Macy's 2011 Annual Report Download - page 13

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relationships, pursuant to which such third parties have performance, payment and other obligations to the Company. In some
cases, the Company depends upon such third parties to provide essential leaseholds, products, services or other benefits,
including with respect to store and distribution center locations, merchandise, advertising, software development and support,
logistics, other agreements for goods and services in order to operate the Company’s business in the ordinary course, extensions
of credit, credit card accounts and related receivables, and other vital matters. Current economic, industry and market
conditions could result in increased risks to the Company associated with the potential financial distress or insolvency of such
third parties. If any of these third parties were to become subject to bankruptcy, receivership or similar proceedings, the rights
and benefits of the Company in relation to its contracts, transactions and business relationships with such third parties could be
terminated, modified in a manner adverse to the Company, or otherwise impaired. The Company cannot make any assurances
that it would be able to arrange for alternate or replacement contracts, transactions or business relationships on terms as
favorable as the Company’s existing contracts, transactions or business relationships, if at all. Any inability on the part of the
Company to do so could negatively affect the Company’s cash flows, financial condition and results of operations.
A material disruption in the Company’s computer systems could adversely affect the Company’s business or results of
operations.
The Company relies extensively on its computer systems to process transactions, summarize results and manage its
business. The Company’s computer systems are subject to damage or interruption from power outages, computer and
telecommunications failures, computer viruses, cyber-attack or other security breaches, catastrophic events such as fires,
floods, earthquakes, tornadoes, hurricanes, acts of war or terrorism, and usage errors by the Company’s employees. If the
Company’s computer systems are damaged or cease to function properly, the Company may have to make a significant
investment to fix or replace them, and the Company may suffer loss of critical data and interruptions or delays in its operations
in the interim. Any material interruption in the Company’s computer systems could adversely affect its business or results of
operations.
A privacy breach could result in negative publicity and adversely affect the Company’s business or results of operations.
The protection of customer, employee, and company data is critical to the Company. The regulatory environment
surrounding information security and privacy is increasingly demanding, with the frequent imposition of new and constantly
changing requirements across business units. In addition, customers have a high expectation that the Company will adequately
protect their personal information from cyber-attack or other security breaches. A significant breach of customer, employee, or
company data could attract a substantial amount of media attention, damage the Company’s customer relationships and
reputation and result in lost sales, fines, or lawsuits.
A regional or global health pandemic could severely affect the Company’s business.
A health pandemic is a disease that spreads rapidly and widely by infection and affects many individuals in an area or
population at the same time. If a regional or global health pandemic were to occur, depending upon its location, duration and
severity, the Company’s business could be severely affected. Customers might avoid public places in the event of a health
pandemic, and local, regional or national governments might limit or ban public gatherings to halt or delay the spread of
disease. A regional or global health pandemic might also adversely impact the Company’s business by disrupting or delaying
production and delivery of materials and products in its supply chain and by causing staffing shortages in its stores.
The Company is subject to numerous regulations that could adversely affect its business.
The Company is subject to customs, child labor, truth-in-advertising and other laws, including consumer protection
regulations and zoning and occupancy ordinances that regulate retailers generally and/or govern the importation, promotion and
sale of merchandise and the operation of retail stores and warehouse facilities. Although the Company undertakes to monitor
changes in these laws, if these laws change without the Company’s knowledge, or are violated by importers, designers,
manufacturers or distributors, the Company could experience delays in shipments and receipt of goods or be subject to fines or
other penalties under the controlling regulations, any of which could adversely affect the Company’s business.
Litigation, legislation or regulatory developments could adversely affect the Company’s business, financial condition or results
of operations.
The Company is subject to various federal, state and local laws, rules, regulations, inquiries and initiatives in connection
with both its core business operations and its credit card and other ancillary operations (including the Credit Card Act of 2009
and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”)). Recent and future
developments relating to such matters could increase the Company's compliance costs and adversely affect the profitability of
its credit card and other operations. In addition, the Company is regularly involved in various litigation matters that arise in the
ordinary course of its business. Adverse outcomes in current or future litigation could adversely affect the Company’s financial