DSW 2009 Annual Report Download - page 15

prior periods. Our ability to open and operate new DSW stores on a timely and profitable basis depends on many
factors, including, among others, our ability to:
•identify suitable markets and sites for new store locations with financially stable co-tenants and landlords;
•negotiate favorable lease terms;
•build-out or refurbish sites on a timely and effective basis;
•obtain sufficient levels of inventory to meet the needs of new stores;
•obtain sufficient financing and capital resources or generate sufficient operating cash flows from operations
to fund growth;
•open new stores at costs not significantly greater than those anticipated;
•successfully open new DSW stores in markets in which we currently have few or no stores;
•control the costs of other capital investments associated with store openings;
•hire, train and retain qualified managers and store personnel; and
•successfully integrate new stores into our existing infrastructure, operations, management and distribution
systems or adapt such infrastructure, operations and systems to accommodate our growth.
As a result, we may be unable to open new stores at the rates expected or at all. If we fail to successfully
implement our growth strategy, the opening of new DSW stores could be delayed or prevented, could cost more than
anticipated and could divert resources from other areas of our business, any of which could have a material adverse
effect on our business, financial condition and results of operations.
To the extent that we open new DSW stores in our existing markets, we may experience reduced net sales in
existing stores in those markets. As our store base increases, our stores will become more concentrated in the
markets we serve. As a result, the number of customers and financial performance of individual stores may decline
and the average sales per square foot at our stores may be reduced. This could have a material adverse effect on our
business, financial condition and results of operations.
We have entered into Supply Agreements with Stein Mart, Gordmans and Filene’s Basement. If Stein
Mart, Gordmans or Filene’s Basement were to terminate our supply agreements, close a significant
number of stores or liquidate, it could have a material adverse effect on our business and financial
performance.
Our supply agreements are typically for multiple years with automatic renewal options as long as either party
does not give notice of intent not to renew. For Stein Mart, Gordmans and Filene’s Basement, our contractual
termination dates are December 2012, January 2013 and January 2013, respectively. In addition, the agreements
contain provisions that may trigger an earlier termination. For fiscal 2009, the sales from our leased business
segment represent approximately 9.2% of our total company sales. In the event of the loss of one of these leased
supply agreements, it is unlikely that we would be able to proportionately reduce expenses to the reduction of sales.
The performance of our leased departments is highly dependant on the performance of Stein Mart, Gordmans
and Filene’s Basement. In fiscal 2009, Filene’s Basement filed for bankruptcy protection and its assets were
purchased by a subsidiary of Syms, which now operates stores under the Filene’s Basement name. If Stein Mart,
Gordmans or Filene’s Basement were to terminate our supply agreements, close a significant number of stores or
liquidate, it could have a material adverse effect on our business and financial performance.
We launched dsw.com in fiscal 2008, which may not be successful and could adversely affect our results
of operations or distract management from our core business.
We launched dsw.com in fiscal 2008 to sell shoes and related accessories through our website. We have a ten-
year lease agreement for space to serve as a fulfillment center for dsw.com distribution. The operation of such a
business channel could distract management from our core business, take business from our existing store base
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