Family Dollar 2011 Annual Report Download - page 16

may result in temporary disruptions to our business and negatively impact sales, and the failure to properly
execute any of these initiatives or the failure to obtain the anticipated results of such initiatives could have an
adverse impact on our future operating results.
We operate in a highly competitive environment and, as a result, we may not be able to compete effectively or
maintain or increase our sales, market share or margins, particularly if the prolonged global economic
conditions intensify.
We operate in the highly competitive discount retail merchandise sector with numerous competitors, some
of which have greater resources than us. We compete for customers, merchandise, real estate locations, and
employees. This competitive environment subjects us to various risks, including the ability to continue our store
and sales growth and to provide attractive merchandise to our customers at competitive prices that allow us to
maintain our profitability. Price reductions by our competitors may result in the reduction of our prices and a
corresponding reduction in our profitability. Consolidation in our retail sector, changes in pricing of
merchandise, or offerings of other services by competitors could have a negative impact on the relative
attractiveness of our stores to consumers. Many of our large box competitors are or may be developing small box
formats. A number of these smaller stores have opened and may produce more competition, particularly in urban
markets. Our ability to provide convenience in a small box retail format while offering attractive, competitively-
priced products could be impacted by various actions of our competitors that are beyond our control. See Item 1
– “Competition” for further discussion of our competitive position.
Any disruption in our ability to select, obtain, distribute and market merchandise attractive to customers at
prices that allow us to profitably sell such merchandise could impact our business negatively.
We generally have been able to select and obtain sufficient quantities of attractive merchandise at prices that
allow us to profitably sell such merchandise. If we are unable to continue to select products that are attractive to
our customers, to obtain such products at costs that allow us to sell such products at a profit, or to market such
products effectively to consumers, our sales or profitability could be affected adversely. In addition, the success
of our business depends in part on our ability to identify and respond promptly to evolving trends in
demographics and consumer preferences, expectations and needs. Failure to maintain attractive stores and to
timely identify or effectively respond to changing consumer needs, preferences and spending patterns could
adversely affect our relationship with customers, the demand for our products and our market share.
Any disruption in the supply or increase in pricing of our merchandise could negatively impact our ability to
achieve anticipated operating results. A significant amount of our merchandise is manufactured outside the
United States, and changes in the prices and flow of these goods for any reason could have an adverse impact on
our operations. For example, because a substantial amount of our imported merchandise is manufactured in
China, a change in the Chinese currency or other policies could negatively impact our merchandise costs. The
United States and other countries have occasionally proposed and enacted protectionist trade legislation, which
may result in changes in tariff structures and trade policies and restrictions that could increase the cost of or
reduce the availability of certain merchandise. Any of these or other measures or events relating to suppliers and
the countries in which they are located, some or all of which are beyond our control, can negatively impact our
operations, increase costs and lower our margins. Such events or circumstances include, but are not limited to:
• political and economic instability;
• the financial instability and labor problems of suppliers;
• the availability of raw materials;
• merchandise quality issues;
• changes in currency exchange rates; and
• transportation availability and cost.
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