Saks Fifth Avenue 2011 Annual Report Download - page 11

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The Company’s business and results of operations may be adversely affected by weather conditions and
natural disasters.
The Company’s business is adversely affected by unseasonable weather conditions. Periods of unseasonably
warm weather in the fall or winter or unseasonably cold or wet weather in the spring or summer affect
consumer apparel purchases and could have a material adverse effect on the Company’s results of operations
and financial condition. Additionally, severe weather conditions such as winter snowstorms or natural disasters
such as hurricanes, tornadoes, earthquakes, and floods may adversely affect the Company’s results of
operations and financial condition.
The Company’s business is intensely competitive and increased or new competition could have a material
adverse effect on the Company.
The retail industry is intensely competitive. As a retailer offering a broad selection of luxury fashion apparel,
shoes, accessories, jewelry, cosmetics, and gift items, the Company currently competes with a diverse group of
retailers, including e-commerce retailers, which sell, among other products, products similar to those of the
Company. The Company also competes in particular markets with a substantial number of retailers that
specialize in one or more types of products that the Company sells. A number of different competitive factors
could have a material adverse effect on the Company’s business, results of operations and financial condition
including:
▪increased operational efficiencies of competitors;
▪competitive pricing strategies, including deep discount pricing by a broad range of retailers during
periods of poor consumer confidence or economic instability;
▪expansion of product offerings by existing competitors;
▪entry by new competitors into markets in which the Company currently operates; and
▪adoption by existing competitors of innovative retail sales methods.
The Company may not be able to continue to compete successfully with its existing or new competitors, and
prolonged periods of deep discount pricing by its competitors may have a material adverse effect on the
Company’s business.
The Company faces risks associated with consumer preferences, demand, and fashion trends.
Changes in consumer preferences, demand and interest could have a material adverse effect on the Company’s
business. In addition, fashion trends could materially impact sales. Success in the retail business depends, in
part, on the Company’s ability to anticipate consumer preferences and demand. Early order commitments often
are made far in advance of consumer acceptance. If the Company fails to anticipate preferences accurately and
respond to consumer preferences and demand, it could experience lower sales, excess inventories, and lower
profit margins, any of which could have a material adverse effect on the Company’s results of operations and
financial condition.
The Company faces a number of risks in opening new stores.
As part of its growth strategy, the Company could potentially increase the total number of stores, which may
include opening new stores in both new and existing markets. The Company may not be able to operate any
new stores profitably. The success of any future store openings will depend upon numerous factors, many of
which are beyond the Company’s control, including the following:
▪the ability of management to adequately analyze and identify suitable markets and individual store
sites within those markets;
▪the ability to attract appropriate vendors;
▪the competition for suitable store sites;
▪the ability to negotiate favorable lease terms with landlords;
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