GameStop 2011 Annual Report Download - page 34

retailers such as Amazon.com; other U.S. and international video game and PC software specialty stores located
in malls and other locations, such as Game Group, Carrefour and Media Markt; toy retail chains; mail-order
businesses; catalogs; direct sales by software publishers; and online retailers and game rental companies. Some
of our competitors have longer operating histories and may have greater financial resources than we do or other
advantages, including non-taxability of sold merchandise. In addition, video game products and content are
increasingly being digitally distributed and new competitors are entering the marketplace such as OnLive and
Gaikai which are built to take advantage of these new capabilities, and other methods may emerge in the future.
We also compete with other sellers of used video game products and other PC software distribution companies,
including Steam. Additionally, we compete with other forms of entertainment activities, including browser,
social and mobile games, movies, television, theater, sporting events and family entertainment centers. If we lose
customers to our competitors, or if we reduce our prices or increase our spending to maintain our customers, we
may be less profitable.
We depend upon our key personnel and they would be difficult to replace.
Our success depends upon our ability to attract, motivate and retain key management for our stores and
skilled merchandising, marketing, financial and administrative personnel at our headquarters. We depend upon
the continued services of our key executive officers: Daniel A. DeMatteo, our Executive Chairman; J. Paul
Raines, our Chief Executive Officer; Tony D. Bartel, our President; Robert A. Lloyd, our Executive Vice
President and Chief Financial Officer; and Michael Mauler, our Executive Vice President-International. The loss
of services of any of our key personnel could have a negative impact on our business.
International events could delay or prevent the delivery of products to our suppliers.
Our suppliers rely on foreign sources, primarily in Asia, to manufacture a portion of the products we
purchase from them. As a result, any event causing a disruption of imports, including natural disasters or the
imposition of import restrictions or trade restrictions in the form of tariffs or quotas, could increase the cost and
reduce the supply of products available to us, which could lower our sales and profitability.
Our international operations expose us to numerous risks.
We have international retail operations in Australia, Canada and Europe. Because release schedules for
hardware and software introduction in these markets often differ from release schedules in the United States, the
timing of increases and decreases in foreign sales may differ from the timing of increases and decreases in
domestic sales. We are also subject to a number of other factors that may affect our current or future international
operations. These include:
• economic downturns, specifically in the regions in which we operate;
• currency exchange rate fluctuations;
• international incidents;
• natural disasters;
• government instability; and
• competitors entering our current and potential markets.
Our operations in Europe are also subject to risks associated with the current economic conditions and
uncertainties in the European Union (“EU”). European and global economic conditions have already been
negatively impacted by the ability of certain EU member states to service their sovereign debt
obligations. Additionally, there continues to be uncertainty over the possibility that other EU member states may
experience similar financial troubles, the ultimate outcome of the EU governments’ financial support programs,
the possible breakup or restructuring of the EU and the possible elimination or restructuring of the EU monetary
18