Radio Shack 2009 Annual Report Download - page 18

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11
Failure to create, 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 effect 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
affected.
The occurrence of severe weather events or natural disasters could significantly damage or
destroy our retail locations, could prohibit consumers from traveling to our retail locations, or
could prevent us from resupplying our stores or distribution centers, 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 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
effect on 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 continuing obligations under leases related to discontinued retail operations that could
materially adversely affect our results of operations.
We have ongoing obligations under retail leases for locations that we assigned to other businesses. The
majority of these lease obligations arose from leases, for which CompUSA Inc. assumed responsibility as
part of the sale of our Computer City, Inc. subsidiary to CompUSA in August 1998. Because the company
that assumed responsibility for these leases has ceased operations, we may be responsible for rent due
under the leases, which could materially adversely affect our results of operations.
Failure to comply with, or the additional implementation of, laws, rules, and regulations regarding
our business could adversely affect our business and our results of operations.
We are subject to various foreign, federal, state, and local laws, rules and regulations including, but not
limited to, the Fair Labor Standards Act and ERISA, each as amended, and regulations promulgated by
the Federal Trade Commission, Securities and Exchange Commission, Internal Revenue Service, United
States Department of Labor, Occupational Safety and Health Administration, and Environmental
Protection Agency. Failure to properly adhere to these and other applicable laws, rules and regulations
could result in the imposition of penalties or adverse legal judgments and could adversely affect our
business and our results of operations. Similarly, the cost of complying with newly-implemented laws,
rules and regulations could adversely affect our business and our results of operations.
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, 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 those items. Although our purchases
are denominated in U.S. dollars, changes in the Chinese currency exchange rate against the U.S. dollar
or other foreign currencies could cause our vendors to increase the prices of items we purchase from
them. The occurrence of any of these events could materially adversely affect our results of operations.