Rue 21 2012 Annual Report Download - page 19

relationship with one or more key vendors, or events harmful to our vendors, may materially adversely affect us. In
addition, increased orders may negatively impact our approach of generally striving to minimize the time from
purchase order to product delivery, and may increase our markdown risk.
We generally have no long-term purchase contracts or other contractual assurances of continued supply,
pricing or access to new products. Any of our vendors could discontinue supplying us with desired products in
sufficient quantities for a variety of reasons. The benefits we currently experience from our vendor relationships
could be adversely affected if our vendors:
• choose to discontinue selling non-exclusive or exclusive products to us;
• refuse to allow us to return merchandise purchased from them;
• raise the prices they charge us;
• sell similar or identical products to certain of our competitors, many of whom purchase products in
significantly greater volume and, in some cases, at lower prices than we do;
• enter into arrangements with competitors that could impair our ability to sell their products, including by
giving our competitors exclusive licensing arrangements or exclusive access to styles, brands and products
or limiting our access to such arrangements or styles, brands or products;
• initiate or expand sales of their products through their own stores or through the Internet to the retail market
and therefore compete with us directly; or
• sell their products through outlet centers or discount stores, increasing the competitive pricing pressure we
face.
So long as we purchase merchandise from domestic vendors who source products overseas, any event causing
a sudden disruption of manufacturing or imports from Asia, Central America or elsewhere, including the imposition
of additional import restrictions, could materially harm our operations. Many of our imports are subject to existing
or potential duties, tariffs or quotas that may limit the quantity of certain types of goods that may be imported into
the United States from countries in Asia, Central America or elsewhere. We compete with other companies for
production facilities and import quota capacity. New initiatives may be proposed impacting the trading status of
certain countries and may include retaliatory duties or other trade sanctions which, if enacted, would limit or reduce
the products purchased from suppliers in such countries.
Our vendors’ sourcing operations may also be hurt by political and financial instability, strikes, health concerns
regarding infectious diseases in countries in which our merchandise is produced, adverse weather conditions or
natural disasters that may occur in Asia, Central America or elsewhere or acts of war or terrorism in the
United States or worldwide, to the extent these acts affect the production, shipment or receipt of merchandise. Our
future operations and performance will be subject to these factors, which are beyond our control, and these factors
could materially hurt our business, financial condition and results of operations or may require us to modify our
current business practices or incur increased costs.
We may suffer risks if our vendors fail to follow our vendor guidelines, including the risk that a vendor or a
manufacturer may fail to use acceptable labor practices or comply with other applicable laws.
Many of the products sold in our stores are manufactured outside of the United States, which may increase the
risk that the labor, manufacturing safety and other practices followed by the manufacturers of these products may
differ from those generally accepted in the United States. Although we require each of our vendors to sign a
purchase order and vendor agreement that requires adherence to accepted labor practices and compliance with labor,
manufacturing safety and other laws, we do not supervise, control or audit our vendors or the manufacturers that
produce the merchandise we sell to our customers, and we have no direct relationship and very limited contact with
any of the manufacturers. The violation of such labor, manufacturing safety or other laws by any of our vendors or
these manufacturers, or the divergence of the labor practices followed by any of our vendors or these manufacturers
from those generally accepted in the United States, could interrupt, or otherwise disrupt, the shipment of finished
products to us or damage our brand image and/or subject us to boycotts by our customers or activist groups.
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