Dick's Sporting Goods 2014 Annual Report Download - page 38

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ITEM 1A. RISK FACTORS
Risks and Uncertainties
Our business is dependent on consumer discretionary spending and reduced consumer spending may adversely affect the
Company's business, operations, liquidity, financial results and stock price.
Our business depends on consumer discretionary spending, and as a result, our results are highly dependent on U.S. consumer
confidence and the health of the U.S. economy. Consumer spending may be affected by many factors outside of the Company’s
control, including general economic conditions, consumer disposable income levels, consumer confidence levels, the
availability, cost and level of consumer debt and consumer behaviors towards incurring and paying debt, the costs of basic
necessities and other goods and the effects of the weather or natural disasters. Decreases in consumer discretionary spending
that leads to a decrease in same store sales, customer traffic or average value per transaction could negatively affect the
Company's financial performance, particularly if consumer spending is depressed for a prolonged period of time. Furthermore,
promotional activities and decreased demand for consumer products, particularly higher-end products, could affect profitability
and margins. The impact of a prolonged decline of consumer spending could also affect the Company if the decline leads to one
or more vacancies of other retailers in shopping plazas as a result of reduced traffic to our store in that location. All of the
foregoing factors could have a material adverse effect on our business.
Intense competition in the sporting goods industry and in retail could limit our growth and reduce our profitability.
The market for sporting goods retailers is highly fragmented and intensely competitive. Our current and prospective
competitors include many large companies, some of which have greater market presence, name recognition and financial,
marketing and other resources than we do. We compete, directly or indirectly, with retailers from multiple categories, including
stores and chains utilizing large format, traditional and specialty formats, mass merchants, department stores and catalog,
Internet-based and direct-sell retailers. Many factors affect the extent to which competition could affect our results, including
our, and our competitors' prices, quality, assortment, advertising, service, locations and reputation. Competition on these
factors, aggressive pricing strategies, and continued evolution of retail sale methods, including eCommerce, could affect our
long-term strategy and could have an adverse effect on our business, financial condition, results of operations and cash flows.
If we are unable to predict or effectively react to changes in consumer demand or shopping patterns, we may lose customers
and our sales may decline.
Our success depends in part on our ability to anticipate and respond in a timely manner to changing consumer demand,
preferences and shopping patterns regarding sporting goods. We must develop and execute merchandising initiatives with
marketing programs that appeal to a broad range of consumers. Consumer preferences cannot be predicted with certainty and
are subject to continual change and evolution. We often make commitments to purchase products from our vendors several
months in advance of the proposed delivery. If we misjudge the market for our new merchandise our sales may decline
significantly. We may overstock unpopular products and be forced to take significant inventory markdowns or miss
opportunities for other products, both of which could have a negative impact on our profitability. Conversely, shortages of items
that prove popular could also be detrimental to our net sales. A major shift in consumer demand away from sporting goods
generally could also have a material adverse effect on our business, results of operations and financial condition. Failure to
timely identify or effectively respond to changing consumer tastes, preferences and spending patterns could negatively affect
our relationship with our customers, the demand for our products and services, our market share, or financial results.
Lack of available retail store sites on terms acceptable to us, rising real estate prices and other costs and risks relating to a
brick & mortar retail store model could affect our results.
Our business strategy includes opening stores in new and existing markets. We must successfully choose store sites, execute
real estate transactions on terms that are acceptable to us, hire competent personnel and effectively open and operate these new
stores. Our plans to increase our number of retail stores will depend in part on the availability of existing retail stores or store
sites. A lack of available financing on terms acceptable to real estate developers may adversely affect the number or quality of
retail sites available to us, and as a result, adversely affect our growth plans. Furthermore, we incur substantial financial
commitments and fixed costs associated with opening new stores. The success of those stores depends on a number of factors,
including the success of the shopping center where our store is located, consumer demographics and consumer shopping
patterns. These factors cannot be predicted with complete accuracy. If we fail to effectively operate these new stores, or if we
have to close stores locations that are not successful, our financial performance could be adversely affected.