Dick's Sporting Goods 2011 Annual Report Download - page 39

Intense competition in the sporting goods industry could limit our growth and reduce our profitability.
The market for sporting goods retailers is highly fragmented and intensely competitive. Our current
and prospective competitors include many large companies, some of which have substantially greater
market presence, name recognition, and financial, marketing and other resources than us. We compete
directly or indirectly with the following categories of companies:
large format sporting goods stores and chains;
traditional sporting goods stores and chains;
specialty stores;
mass merchants;
catalog and Internet-based retailers; and
sporting goods brands that sell direct to consumers.
Pressure from our competitors could require us to reduce our prices or increase our spending for
advertising and promotion. Increased competition in markets in which we have stores or the adoption
or proliferation by competitors of innovative store formats, aggressive pricing strategies and retail sale
methods, such as the Internet, could cause us to lose market share and could have a material adverse
effect on our business, financial condition, results of operations and cash flows.
Lack of available retail store sites on terms acceptable to us, rising real estate prices and other costs and risks
relating to new store openings could severely limit our growth opportunities.
Our strategy includes opening stores in new and existing markets. We must successfully choose store
sites, execute favorable real estate transactions on terms that are acceptable to us, hire competent
personnel and effectively open and operate these new stores. Our plans to increase our number of
retail stores will depend in part on the availability of existing retail stores or store sites. A lack of
available financing on terms acceptable to real estate developers or a tightening credit market may
adversely affect the number or quality of retail sites available to us. We cannot assure you that stores
or sites will be available to us, or that they will be available on terms acceptable to us. If additional
retail store sites are unavailable on acceptable terms, we may not be able to carry out a significant part
of our growth strategy. Rising real estate costs and acquisition, construction and development costs
could also inhibit our ability to grow. If we fail to locate desirable sites, obtain lease rights to these
sites on terms acceptable to us, hire adequate personnel and open and effectively operate these new
stores, our financial performance could be adversely affected.
In addition, our expansion in new and existing markets may present competitive, distribution,
merchandising and regulatory challenges that differ from our current challenges, including competition
among our stores, diminished novelty of our store design and concept, added strain on our distribution
centers, additional information to be processed by our management information systems and diversion
of management attention from operations, such as the control of inventory levels in our stores. We also
cannot guarantee that we will be able to obtain and distribute adequate product supplies to our stores
or maintain adequate warehousing and distribution capability at acceptable costs. New stores also may
have lower than anticipated sales volumes relative to previously opened stores during their comparable
years of operation, and sales volumes at new stores may not be sufficient to achieve store-level
profitability or profitability comparable to that of existing stores.
New stores in new markets, where we are less familiar with the target customer and less well-known,
may face different or additional risks and increased costs compared to stores operated in existing
markets or new stores in existing markets. For example, expansion into new markets could bring us into
direct competition with retailers with whom we have no past experience as direct competitors. We also
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