Radio Shack 2008 Annual Report Download - page 18

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Failure to enter into, maintain and renew profitable relationships with name brand product and
service providers could adversely affect our sales and profitability.
Our large selection of name brand products and service providers makes up a significant portion of our
overall sales. In the aggregate, these relationships have or are expected to have a significant impact on
both our operations and financial strategy. If we are unable to create, maintain or renew our relationships
with such third parties on profitable terms or at all, our sales and our profitability could be adversely
impacted.
The occurrence of severe weather events or natural disasters could significantly damage or
destroy outlets or prohibit consumers from traveling to our retail locations, especially during the
peak winter holiday shopping season.
If severe weather or a catastrophic natural event, such as a hurricane or earthquake, occurs in a particular
region and damages or destroys a significant number of our stores in that area, our overall sales would be
reduced accordingly. In addition, if severe weather, such as heavy snowfall or extreme temperatures,
discourages or restricts customers in a particular region from traveling to our stores, our sales would also
be adversely affected. If severe weather occurs during the fourth quarter holiday season, the adverse
impact to our sales and gross profit could be even greater than at other times during the year because we
generate a significant portion of our sales and gross profit during this period.
We have assigned lease obligations related to our discontinued retail operations that, if realized,
could materially and adversely affect our financial results.
We have retail leases for locations that were assigned to other businesses. The majority of these lease
obligations arose from leases assigned to CompUSA, Inc. as part of the sale of our Computer City, Inc.
subsidiary to CompUSA in August 1998. In the event CompUSA or the other assignees, as applicable, are
unable to fulfill these obligations, we may be responsible for rent due under the leases, which could have a
material adverse affect on our financial results or financial condition.
Failure to comply with, or the additional implementation of, restrictions or regulations regarding
the products and/or services we sell or changes in tax rules and regulations applicable to us could
adversely affect our business and our financial results.
We are subject to various foreign, federal, state, and local laws and regulations including, but not limited
to, the Fair Labor Standards Act and ERISA, each as amended, and regulations promulgated by the
Internal Revenue Service, the United States Department of Labor, the Occupational Safety and Health
Administration, and the Environmental Protection Agency. Failure to properly adhere to these and other
applicable laws and regulations could result in the imposition of penalties or adverse legal judgments and
could adversely affect our business and our financial results. Similarly, the cost of complying with newly-
implemented laws and regulations could adversely affect our business and our financial results.
Risks associated with the suppliers from whom our raw materials and products are sourced could
materially adversely affect our sales and profitability.
We utilize a large number of suppliers located in various parts of the world to obtain raw materials and
private brand merchandise and other products. If any of our key vendors fail to supply us with products,
we may not be able to meet the demands of our customers and our sales and profitability could be
adversely affected.
We purchase a significant portion of our inventory from manufacturers located in China. Changes in trade
regulations (including tariffs on imports) could increase the cost of items we purchase. Although our
purchases are denominated in U.S. dollars, the continued strengthening of the Chinese currency against
the U.S. dollar could cause our vendors to increase the prices of items we purchase. The occurrence of
any of these events could have a material adverse effect on our financial results.
Our ability to find qualified vendors who meet our standards and supply products in a timely and efficient
manner is a significant challenge, especially with respect to goods sourced from outside the United States.
Merchandise quality issues, product safety concerns, trade restrictions, difficulties in enforcing intellectual
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