AutoZone 2014 Annual Report Download - page 82

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12
Item 1A. Risk Factors
Our business is subject to a variety of risks. Set forth below are certain of the important risks that we face, the
occurrence of which could have a material, adverse effect on our business. These risks are not the only ones we
face. Our business could also be affected by additional factors that are presently unknown to us or that we
currently believe to be immaterial to our business.
If demand for our products slows, then our business may be materially affected.
Demand for the products we sell may be affected by a number of factors we cannot control, including:
x the number and age of vehicles in current service. Vehicles seven years old or older are generally no
longer under the original vehicle manufacturers’ warranties and tend to need more maintenance and
repair than newer vehicles.
x rising energy prices. Increases in energy prices may cause our customers to defer purchases of certain of
our products as they use a higher percentage of their income to pay for gasoline and other energy costs
and may drive their vehicles less, resulting in less wear and tear and lower demand for repairs and
maintenance.
x the economy. In periods of declining economic conditions, both retail and commercial customers may
defer vehicle maintenance or repairs. Additionally, such conditions may affect our customers’ ability to
obtain credit. During periods of expansionary economic conditions, more of our DIY customers may pay
others to repair and maintain their cars instead of working on their own vehicles, or they may purchase
new vehicles.
x the weather. Mild weather conditions may lower the failure rates of automotive parts, while wet
conditions may cause our customers to defer maintenance and repair on their vehicles. Extremely hot or
cold conditions may enhance demand for our products due to increased failure rates of our customers’
automotive parts.
x technological advances. Advances in automotive technology and parts design can result in cars needing
maintenance less frequently and parts lasting longer.
For the long term, demand for our products may be affected by:
x the number of miles vehicles are driven annually. Higher vehicle mileage increases the need for
maintenance and repair. Mileage levels may be affected by gas prices and other factors.
x the quality of the vehicles manufactured by the original vehicle manufacturers and the length of the
warranties or maintenance offered on new vehicles.
x restrictions on access to diagnostic tools and repair information imposed by the original vehicle
manufacturers or by governmental regulation, which may cause vehicle owners to rely on dealers to
perform maintenance and repairs.
All of these factors could result in immediate and longer term declines in the demand for our products, which
could adversely affect our sales, cash flows and overall financial condition.
If we are unable to compete successfully against other businesses that sell the products that we sell, we
could lose customers and our sales and profits may decline.
The sale of automotive parts, accessories and maintenance items is highly competitive, and sales volumes are
dependent on many factors, including name recognition, product availability, customer service, store location and
price. Competitors are opening locations near our existing stores. AutoZone competes as a provider in both the
DIY and DIFM auto parts and accessories markets.
Our competitors include national, regional and local auto parts chains, independently owned parts stores, online
parts stores, wholesale distributors, jobbers, repair shops, car washes and auto dealers, in addition to discount and
mass merchandise stores, hardware stores, supermarkets, drugstores, convenience stores, home stores, and other
online retailers that sell aftermarket vehicle parts and supplies, chemicals, accessories, tools and maintenance
parts. Although we believe we compete effectively on the basis of customer service, including the knowledge and
expertise of our AutoZoners; merchandise quality, selection and availability; product warranty; store layout,
10-K