Dillard's 2012 Annual Report Download - page 9

reputation could negatively impact sales, diminish customer trust and generate negative sentiment, any
of which would harm our business and results of operation.
Increases in the price of merchandise, raw materials, fuel and labor or their reduced availability could
increase our cost of goods and negatively impact our financial results.
We have experienced and may continue to experience increases in our merchandise, raw materials,
fuel and labor costs. Fluctuations in the price and availability of fuel, labor and raw materials,
combined with the inability to mitigate or to pass cost increases on to our customers or to change our
merchandise mix as a result of such cost increases, could have an adverse impact on our profitability.
Attempts to pass such costs along to our customers, however, might cause a decline in our sales
volume. Additionally, any decrease in the availability of raw materials could impair our ability to meet
our purchasing requirements in a timely manner. Both the increased cost and lower availability of
merchandise, raw materials, fuel and labor may also have an adverse impact on our cash and working
capital needs.
Third party suppliers on whom we rely to obtain materials and provide production facilities may experience
financial difficulties due to current and future economic and political conditions.
Our suppliers may experience financial difficulties due to a downturn in the industry or in other
macroeconomic environments. Our suppliers’ cash and working capital needs can be adversely impacted
by the increased cost and lower availability of merchandise, raw materials, fuel and labor. Current and
future economic conditions may prevent our suppliers from obtaining financing on favorable terms,
which could impact their ability to supply us with merchandise on a timely basis. Similarly, political or
financial instability, changes in U.S. and foreign laws and regulations affecting the importation and
taxation of goods, including duties, tariffs and quotas, or changes in the enforcement of those laws and
regulations, as well as currency exchange rates, transport capacity and costs and other factors relating
to foreign trade and the inability to access suitable merchandise on acceptable terms could adversely
impact our results of operations.
An increase in the cost or a disruption in the flow of our imported goods could decrease our sales and profits.
We source many of our products from vendors in countries outside of the United States. Any
disruption in the flow of imported merchandise, including strikes at ports at home or abroad, or an
increase in the cost of those goods may harm our business and decrease our profitability.
All of our suppliers must comply with our supplier compliance programs and applicable laws,
including consumer and product safety laws, but we do not control our vendors or their labor and
business practices. The violation of labor or other laws by one of our vendors could have an adverse
effect on our business. Additionally, although we diversify our sourcing and production by country, the
failure of any supplier to produce and deliver our goods on time, to meet our quality standards and
adhere to our product safety requirements or to meet the requirements of our supplier compliance
program or applicable laws, could impact our ability to flow merchandise to our stores or directly to
consumers in the right quantities at the right time, which could adversely affect our profitability and
could result in damage to our reputation and translate into sales losses.
A decrease in cash flows from our operations and constraints to accessing other financing sources could limit
our ability to fund our operations, capital projects, interest and debt repayments, stock repurchases and
dividends.
Our business depends upon our operations to generate strong cash flow and to some extent upon
the availability of financing sources to supply capital to fund our general operating activities, capital
projects, interest and debt repayments, stock repurchases and dividends. Our inability to continue to
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