AutoZone 2011 Annual Report Download - page 77

Our failure to protect our reputation could have a material adverse effect on our brand name.
We believe our continued strong sales growth is driven in significant part by our brand name. The value in our
brand name and its continued effectiveness in driving our sales growth are dependent to a significant degree on
our ability to maintain our reputation for safety, high product quality, friendliness, service, trustworthy advice,
integrity and business ethics. Any negative publicity about these types of concerns may reduce demand for our
merchandise. Failure to comply with ethical, social, product, labor and environmental standards, or related
political considerations, could also jeopardize our reputation and potentially lead to various adverse consumer
actions. Failure to comply with local laws and regulations, to maintain an effective system of internal controls or
to provide accurate and timely financial statement information could also hurt our reputation. Failure to protect
the security of our customers’ personal information could subject us to costly regulatory enforcement actions,
expose us to litigation and our reputation could suffer. Damage to our reputation or loss of consumer confidence
for any of these or other reasons could have a material adverse effect on our results of operations and financial
condition, as well as require additional resources to rebuild our reputation.
Business interruptions may negatively impact our store hours, operability of our computer and other
systems, availability of merchandise and otherwise have a material negative effect on our sales and our
business.
War or acts of terrorism, political unrest, hurricanes, windstorms, fires, earthquakes and other natural or other
disasters or the threat of any of them, may result in certain of our stores being closed for a period of time or
permanently or have a negative impact on our ability to obtain merchandise available for sale in our stores. Some
of our merchandise is imported from other countries. If imported goods become difficult or impossible to bring
into the United States, and if we cannot obtain such merchandise from other sources at similar costs, our sales and
profit margins may be negatively affected.
In the event that commercial transportation is curtailed or substantially delayed, our business may be adversely
impacted, as we may have difficulty shipping merchandise to our distribution centers and stores resulting in lost
sales and/or a potential loss of customer loyalty. Transportation issues could also cause us to cancel purchase
orders if we are unable to receive merchandise in our distribution centers.
We rely extensively on our computer systems to manage inventory, process transactions and summarize results.
Our systems are subject to damage or interruption from power outages, telecommunications failures, computer
viruses, security breaches and catastrophic events. If our systems are damaged or fail to function properly, we may
incur substantial costs to repair or replace them, and may experience loss of critical data and interruptions or
delays in our ability to manage inventories or process transactions, which could result in lost sales, inability to
process purchase orders and/or a potential loss of customer loyalty, which could adversely affect our results of
operations.
Healthcare reform legislation could have a negative impact on our business.
The Patient Protection and Affordable Care Act (the “Patient Act”) as well as other healthcare reform legislation
being considered by Congress and state legislatures may have an impact on our business. Based on the current
form of the Patient Act, the impact could be extensive and could increase our employee healthcare-related costs.
While the significant costs of the recent healthcare legislation enacted will occur after 2013 due to provisions of
the legislation being phased in over time, changes to our healthcare costs structure could have a significant,
negative impact on our business.
Item 1B. Unresolved Staff Comments
None.
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10-K