Dick's Sporting Goods 2010 Annual Report Download - page 40

websites and the characteristics and quality of products and services. Unfavorable changes to regulations in these areas could
harm our business.
We have contracted with a third party to maintain and operate our e-commerce website and are reliant on that party and its
operational, privacy and security procedures and controls and its ability to maintain and operate our website. Failure by such third
party to adequately maintain and operate our e-commerce website, including any prolonged disruption that affects our customers’
ability to utilize our website resulting in the loss of sales and customers and/or increased costs, could materially affect our
reputation, operations or financial results.
In addition, as the popularity and use of e-commerce sites continue to increase, our business faces increased competition from
various domestic and international sources, including our suppliers. We may require significant capital in the future to sustain or
grow our business, including our e-commerce operations, and there is no assurance that cash flow from operations will be
sufficient to meet those needs or that additional sources of capital will be available on acceptable terms or at all.
Problems with our information system software could disrupt our operations and negatively impact our financial results and
materially adversely affect our business operations.
Our Dick’s and Golf Galaxy stores utilize a suite of applications from JDA for our core merchandising, allocation and replenishment
systems. These systems, if not functioning properly, could disrupt our operations, including our ability to track, record and analyze
the merchandise that we sell, process shipments of goods, process financial information or credit card transactions, deliver
products or engage in similar normal business activities particularly if there are any unforeseen interruptions after implementa-
tion. Any material disruption, malfunction or other similar problems in or with these systems could negatively impact our financial
results and materially adversely affect our business operations.
We rely on three distribution centers, and if there is a natural disaster or other serious disruption at one of these facilities, we may
lose merchandise and be unable to effectively deliver it to our stores.
We currently operate a 725,000 square foot distribution center in Plainfield, Indiana, a 657,000 square foot distribution center near
Atlanta, Georgia, and a 601,000 square foot distribution center in Smithton, Pennsylvania. Any natural disaster or other serious
disruption to one of these facilities due to fire, tornado or any other cause could damage a significant portion of our inventory or
impair our ability to adequately stock our stores and process returns of products to vendors and could negatively affect our sales
and profitability. In addition, as we grow, we may require additional distribution capacity, which could come in the form of
expanding existing facilities or opening alternative or additional facilities. Any such expansions or openings could affect us in ways
we cannot predict.
Our business is seasonal and our annual results are highly dependent on the success of our fourth quarter sales.
Our business is highly seasonal in nature. Our highest sales and operating income results historically occur during the fourth
fiscal quarter, which is due, in part, to the holiday selling season and, in part, to our strong sales of cold weather sporting goods
and apparel. The fourth quarter generated approximately 31% of our net sales for fiscal 2010. Any decrease in our fourth quarter
sales, whether because of a slow holiday selling season, unseasonable weather conditions, economic conditions or otherwise,
could have a material adverse effect on our business, financial condition and operating results for the entire fiscal year.
Because our Dick’s stores are generally concentrated in the eastern half of the United States, we are subject to regional risks.
A majority of our Dick’s stores are located in the eastern half of the United States. Because of this, we are subject to regional
risks, such as the regional economy, weather conditions, increasing costs of electricity, oil and natural gas, natural disasters, as
well as government regulations specific to the states in which we operate. If the region were to suffer an economic downturn or
other adverse event, our net sales and profitability could suffer.
Our results of operations may be harmed by unseasonably warm winter weather conditions. Many of our stores are located in
geographic areas that experience seasonably cold weather. We sell a significant amount of cold weather sporting goods and
apparel. Abnormally warm weather conditions could reduce our sales of these items and cause a decrease in our profitability.
Additionally, abnormally wet or cold weather in the spring or summer months could reduce our sales of golf or other merchandise
and cause a decrease in our profitability.
20 Dick’s Sporting Goods, Inc. ¬2010 Annual Report