OfficeMax 2007 Annual Report Download - page 10

tasks are difficult to manage successfully. If we are not able to open and remodel stores as quickly
as we have planned, our future financial performance could be materially and adversely affected.
Further, we cannot ensure that the new or remodeled stores will achieve the sales or profit levels
that we anticipate. This is particularly true as we introduce different store designs, formats and sizes
or enter into new market areas. In particular, the ‘‘Advantage’’ prototype store format we intend to
utilize for new and remodeled stores was new in 2006 and there can be no assurance as to
whether or to what extent that format will be successful.
Economic conditions directly influence our operating results. Economic conditions, both
domestically and abroad, directly influence our operating results. Current and future economic
conditions, including the level of unemployment, energy costs, availability of credit, and the financial
condition and growth prospects of our customers may adversely affect our business and the results
of our operations.
Our expanding international operations expose us to the unique risks inherent in foreign
operations. During 2007, we expanded our operations in international markets, and we may also
seek to expand further into other international markets. Our foreign operations encounter risks
similar to those faced by our U.S. operations, as well as risks inherent in foreign operations, such
as local customs and regulatory constraints, foreign trade policies, competitive conditions, foreign
currency fluctuations and unstable political and economic conditions.
Our quarterly operating results are subject to fluctuation. Our quarterly operating results
have fluctuated in the past and are likely to do so in the future. Factors that may contribute to these
quarter-to-quarter fluctuations could include the effects of seasonality, our level of advertising and
marketing, new store openings, changes in product mix and competitors’ pricing. These quarterly
fluctuations could have an adverse effect on both our operating results and the price of our
common stock.
We may be unable to attract and retain qualified associates. We attempt to attract and
retain an appropriate level of personnel in both field operations and corporate functions. As a
retailer, we face the challenge of filling many positions at lower wage scales which are appropriate
for our industry and in light of competitive factors. As a result, we face many external risks and
internal factors in meeting our labor needs, including competition for qualified personnel, overall
unemployment levels, prevailing wage rates, as well as rising employee benefit costs, including
insurance costs and compensation programs. Changes in any of these factors, including especially
a shortage of available workforce in the areas in which we operate, could interfere with our ability to
adequately provide services to customers and result in increasing our labor costs, which could
have an adverse effect on our business and results of our operations.
Our expanded offering of proprietary branded products may not improve our financial
performance and may expose us to product liability claims. Our product offering includes many
proprietary branded products. While we have focused on the quality of our proprietary branded
products, we rely on third-party manufacturers for these products. Such third party manufacturers
may prove to be unreliable, or the quality of our globally sourced products may not meet our
expectations. Furthermore, economic and political conditions in areas of the world where we source
such products may adversely affect the availability and cost of such products. In addition, our
proprietary branded products compete with other manufacturers’ branded items that we offer. As we
continue to increase the number and types of proprietary branded products that we sell, we may
adversely affect our relationships with our vendors, who may decide to reduce their product
offerings through OfficeMax and increase their product offerings through our competitors. Finally, if
any of our customers are harmed by our proprietary branded products, they may bring product
liability and other claims against us. Any of these circumstances could have an adverse effect on
our business and financial performance.
6