Dillard's 2012 Annual Report Download - page 13

The Company depends on its ability to attract and retain quality employees, and failure to do so could
adversely affect our ability to execute our business strategy and our operating results.
The Company’s business is dependent upon attracting and retaining quality employees. The
Company has a large number of employees, many of whom are in entry level or part-time positions
with historically high rates of turnover. The Company’s ability to meet its labor needs while controlling
the costs associated with hiring and training new employees is subject to external factors such as
unemployment levels, prevailing wage rates, minimum wage legislation and changing demographics. In
addition, as a complex enterprise operating in a highly competitive and challenging business
environment, the Company is highly dependent upon management personnel to develop and effectively
execute successful business strategies and tactics. Any circumstances that adversely impact the
Company’s ability to attract, train, develop and retain quality employees throughout the organization
could adversely affect the Company’s business and results of operations.
Variations in the amount of vendor allowances received could adversely impact our operating results.
We receive vendor allowances for advertising, payroll and margin maintenance that are a strategic
part of our operations. A reduction in the amount of cooperative advertising allowances would likely
cause us to consider other methods of advertising as well as the volume and frequency of our product
advertising, which could increase/decrease our expenditures and/or revenue. Decreased payroll
reimbursements would either cause payroll costs to rise, negatively impacting operating income, or
cause us to reduce the number of employees, which may cause a decline in sales. A decline in the
amount of margin maintenance allowances would either increase cost of sales, which would negatively
impact gross margin and operating income, or cause us to reduce merchandise purchases, which may
cause a decline in sales.
Our operations are dependent on information technology systems, and disruptions in those systems could have
an adverse impact on our results of operations.
Our operations are dependent upon the integrity, security and consistent operation of various
systems and data centers, including the point-of-sale systems in the stores, our Internet website, data
centers that process transactions, communication systems and various software applications used
throughout our Company to track inventory flow, process transactions and generate performance and
financial reports. The Company’s computer systems are subject to damage or interruption from power
outages, computer and telecommunications failures, computer viruses, cyber-attack or other security
breaches, catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes, acts of war or
terrorism, and usage errors by the Company’s employees. If the Company’s computer systems are
damaged or cease to function properly, the Company may have to make a significant investment to
repair or replace them, and the Company may suffer loss of critical data and interruptions or delays in
its operations in the interim. Any material interruption in the Company’s computer systems could
adversely affect its business or results of operations. Additionally, to keep pace with changing
technology, we must continuously provide for the design and implementation of new information
technology systems and enhancements of our existing systems. We could encounter difficulties in
developing new systems or maintaining and upgrading existing systems. Such difficulties could lead to
significant expenses or to losses due to disruption in business operations.
A privacy breach could adversely affect our business, reputation and financial condition.
The protection of customer, employee and Company data is critical to us. The regulatory
environment surrounding information security and privacy is increasingly demanding, with the frequent
imposition of new and constantly changing requirements. We receive certain personal information about
our customers and employees. In addition, our online operations at www.dillards.com depend upon the
secure transmission of confidential information over public networks, including information permitting
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