Macy's 2009 Annual Report Download - page 13

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Item 1A. Risk Factors.
In evaluating the Company, the risks described below and the matters described in “Forward-Looking
Statements” should be considered carefully. Such risks and matters could significantly and adversely affect the
Company’s business, prospects, financial condition, results of operations and cash flows.
The Company faces significant competition in the retail industry.
The Company conducts its retail merchandising business under highly competitive conditions. Although the
Company is one of the nation’s largest retailers, it has numerous and varied competitors at the national and local
levels, including conventional and specialty department stores, other specialty stores, category killers, mass
merchants, value retailers, discounters, and Internet and mail-order retailers. Competition may intensify as the
Company’s competitors enter into business combinations or alliances. Competition is characterized by many
factors, including assortment, advertising, price, quality, service, location, reputation and credit availability. If
the Company does not compete effectively with regard to these factors, its results of operations could be
materially and adversely affected.
The Company’s sales and operating results depend on consumer preferences and consumer spending.
The fashion and retail industries are subject to sudden shifts in consumer trends and consumer spending.
The Company’s sales and operating results depend in part on its ability to predict or respond to changes in
fashion trends and consumer preferences in a timely manner. The Company develops new retail concepts and
continuously adjusts its industry position in certain major and private-label brands and product categories in an
effort to satisfy customers. Any sustained failure to anticipate, identify and respond to emerging trends in
lifestyle and consumer preferences could have a material adverse affect on the Company’s business. The
Company’s sales are impacted by discretionary spending by consumers. Consumer spending may be affected by
many factors outside of the Company’s control, including general economic conditions, consumer disposable
income levels, consumer confidence levels, the availability, cost and level of consumer debt, the costs of basic
necessities and other goods and the effects of the weather or natural disasters.
The Company’s business is subject to unfavorable economic and political conditions and other developments and
risks.
Unfavorable global, domestic or regional economic or political conditions and other developments and risks
could negatively affect the Company’s business. For example, unfavorable changes related to interest rates, rates
of economic growth, fiscal and monetary policies of governments, inflation, deflation, consumer credit
availability, consumer debt levels, tax rates and policy, unemployment trends, oil prices, and other matters that
influence the availability and cost of merchandise, consumer confidence, spending and tourism could adversely
impact the Company’s business and results of operations. In addition, unstable political conditions or civil unrest,
including terrorist activities and worldwide military and domestic disturbances and conflicts, may disrupt
commerce and could have a material adverse effect on the Company’s business and results of operations.
The Company’s revenues and cash requirements are affected by the seasonal nature of its business.
The Company’s business is seasonal, with a high proportion of revenues and operating cash flows generated
during the second half of the fiscal year, which includes the fall and holiday selling seasons. A disproportionate
amount of revenues fall in the fourth fiscal quarter, which coincides with the holiday season. In addition, the
Company incurs significant additional expenses in the period leading up to the months of November and
December in anticipation of higher sales volume in those periods, including for additional inventory, advertising
and employees.
The Company’s business could be affected by extreme weather conditions or natural disasters.
Extreme weather conditions in the areas in which the Company’s stores are located could adversely affect
the Company’s business. For example, frequent or unusually heavy snowfall, ice storms, rainstorms or other
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