Sears 2011 Annual Report Download - page 9

• changes in our merchandise strategy and mix,
• changes in population and other demographics, and
• timing of our promotional events.
Accordingly, our results for any one quarter are not necessarily indicative of the results to be expected for
any other quarter, and comparable store sales for any particular future period may increase or decrease. For more
information on our results of operations, see “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” in Item 7 of this report on Form 10-K.
We rely on foreign sources for significant amounts of our merchandise, and our business may therefore be
negatively affected by the risks associated with international trade.
We depend on a large number of products produced in foreign markets. We face risks associated with the
delivery of merchandise originating outside the United States, including:
• potential economic and political instability in countries where our suppliers are located,
• increases in shipping or other costs,
• transportation delays and interruptions,
• adverse fluctuations in currency exchange rates, and
• changes in U.S. and foreign laws affecting the importation and taxation of goods, including duties,
tariffs and quotas, or changes in the enforcement of those laws.
We rely extensively on computer systems to process transactions, summarize results and manage our
business. Disruptions in these systems could harm our ability to run our business.
Given the number of individual transactions we have each year, it is critical that we maintain uninterrupted
operation of our computer and communications hardware and software systems. Our systems are subject to
damage or interruption from power outages, computer and telecommunications failures, computer viruses,
catastrophic events such as fires, tornadoes and hurricanes, and usage errors by our employees. If our systems are
breached, damaged or cease to function properly, we may have to make a significant investment to fix or replace
them, we may suffer interruptions in our operations in the interim, and we may face costly litigation. Any
material interruption in our computer operations may have a material adverse effect on our business or results of
operations. In addition, we are pursuing complex initiatives to transform our information technology processes
and systems. The risk of disruption is increased in periods where such complex and significant systems changes
are undertaken.
If we do not maintain the security of our member and customer, associate or company information, we
could damage our reputation, incur substantial additional costs and become subject to litigation.
Any significant security compromise or breach of member and customer, associate or company data, either
held or maintained by the Company or our third party providers, could significantly damage our reputation and
brands and result in additional costs, lost sales, fines and/or lawsuits. The regulatory environment related to
information security and privacy is increasingly rigorous, with new and constantly changing requirements
applicable to our business, and compliance with those requirements could result in additional costs. There is no
guarantee that the procedures that we have implemented to protect against unauthorized access to secured data
are adequate to safeguard against all data security breaches. A data security breach could negatively impact our
business and our results of operations.
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