AutoZone 2013 Annual Report Download - page 76

14
our suppliers to obtain necessary short and long-term financing to meet our inventory demands. Moreover, rising
energy prices could impact our merchandise distribution, commercial delivery, utility and product costs. All of
these macroeconomic conditions could adversely affect our sales growth, margins and overhead, which could
adversely affect our financial condition and operations.
Our business depends upon hiring and retaining qualified employees.
We believe that much of our brand value lies in the quality of the more than 71,000 AutoZoners employed in our
stores, distribution centers, store support centers, ALLDATA and AutoAnything. We cannot be assured that we
can continue to hire and retain qualified employees at current wage rates. If we are unable to hire, properly train
and/or retain qualified employees, we could experience higher employment costs, reduced sales, losses of
customers and diminution of our brand, which could adversely affect our earnings. If we do not maintain
competitive wages, our customer service could suffer due to a declining quality of our workforce or, alternatively,
our earnings could decrease if we increase our wage rates.
Inability to acquire and provide quality merchandise could adversely affect our sales and results of
operations.
We are dependent upon our vendors continuing to supply us with quality merchandise. If our merchandise
offerings do not meet our customers' expectations regarding quality and safety, we could experience lost sales,
increased costs and exposure to legal and reputational risk. All of our vendors 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 or private litigation and result in costly product recalls and other liabilities. To the
extent our suppliers are subject to added 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. Moreover, if any of our significant vendors experience financial difficulties or otherwise are unable to
deliver merchandise to us on a timely basis, or at all, we could have product shortages in our stores that could
adversely affect customers’ perceptions of us and cause us to lose customers and sales.
Our ability to grow depends in part on new store openings, existing store remodels and expansions and
effective utilization of our existing supply chain and hub network.
Our continued growth and success will depend in part on our ability to open and operate new stores and expand
and remodel existing stores to meet customers’ needs on a timely and profitable basis. Accomplishing our new
and existing store expansion goals will depend upon a number of factors, including the ability to partner with
developers and landlords to obtain suitable sites for new and expanded stores at acceptable costs, the hiring and
training of qualified personnel, particularly at the store management level, and the integration of new stores into
existing operations. There can be no assurance we will be able to achieve our store expansion goals, manage our
growth effectively, successfully integrate the planned new stores into our operations or operate our new,
remodeled and expanded stores profitably.
In addition, we extensively utilize hub stores, our supply chain and logistics management techniques to efficiently
stock our stores. If we fail to effectively utilize our existing hubs and/or supply chains, we could experience
inappropriate inventory levels in our stores, which could adversely affect our sales volume and/or our margins.
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 could also
jeopardize our reputation and potentially lead to various adverse consumer actions. Failure to comply with
10-K