Foot Locker 2011 Annual Report Download - page 22

Item 1A. Risk Factors
The statements contained in this Annual Report on Form 10-K (‘‘Annual Report’’) that are not historical
facts, including, but not limited to, statements regarding our expected financial position, business and
financing plans found in ‘‘Item 1. Business’’ and ‘‘Item 7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations,’’ constitute ‘‘forward-looking statements’’ within the
meaning of the Private Securities Litigation Reform Act of 1995. Please also see ‘‘Disclosure Regarding
Forward-Looking Statements.’’ Our actual results may differ materially due to the risks and uncertainties
discussed in this Annual Report, including those discussed below. Additional risks and uncertainties that
we do not presently know about or that we currently consider to be insignificant may also affect our
business operations and financial performance.
Our inability to implement our strategic long range plan may have an adverse affect on our future
results.
Our ability to successfully implement and execute our long range plan is dependent on many factors. Our
strategies may require significant capital investment and management attention, which may result in the
diversion of these resources from our core business and other business issues and opportunities.
Additionally, any new initiative is subject to certain risks including customer acceptance, competition,
product differentiation, and the ability to attract and retain qualified personnel. If we cannot successfully
execute our strategic growth initiatives or if the long range plan does not adequately address the
challenges or opportunities we face, our financial condition and results of operations may be adversely
affected.
The businesses in which we operate are highly competitive.
The retail athletic footwear and apparel business is highly competitive with relatively low barriers to
entry. Our athletic footwear and apparel operations compete primarily with athletic footwear specialty
stores, sporting goods stores and superstores, department stores, discount stores, traditional shoe stores,
and mass merchandisers, many of which are units of national or regional chains that have significant
financial and marketing resources. The principal competitive factors in our markets are price, quality,
selection of merchandise, reputation, store location, advertising, and customer service. Our success also
depends on our ability to differentiate ourselves from our competitors with respect to shopping
convenience, a quality assortment of available merchandise and superior customer service. We cannot
assure you that we will continue to be able to compete successfully against existing or future competitors.
Our expansion into markets served by our competitors and entry of new competitors or expansion of
existing competitors into our markets could have a material adverse effect on our business, financial
condition, and results of operations. Although we sell merchandise via the Internet, a significant shift in
customer buying patterns to purchasing athletic footwear, athletic apparel, and sporting goods via the
Internet could have a material adverse effect on our business results.
In addition, all of our significant vendors distribute products directly through the Internet and others may
follow. Some vendors operate retail stores and some have indicated that further retail stores will open.
Should this continue to occur, and if our customers decide to purchase directly from our vendors, it could
have a material adverse effect on our business, financial condition, and results of operations.
The industry in which we operate is dependent upon fashion trends, customer preferences, and
other fashion-related factors.
The athletic footwear and apparel industry is subject to changing fashion trends and customer preferences.
We cannot guarantee that our merchandise selection will accurately reflect customer preferences when it
is offered for sale or that we will be able to identify and respond quickly to fashion changes, particularly
given the long lead times for ordering much of our merchandise from vendors. A substantial portion of our
highest margin sales are to young males (ages 12 − 25), many of whom we believe purchase athletic
footwear and athletic and licensed apparel as a fashion statement and are frequent purchasers. Any shift in
fashion trends that would make athletic footwear or licensed apparel less attractive to these customers
could have a material adverse effect on our business, financial condition, and results of operations.
2