AutoZone 2014 Annual Report Download - page 84

14
public and private debt and would likely significantly increase our overall borrowing costs and adversely affect
our earnings.
Moreover, significant deterioration in the financial condition of large financial institutions in calendar years 2008
and 2009 resulted in a severe loss of liquidity and availability of credit in global credit markets and in more
stringent borrowing terms. During brief time intervals in the fourth quarter of calendar 2008 and the first quarter
of calendar 2009, there was limited liquidity in the commercial paper markets, resulting in an absence of
commercial paper buyers and extraordinarily high interest rates on commercial paper. We can provide no
assurance that credit market events such as those that occurred in the fourth quarter of 2008 and the first quarter of
2009 will not occur again in the foreseeable future. Conditions and events in the global credit market could have a
material adverse effect on our access to short-term debt and the terms and cost of that debt.
Significant changes in macroeconomic and geo-political factors could adversely affect our financial
condition and results of operations.
Macroeconomic conditions impact both our customers and our suppliers. Job growth in the United States has
remained relatively slow during the past five years and the unemployment rate has not recovered to pre-recession
levels. Moreover, the United States government continues to operate under historically large deficits and debt
burden. Continued distress in global credit markets, business failures, significant geo-political conflicts, continued
high energy prices and other factors continue to affect the global economy. Moreover, rising energy prices could
impact our merchandise distribution, commercial delivery, utility and product costs. Over the short term, such
factors could positively impact our business. Over a longer period of time, all of these macroeconomic and geo-
political conditions could adversely affect our sales growth, margins and overhead, which could adversely affect
our financial condition and operations.
Our business depends upon hiring and retaining qualified employees.
We believe that much of our brand value lies in the quality of the more than 76,000 AutoZoners employed in our
stores, distribution centers, store support centers, ALLDATA and AutoAnything. We cannot be assured that we
can continue to hire and retain qualified employees at current wage rates. If we are unable to hire, properly train
and/or retain qualified employees, we could experience higher employment costs, reduced sales, losses of
customers and diminution of our brand, which could adversely affect our earnings. If we do not maintain
competitive wages, our customer service could suffer due to a declining quality of our workforce or, alternatively,
our earnings could decrease if we increase our wage rates.
Inability to acquire and provide quality merchandise could adversely affect our sales and results of
operations.
We are dependent upon our vendors continuing to supply us with quality merchandise. If our merchandise
offerings do not meet our customers' expectations regarding quality and safety, we could experience lost sales,
increased costs and exposure to legal and reputational risk. All of our vendors must comply with applicable
product safety laws, and we are dependent on them to ensure that the products we buy comply with all safety and
quality standards. Events that give rise to actual, potential or perceived product safety concerns could expose us to
government enforcement action or private litigation and result in costly product recalls and other liabilities. To the
extent our suppliers are subject to added government regulation of their product design and/or manufacturing
processes, the cost of the merchandise we purchase may rise. In addition, negative customer perceptions regarding
the safety or quality of the products we sell could cause our customers to seek alternative sources for their needs,
resulting in lost sales. In those circumstances, it may be difficult and costly for us to regain the confidence of our
customers. Moreover, our vendors are impacted by global economic conditions. Credit market and other
macroeconomic conditions could have a material adverse effect on the ability of our suppliers to finance and
operate their businesses and meet our inventory demands. If any of our significant vendors experience financial
difficulties or otherwise are unable to deliver merchandise to us on a timely basis, or at all, we could have product
shortages in our stores that could adversely affect customers’ perceptions of us and cause us to lose customers and
sales.
10-K