Family Dollar 2013 Annual Report Download - page 16

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 adversely impact our business.
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 acquire products attractive to our
customers, to obtain such products at costs allowing 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 an attractive selection 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.
We have substantially increased the number of our private brand items, and the program is a sizable part of
our future growth plans. We believe our success in maintaining broad market acceptance of our private brands
depends on many factors, including pricing, our costs, quality and customer perception. We may not achieve or
maintain our expected sales for our private brands and, as a result, our business and results of operations could be
adversely impacted.
Inappropriate pricing of products may cause products to be less attractive to our customers. We continue to
enhance our pricing capabilities to drive customer loyalty and have established a strategic pricing team to
improve our value perception and to increase profitability. Inability to implement new pricing strategies could
have a negative effect on our business.
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 reduce our profitability.
In addition, we are currently enhancing our Global Sourcing program and have formed a wholly-owned
subsidiary which acts as a trading company. Our ability to find qualified suppliers who meet our standards and to
access products in a timely and efficient manner is a significant challenge, especially with respect to suppliers
located and goods sourced outside the United States. Political and economic instability in the countries in which
foreign suppliers are located, the financial instability of suppliers, suppliers’ failure to meet our supplier
standards, labor problems experienced by our suppliers, the availability of raw materials to suppliers,
merchandise quality issues, currency exchange rates, transport availability and cost, transport security, inflation,
and other factors relating to the suppliers and the countries in which they are located are beyond our control.
These and other factors affecting our suppliers, our access to products and our ability to transport those products
could have an adverse effect on our financial performance.
Our growth is dependent upon our ability to increase sales in existing stores, the success of our new store
opening program and our store renovation program.
Our growth is dependent on both increases in sales in existing stores and our ability to open profitable new
stores. Sales growth in existing stores is dependent upon factors including competition, merchandise selection,
store operations, and customer satisfaction. Our ability to open profitable new stores is dependent upon factors
including having available capital resources, identifying suitable locations for new stores, negotiating favorable
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