Columbia Sportswear 2010 Annual Report Download - page 20

Factors that could affect our ability to accurately forecast demand for our products include:
• An increase or decrease in consumer demand for our products or for products of our competitors;
• For certain demand and supply planning functions, we rely on manual processes and judgment that are
subject to human error;
• Our failure to accurately forecast customer acceptance of new products;
• New product introductions by competitors;
• Unanticipated changes in general market conditions or other factors, which may result in cancellations
of orders or a reduction or increase in the rate of reorders placed by retailers; and
• Weak economic conditions or consumer confidence, which could reduce demand for discretionary
items such as our products.
In some cases, our production orders may not match actual demand, which could result in our inability to
deliver product in a timely manner, higher transportation costs to expedite delivery and higher inventory levels.
During periods of weak economic conditions we may experience a significant increase in the volume of order
cancellations by our customers, including cancellations resulting from the bankruptcy, liquidation or contraction
of certain customers’ operations. We may not be able to sell all of the products we have ordered from
independent factories or that we have in our inventory. Inventory levels in excess of customer demand may result
in inventory write-downs and the sale of excess inventory at discounted prices through discount
direct-to-consumer channels, which could have a material adverse effect on our brand image, financial condition,
results of operations or cash flows.
Conversely, if we underestimate demand for our products or if our independent factories are unable to
supply products when we need them, we may experience inventory shortages. Inventory shortages may prevent
us from fulfilling customer orders, delay shipments to customers, negatively affect customer relationships, result
in increased costs to expedite production and delivery, and diminish our ability to build brand loyalty. Shipments
delayed due to limited factory capacity or other factors could result in order cancellations by our customers,
which could have a material adverse effect on our financial condition, results of operations or cash flows.
We May be Adversely Affected by Weather Conditions
Our business is adversely affected by unseasonable weather conditions. A significant portion of the sales of
our products is dependent in part on the weather and may decline in years in which weather conditions do not
favor the use of these products. Periods of unseasonably warm weather in the fall or winter or unseasonably cold
or wet weather in the spring and summer may have a material adverse effect on our financial condition, results of
operations or cash flows. Inventory accumulation by our wholesale customers resulting from unseasonable
weather in one season may negatively affect orders in future seasons, which may have a material adverse effect
on our financial condition, results of operations or cash flows.
Our International Operations Involve Many Risks
We are subject to the risks generally associated with doing business internationally. These risks include the
effects of foreign laws and regulations, changes in consumer preferences, foreign currency fluctuations, political
unrest, terrorist acts, military operations, disruptions or delays in shipments, disease outbreaks and changes in
economic conditions in countries in which we manufacture or sell products. These factors, among others, may
affect our ability to sell products in international markets, our ability to manufacture products or procure
materials, and our cost of doing business. If any of these or other factors make the conduct of business in a
particular country undesirable or impractical, our business may be materially and adversely affected. As we
expand our operations in geographic scope and product categories, we anticipate intellectual property disputes
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