credit Market Uncertainty and Changes in Credit Ratings
Significant deterioration in the financial condition of large financial institutions in 2008 and 2009 resulted in a severe loss
of liquidity and available credit in global credit markets and in more stringent borrowing terms. We can provide no assurance
that the credit market events during 2008 and 2009 will not occur again in the foreseeable future. Conditions and events in the