Lumber Liquidators 2013 Annual Report Download - page 24

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We may not be able to successfully anticipate consumer trends and our failure to do so may adversely
impact our net sales and profitability.
As part of our business proposition, it is important for us to anticipate and respond to changing
preferences and consumer demands in a timely manner. If we fail to identify and respond to emerging trends,
consumer acceptance of the merchandise in our stores and our image with our customers may be harmed,
which could reduce customer traffic in our stores and adversely affect our net sales. Moreover, consumer
demand within our mix of products may shift and such change may negatively impact our net sales and
operating results.
Risks Related to Our Operations
Federal, provincial, state or local laws and regulations, or our failure to comply with such laws and
regulations, could increase our expenses, restrict our ability to conduct our business and expose us to legal
risks.
We are subject to a wide range of general and industry-specific laws and regulations imposed by federal,
provincial, state and local authorities in the countries in which we operate including those related to customs,
foreign operations (such as the Foreign Corrupt Practices Act), truth-in-advertising, consumer protection,
privacy, zoning and occupancy matters as well as the operation of retail stores and warehouse, production and
distribution facilities. In addition, various federal, provincial and state laws govern our relationship with and
other matters pertaining to our employees, including wage and hour laws, requirements to provide meal and
rest periods or other benefits, family leave mandates, requirements regarding working conditions and
accommodations to certain employees, citizenship or work authorization and related requirements, insurance
and workers’ compensation rules and anti-discrimination laws. If we fail to comply with these laws and
regulations, we could be subject to legal risk, our operations could be impacted negatively and our reputation
could be damaged. Likewise, if such laws and regulations should change, our costs of compliance may
increase, thereby impacting our results and hurting our profitability.
Certain portions of our operations are subject to laws and regulations governing the use, storage,
handling, generation, treatment, emission, release, discharge and disposal of certain hazardous materials and
wastes, the remediation of contaminated soil and groundwater and the health and safety of employees. If we
are unable to extend or renew a material approval, license or permit required by such laws, or if there is a
delay in renewing any material approval, license or permit, our net sales and operating results could
deteriorate or otherwise cause harm to our business.
With regard to our products, we may spend significant time and resources in order to comply with
applicable advertising, importation, exportation, environmental, health and safety laws and regulations. If we
should violate these laws and regulations, we could experience delays in shipments of our goods, be subject to
fines or penalties, be liable for costs and damages, or suffer reputational harm, which could reduce demand for
our merchandise and hurt our business and results of operations. Further, if such laws and regulations should
change, we may experience increased costs or incur decreased efficiency in order to adhere to the new
standards.
We are involved in a number of legal proceedings and, while we cannot predict the outcomes of such
proceedings and other contingencies with certainty, some of these outcomes could adversely affect our
business, financial condition and results of operations.
We are, or may become involved, in legal proceedings, government and agency investigations, and
consumer, employment, tort and other litigation (see discussion of Legal Proceedings in Item 3 of this Report
and Note 11 to the consolidated financial statements included in Item 8 of this Report). We cannot predict
with certainty the outcomes of these legal proceedings. The outcome of some of these legal proceeding could
require us to take, or refrain from taking, actions which could negatively affect our operations or could require
us to pay substantial amounts of money adversely affecting our financial condition and results of operations.
Additionally, defending against lawsuits and proceedings may involve significant expense and diversion of
management’s attention and resources.
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