DSW 2015 Annual Report Download - page 13

Table of Contents
changes in our merchandising strategy; timing and concentration of new DSW store openings and related new store and other start-up costs;expenses
associated with new DSW stores, our omni-channel strategy and marketing expenses; changes in our merchandise mix; changes in and regional variations in
demographic and population characteristics;timing of promotional events; seasonal fluctuations due to weather conditions; and actions by our competitors.
Accordingly, our results for any one fiscal quarter are not necessarily indicative of the results to be expected for any other quarter, and comparable sales for
any particular future period may increase or decrease. Our future financial performance may fall below the expectations of securities analysts and investors.
In addition, our business is subject to seasonal merchandise trends when our customers’ interest in new seasonal styles increases. New spring styles are
introduced in the first quarter, and new fall styles are introduced in the third quarter. As a result of seasonal merchandise trends, any factors negatively
affecting us during these periods, including adverse weather, the timing and level of markdowns, fashion trends or unfavorable economic conditions, could
have a material adverse effect on our business.

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Our information technology systems are an integral part of our growth strategy in efficiently operating our business, in managing operations and protecting
against security risks related to our electronic processing and transmitting of confidential customer and associate data. The requirements to keep our
information technology systems operating at peak performance may be higher than anticipated and could strain our capital resources, management of any
system upgrades, implementation of new systems and the related change management processes required with new systems and our ability to protect
ourselves from any future information security breaches. In addition, any significant disruption of our data center could have a material adverse effect on
those operations dependent on those systems, most specifically, store operations, dsw.com, our distribution and fulfillment centers and our merchandising
team. While we maintain business interruption and property insurance, in the event our data center was to be shut down, our insurance may not be sufficient
to cover the impact to the business.
We accept orders through dsw.com and m.dsw.com, the DSW mobile site. We are subject to various risks of operating online and mobile selling capabilities
such as: the failure of our information technology infrastructure, including any third-party hardware or software, resulting in downtime or other technical
issues; reliance on third-party logistics providers to deliver our products to customers; inability to respond to technological changes; violations of state or
federal laws; credit card fraud; or other information security breaches. Failure to mitigate these risks could have a material adverse effect on our business.


Given the nature of our business, we collect, process and retain sensitive and confidential customer data, including credit card information. Despite our
current security measures, our facilities and systems, and those of our third-party service providers, may be vulnerable to information security breaches, acts
of vandalism, computer viruses or other similar attacks. An information security breach involving the disclosure of confidential data could damage our
reputation and our customers' willingness to shop in our stores, on dsw.com and m.dsw.com, and subject us to possible legal liability. In addition, we may
incur material remediation costs as a result of an information security breach, including liability for stolen customer or associate data, repairing system
damage or providing credit monitoring or other benefits to customers or associates affected by the breach. While we have insurance, in the event we
experience an information security breach, our insurance may not be sufficient to cover the impact to the business. Failure to mitigate these risks could have a
material adverse effect on our business.
 
Our business requires disciplined execution at all levels of our organization which requires an experienced and talented management team. If we were to lose
the benefit of the experience, efforts and abilities of any of our key executive and buying personnel, our business could be adversely affected. We have
entered into employment agreements with several key executives and also offer compensation packages designed to attract and retain talent. Furthermore, our
ability to manage our expansion will require us to continue to train, motivate and develop our employees to maintain a high level of talent for future
challenges and succession planning. Competition for these types of personnel is intense, and we may not be successful in attracting and
retaining the personnel required to grow and operate our business.
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Source: DSW Inc., 10-K, March 24, 2016 Powered by Morningstar® Document Research℠
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