CompUSA 2014 Annual Report Download - page 12

There are a number of factors and variables described below that may affect our future results of operations and financial condition. Other
factors of which we are currently not aware or that we currently deem immaterial may also affect our results of operations and financial position.
Risks Related to the Economy and Our Industries
Current economic conditions may cause the loss of consumer confidence in the Company’
s domestic and international markets which we
believe resulted in a decrease of spending in the categories of products we sell in 2012, 2013 and 2014. With conditions in the market for
technology products remaining highly competitive, reductions in our selling prices, as we have experienced in recent years, have
adversely affected our revenues and profits and could continue to do so in the future. It is also possible that as manufacturers react to the
marketplace they may reduce manufacturing capacity or allocations to their customers creating shortages of product. Both we and our
customers are subject to global political, economic and market conditions, including inflation, interest rates, energy costs, the impact of
natural disasters, military action and the threat of terrorism. Our consolidated results of operations are directly affected by economic
conditions in North America and Europe. We may experience a decline in sales as a result of poor economic conditions and the lack of
visibility relating to future orders, which occurred in 2012, 2013 and 2014. Our results of operations depend upon, among other things,
our ability to maintain and increase sales volumes with existing customers, our ability to limit price reductions and maintain our margins,
our ability to attract new customers and the financial condition of our customers. A decline in the economy that adversely affects our
customers, causing them to limit or defer their spending, would likely adversely affect our sales, prices and profitability as well, which
occurred in 2012, 2013 and 2014. We cannot predict with any certainty whether we will be able to maintain or improve upon historical
sales volumes with existing customers, or whether we will be able to attract new customers.
In response to economic and market conditions, from time to time we have undertaken initiatives to reduce our cost structure where
appropriate. These initiatives, as well as any future workforce and facilities reductions, may not be sufficient to meet current and future
changes in economic and market conditions and allow us to continue to achieve the growth rates and re-
attain the levels of profitability we
experienced prior to the recent market downturns. In addition, costs actually incurred in connection with our restructuring actions may be
higher than our estimates of such costs and/or may not lead to the anticipated cost savings.
As more particularly describe below, on March 10, 2015 the Company announced that its Technology Products business segment would
be exiting the retail store business in order to accelerate its business to business (''B2B'') operations.
We may not be able to compete effectively with current or future competitors. The markets for our products and services are intensely
competitive and subject to constant technological change. The integration of formerly separate products such as cameras and GPS
devices into cell phones, and the adverse impact of the boom in tablets sales on PC and laptop sales, demonstrate how rapid technological
change can significantly affect the markets for the products we sell. We expect this competition and technological change to further
intensify in the future. Competitive factors include price, availability, service and support. Our ecommerce business faces pressure from
competing with large, expanding ecommerce retailers. Many of our competitors are larger companies with greater financial, marketing
and product development resources than ours. The market for the sale of industrial products in North America is highly fragmented and is
characterized by multiple distribution channels such as small dealerships, direct mail distribution, internet-
based resellers, large
warehouse stores and retail outlets. We also face competition from manufacturers’
own sales representatives, who sell industrial
equipment directly to customers, and from regional or local distributors. In addition, new competitors may enter our markets. This may
place us at a disadvantage in responding to competitors’
pricing strategies, technological advances and other initiatives, resulting in our
inability to increase our revenues or maintain our gross margins in the future.
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Table of Contents
Item
1A. Risk Factors.
•
General economic conditions, such as decreased consumer confidence and spending and reductions in manufacturing capacity have and
could continue to result in our failure to achieve our historical sales growth rates and profit levels.
• The markets for our products and services are extremely competitive and if we are unable to successfully respond to our competitors
’
strategies our sales and gross margins will be adversely affected.