DSW 2015 Annual Report Download - page 11
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Table of Contents
In addition to the other information in this Annual Report on Form 10-K, shareholders or prospective investors should carefully consider the following risk
factors when evaluating DSW Inc. If any of the events described below occurs, our business, financial condition, results of operations and future growth
prospects could be negatively affected.
Our continued and future growth in part depends on our ability to successfully open and operate new DSW stores on a profitable basis. We believe we can
operate more than 550 stores in the United States and are evaluating our real estate strategy to optimize how we can best serve the customers' shopping
preferences in store and online.
This continued expansion could place increased demands on our financial, managerial, operational and administrative resources. We may not achieve our
planned expansion on a timely and profitable basis or achieve results in new locations similar to those achieved in existing locations in prior periods. Our
ability to open and operate new DSW stores on a timely and profitable basis depends on many factors, including 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.
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, which could have a material adverse effect on our business.
We generally do not have long-term supply agreements or exclusive arrangements with any vendors and, therefore, our success depends on maintaining
strong relationships with our vendors. Our success depends, to a significant extent, on the willingness and ability of our vendors to supply us with sufficient
inventory to stock our sales channels. If we fail to maintain our relationships with our existing vendors or to enhance the quality of merchandise they supply
us, and if we cannot maintain or acquire new vendors of in-season brand name and designer merchandise, our ability to obtain a sufficient amount and variety
of merchandise at favorable prices may be limited, which could have a negative impact on our business. In addition, our inability to stock our sales channels
with in-season merchandise at attractive prices could result in lower net sales and decreased customer interest in our sales channels, which could have a
material adverse effect on our business. Further, if our merchandise costs increase due to increased material or labor costs, or other reasons, our ability to
respond or the effect of our response could adversely affect our net sales or gross profit. During fiscal 2015, three key vendors supplied approximately 18% of
our merchandise. The loss of or a reduction in the amount and quality of merchandise supplied by any one of these vendors could have an adverse effect on
our business.
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Source: DSW Inc., 10-K, March 24, 2016 Powered by Morningstar® Document Research℠
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