Radio Shack 2012 Annual Report Download - page 9

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We may not be able to execute successfully our
strategy to provide cost-effective solutions to meet the
routine consumer electronics needs and distinct
consumer electronics wants of our customers.
To achieve our strategy, we have undertaken a variety of
strategic initiatives. Our failure to execute our strategy
successfully or the occurrence of certain events, including
the following, could materially adversely affect our ability to
maintain or grow our comparable store sales and our
business generally:
• Our inability to recognize evolving consumer
electronics trends and offer products that our target
customer needs or wants
• Our employees’ inability to provide solutions,
answers, and information related to increasingly
complex consumer electronics products
• Our inability to keep our extensive store distribution
system updated and conveniently located near our
customers
Adverse changes in national and world-wide economic
conditions could negatively affect our business.
The continued uncertainty in the economy could have a
significant negative effect on U.S. consumer spending,
particularly discretionary spending for consumer electronics
products, which, in turn, could adversely affect our sales.
Consumer confidence, labor unrest, recessionary and
inflationary trends, equity market levels, consumer credit
availability, interest rates, consumers’ disposable income
and spending levels, energy prices, job growth, income tax
rates and unemployment rates may affect the volume of
customer traffic and level of sales in our locations.
Continued negative trends in any of these economic
conditions, whether national or regional in nature, could
materially adversely affect our results of operations and
financial condition.
In addition, potential disruptions in the capital and credit
markets could have a significant effect on our ability to
access the U.S. and global capital and credit markets, if
needed. These potential disruptions in the capital and credit
markets could materially adversely affect our ability to
borrow under our credit facility, or materially adversely
affect the banks that underwrote our credit facility. The
availability of financing will depend on a variety of factors,
such as economic and market conditions, the availability of
credit, valuation of capital assets, and our credit ratings. If
needed, we may not be able to successfully obtain any
necessary additional financing on favorable terms, or at all.
Our inability to increase or maintain profitability of our
operations could materially adversely affect our results
of operations and financial condition.
A critical component of our business strategy is to improve
our overall profitability. Our ability to increase profitable
sales in existing retail locations may be affected by:
• Our ability to offer and sell products with sufficient
gross profit to improve our overall profitability
• Our success in attracting customers into our retail
locations
• Our ability to choose the correct mix of products to
sell
• Our ability to keep our retail locations stocked with
merchandise customers will purchase
• Our ability to maintain fully-staffed retail locations
with appropriately trained employees
• Our ability to remain relevant to the consumer
Our products and services must appeal to a broad range of
consumers whose preferences cannot be predicted with
certainty and are subject to frequent change. Our success
depends upon our ability to anticipate and respond in a
timely manner to trends in consumer preferences relating to
consumer electronics. If we fail to identify and respond to
these trends in a timely manner, our sales may decline.
In addition, consumer spending remains uncertain, which
makes it more challenging for us to maintain or grow our
operating income. As a result, we must continue to control
our expense structure. Failure to manage our labor and
benefit rates, advertising and marketing expenses, or other
store expenses could delay or prevent us from achieving
increased profitability or otherwise have a material adverse
effect on our results of operations and financial condition.
Any reductions or changes in the growth rate of the
wireless industry or other changes in the dynamics of
the industry could materially adversely affect our
results of operations and financial condition.
Sales of wireless handsets and the related commissions
and residual income constitute a majority of our total
revenue. Consequently, changes in the wireless industry,
such as those discussed below, could materially adversely
affect our results of operations and financial condition.
Lack of growth in the wireless industry tends to have a
corresponding effect on our wireless sales. Wireless
handsets are subject to significant technological changes,
and it is possible that new products will never achieve
widespread consumer acceptance or will be supplanted by
alternative products and technologies that do not offer us a
similar sales opportunity or are sold at lower price points or
margins. Because growth in the wireless industry is often