Express 2014 Annual Report Download - page 15

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ITEM 1A. RISK FACTORS.
Our business faces a number of risks. The risks described below are the items of most concern to us, however
these are not all of the risks we face. Additional risks and uncertainties not presently known to us or that we
currently consider immaterial may also impair our business operations.
RISK FACTORS
Our business is sensitive to consumer spending and general economic conditions. Recessionary, slow growth,
or other difficult economic conditions could adversely affect our financial performance.
Consumer purchases of discretionary retail items, including our products, generally decline during recessionary
periods and other periods where disposable income is adversely affected. Our business is impacted by factors that
affect domestic and worldwide economic conditions, particularly those that affect our target demographic,
including unemployment levels, levels of consumer debt, availability of consumer credit, student loans,
healthcare costs, reductions in net worth, residential real estate and mortgage markets, taxation, fuel and energy
prices, interest rates, consumer confidence, value of the United States dollar versus foreign currencies, and other
macroeconomic factors. A deterioration in economic conditions may reduce the level of consumer spending and
inhibit consumers’ use of credit, which may adversely affect our revenues and profits. In recessionary periods,
we may have to increase the number of promotional sales or otherwise dispose of inventory for which we have
previously paid to manufacture, which could adversely affect our profitability. Our financial performance may be
particularly susceptible to economic and other conditions in regions or states where we have a significant number
of stores.
In addition, difficult economic conditions may exacerbate some of the other risks described in this Item 1.A. Risk
Factors, including those risks associated with increased competition, decreases in mall traffic, brand reputation,
our ability to develop and maintain a reliable omni-channel customer experience, our ability to execute our
strategic growth plans, the interruption of the production and flow of merchandise, and leasing substantial
amounts of space. The risks could be exacerbated individually or collectively.
Our business is highly dependent upon our ability to identify and respond to new and changing fashion trends,
customer preferences, and other related factors. Our inability to identify and respond to these new trends may
lead to inventory markdowns and write-offs, which could adversely affect us and our brand image.
Our focus on fashion-conscious young women and men means that we have a target market of customers whose
preferences cannot be predicted with certainty and are subject to frequent change. Our success depends in large
part upon our ability to effectively identify and respond to changing fashion trends and consumer demands and to
translate market trends into desired product offerings. Our failure to identify and react appropriately to new and
changing fashion trends or tastes, or to accurately forecast demand for certain product offerings could lead to,
among other things, excess or insufficient amounts of inventory, markdowns, and write-offs, which could
materially adversely affect our business and our brand image. Because our success depends significantly on our
brand image, damage to our brand image as a result of our failure to respond to changing fashion trends could
have a negative impact on us.
We often place orders for the manufacture and purchase of merchandise well ahead of the season in which that
merchandise will be sold. Therefore, we are vulnerable to changes in consumer preference and demand between
the time we design and order our merchandise and the season in which this merchandise will be sold. There can
be no assurance that our new product offerings will have the same level of acceptance as our product offerings in
the past or that we will be able to adequately and timely respond to the preferences of our customers. The failure
of any of our product offerings to appeal to our customers could have a material adverse effect on our business,
results of operations, and financial condition.
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