LensCrafters 2011 Annual Report Download - page 108

ANNUAL REPORT 2011> 32 |
f) If the Group is not successful in completing and integrating strategic acquisitions to
expand or complement its business, its future profitability and growth could be at risk
As part of its growth strategy, the Group has made, and may continue to make, strategic
business acquisitions to expand or complement its business. Its acquisition activities,
however, can be disrupted by overtures from competitors for the targeted candidates,
governmental regulation and rapid developments in its industry. The Group may
face additional risks and uncertainties following an acquisition, including (i) difficulty
in integrating the newly-acquired business and operations in an efficient and effective
manner, (ii) inability to achieve strategic objectives, cost savings and other benefits from
the acquisition, (iii) the lack of success by the acquired business in its markets, (iv) the loss of
key employees of the acquired business, (v) a decrease in the focus of senior management
on its operations, (vi) difficulty integrating human resources systems, operating systems,
inventory management systems and assortment planning systems of the acquired business
with its systems, (vii) the cultural differences between the Group’s organization and that of
the acquired business and (viii) liabilities that were not known at the time of acquisition or
the need to address tax or accounting issues.
If the Group fails to timely recognize or address these matters or to devote adequate
resources to them, the Group may fail to achieve its growth strategy or otherwise realize
the intended benefits of any acquisition. Even if the Group is able to integrate its business
operations successfully, the integration may not result in the realization of the full benefits
of synergies, cost savings, innovation and operational efficiencies that may be possible
from the integration or in the achievement of such benefits within the forecasted period
of time.
g) If the Group is unable to achieve and manage growth, operating margins may be
reduced as a result of decreased efficiency of distribution
In order to achieve and manage its growth effectively, the Group is required to increase
and streamline production and implement manufacturing efficiencies where possible,
while maintaining strict quality control and the ability to deliver products to its customers
in a timely and efficient manner. The Group must also continuously develop new product
designs and features, expand its information systems and operations, and train and
manage an increasing number of management level and other employees. If the Group
is unable to manage these matters effectively, its distribution process could be adversely
affected and the Group could lose market share in affected regions, which could materially
adversely affect its business prospects.
h) If the Group does not correctly predict future economic conditions and changes in
consumer preferences, its sales of premium products and profitability could suffer
The fashion and consumer products industries in which the Group operates are cyclical.
Downturns in general economic conditions or uncertainties regarding future economic
prospects, which affect consumer disposable income, have historically adversely affected
consumer spending habits in its principal markets and thus made the growth in sales
and profitability of premium-priced product categories difficult during such downturns.
Therefore, future economic downturns or uncertainties could have a material adverse