Dillard's 2005 Annual Report Download - page 12

leases. If an existing or future store is not profitable, and we decide to close it, we may be committed to perform
certain obligations under the applicable lease including, among other things, paying the base rent for the balance
of the lease term. In addition, as each of the leases expires, we may be unable to negotiate renewals, either on
commercially acceptable terms or at all, which could cause us to close stores in desirable locations. If an existing
owned store is not profitable, and we decide to close it, we may be required to record an impairment charge and/
or exit costs associated with the disposal of the store. We may not be able to close an unprofitable owned store
due to an existing operating covenant which may cause us to operate the location at a loss and prevent us from
locating a more desirable location.
We rely on third party suppliers to obtain materials and provide production facilities from which we source
our merchandise.
We may experience supply problems such as unfavorable pricing or untimely delivery of merchandise. The
price and availability of materials from suppliers can be adversely affected by factors outside of our control such
as increased worldwide demand. Further, our suppliers who also serve the retail industry may experience
financial difficulties due to a downturn in the industry. These supplier risks may have a material adverse effect
on our business and results of operations.
We intend to evaluate acquisitions, joint ventures and other strategic initiatives, any of which could distract
management or otherwise have a negative effect on revenues, costs and stock price.
Our future success may depend on opportunities to buy or obtain rights to other businesses or technologies
that could complement, enhance or expand our current business or products or that might otherwise offer growth
opportunities. In particular, we intend to evaluate potential mergers, acquisitions, joint venture investments,
strategic initiatives, alliances, vertical integration opportunities and divestitures. Our attempt to engage in these
transactions may expose us to various inherent risks, including:
• accurately assessing the value, future growth potential, strengths, weaknesses, contingent and other
liabilities and potential profitability of acquisition candidates;
• the potential loss of key personnel of an acquired business;
• the ability to achieve projected economic and operating synergies;
• difficulties successfully integrating, operating, maintaining and managing newly acquired operations or
employees;
• difficulties maintaining uniform standards, controls, procedures and policies;
• unanticipated changes in business and economic conditions affecting an acquired business;
• the possibility of impairment charges if an acquired business performs below expectations; and
• the diversion of management’s attention from the existing business to integrate the operations and
personnel of the acquired or combined business or to implement the strategic initiative.
Our annual and quarterly financial results may fluctuate depending on various factors, many of which are
beyond our control, and if we fail to meet the expectations of securities analysts or investors, our share price
may decline.
Our sales and operating results can vary from quarter to quarter and year to year depending on various
factors, many of which are beyond our control. Certain events and factors may directly and immediately decrease
demand for our products. If customer demand decreases rapidly, our results of operations would also decline
precipitously. These events and factors include:
• variations in the timing and volume of our sales;
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