Pep Boys 2009 Annual Report Download - page 69

We depend on our relationships with our vendors and a disruption of these relationships or of our
vendors’ operations could have a material adverse effect on our business and results of operations.
Our business depends on developing and maintaining productive relationships with our vendors.
Many factors outside our control may harm these relationships. For example, financial difficulties that
some of our vendors may face may increase the cost of the products we purchase from them or may
interrupt our source of supply. In addition, our failure to promptly pay, or order sufficient quantities of
inventory from our vendors may increase the cost of products we purchase or may lead to vendors
refusing to sell products to us at all. A disruption of our vendor relationships or a disruption in our
vendors’ operations could have a material adverse effect on our business and results of operations.
We depend on our senior management team and our other personnel, and we face substantial competition
for qualified personnel.
Our success depends in part on the efforts of our senior management team. Our continued success
will also depend upon our ability to retain existing, and attract additional, qualified field personnel to
meet our needs. We face substantial competition, both from within and outside of the automotive
aftermarket to retain and attract qualified personnel. In addition, we believe that the number of
qualified automotive service technicians in the industry is generally insufficient to meet demand.
We are subject to environmental laws and may be subject to environmental liabilities that could have a
material adverse effect on us in the future.
We are subject to various federal, state and local environmental laws and governmental regulations
relating to the operation of our business, including those governing the handling, storage and disposal
of hazardous substances contained in the products we sell and use in our service bays, the recycling of
batteries, tires and used lubricants, the ownership and operation of real property and the sale of small
engine merchandise. When we acquire or dispose of real property or enter into financings secured by
real property, we undertake investigations that may reveal soil and/or groundwater contamination at the
subject real property. All such known contamination has either been remediated, or is in the process of
being remediated. Any costs expected to be incurred related to such contamination are either covered
by insurance or financial reserves or provided for in the consolidated financial statements. However,
there exists the possibility of additional soil and/or groundwater contamination on our real property
where we have not undertaken an investigation. A failure by us to comply with environmental laws and
regulations could have a material adverse effect on us.
Risks Related to Our Industry
Our industry is highly competitive, and price competition in some segments of the automotive aftermarket
or a loss of trust in our participation in the ‘‘do-it-for-me’’ market, could cause a material decline in our
revenues and earnings.
The automotive aftermarket retail and service industry is highly competitive and subjects us to a
wide variety of competitors. We compete primarily with the following types of businesses in each
segment of the automotive aftermarket:
Do-It-Yourself
Retail
• automotive parts and accessories stores;
• automobile dealers that supply manufacturer replacement parts and accessories; and
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