DSW 2009 Annual Report Download - page 17

Our sales and quarterly financial performance may fluctuate for a variety of reasons, which could result
in a decline in the price of our Class A Common Shares.
Our business is sensitive to customers’ spending patterns, which in turn are subject to prevailing regional and
national economic conditions and the general level of economic activity. Our comparable store sales and quarterly
results of operations have fluctuated in the past, and we expect them to continue to fluctuate in the future. A variety
of other factors affect our sales and quarterly financial performance, including:
•challenging U.S. economic conditions and, in particular, the retail sales environment;
•changes in our merchandising strategy;
•timing and concentration of new DSW store openings and related new store and other start-up costs;
•levels of new store expenses associated with new DSW stores;
•changes in our merchandise mix;
•changes in and regional variations in demographic and population characteristics;
•timing of promotional events;
•seasonal fluctuations due to weather conditions; and
•actions by our competitors.
Accordingly, our results for any one fiscal quarter are not necessarily indicative of the results to be expected for
any other quarter, and comparable store sales for any particular future period may decrease. Our future financial
performance may fall below the expectations of securities analysts and investors. In that event, the price of our
Class A Common Shares would likely decline. For more information on our quarterly results of operations, see
“Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
We are reliant on our information systems and the loss or disruption of services could affect our ability to
implement our growth strategy and have a material adverse effect on our business.
Our information systems are an integral part of our growth strategy in efficiently operating our stores, in
managing the operations of a growing store base and resolving security risks related to our electronic processing and
transmission of confidential customer information. The capital required to keep our information systems operating
at peak performance may be higher than anticipated and could strain our capital resources, management of any
upgrade and our ability to protect ourselves from any future security breaches. In addition, any significant
disruption of our data center could have a material adverse effect on those operations dependent on those systems,
most specifically, store operations, our distribution and fulfillment centers and our merchandising team.
While we maintain business interruption and property insurance, in the event our data center was to be shut
down, our insurance may not be sufficient to cover the impact to the business, or insurance proceeds may not be paid
timely.
The loss or disruption of our distribution and fulfillment centers could have a material adverse effect on
our business and operations.
For DSW stores and leased departments, the majority of our inventory is shipped directly from suppliers to our
primary distribution center in Columbus, Ohio, where the inventory is then processed, sorted and shipped to one of
our pool locations located throughout the country and then on to our stores. Through a third party, we also operate a
west coast bypass where shipments bypass our primary distribution center and go directly to one of our pool
locations from the west coast bypass. For dsw.com, our inventory is shipped directly from our fulfillment center to
customers’ homes. Our operating results depend on the orderly operation of our receiving and distribution process,
which in turn depends on third-party vendors’ adherence to shipping schedules and our effective management of our
distribution facilities. We may not anticipate all the changing demands that our expanding operations will impose on
our receiving and distribution system, and events beyond our control, such as disruptions in operations due to
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