Dick's Sporting Goods 2012 Annual Report Download - page 36

14
ITEM 1A. RISK FACTORS
Risks and Uncertainties
Our business is dependent on the general economic conditions in our markets and ongoing economic and
financial uncertainties may cause a decline in consumer spending that may adversely affect the Company’s
business, operations, liquidity, financial results and stock price.
Our operating results are affected by the relative condition of the U.S. economy. All of our stores are
currently located within the United States, making our operating results highly dependent on U.S.
consumer confidence and the health of the U.S. economy. While the national economy is experiencing
some level of recovery from the recent downturn, we cannot predict how robust the recovery will be or
whether or not it will be sustained. If the economic recovery continues to be slow, or if the economy
experiences a prolonged period of decelerating or negative growth, our results of operations may be
negatively impacted.
As a business that depends on consumer discretionary spending, the Company may be adversely
affected if our customers reduce, delay or forego their purchases of our products as a result of
continued job losses, foreclosures, bankruptcies, higher consumer debt and interest rates, higher energy
and fuel costs, reduced access to credit, falling home prices, lower consumer confidence, uncertainty or
changes in tax policies and tax rates and uncertainty due to national or international security concerns.
Decreases in same store sales, customer traffic or average value per transaction negatively affect the
Company’s financial performance, and a prolonged period of depressed consumer spending could have
a material adverse effect on our business. Promotional activities and decreased demand for consumer
products, particularly higher-end products, could affect profitability and margins. In addition, adverse
economic conditions may result in an increase in our operating expenses due to, among other things,
higher costs of labor, energy, equipment and facilities. Due to recent fluctuations in the U.S. economy,
our sales, operating and financial results for a particular period are difficult to predict, making it
difficult to forecast results to be expected in future periods. Any of the foregoing factors could have a
material adverse effect on our business, results of operations and financial condition and could
adversely affect our stock price.
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 greater market
presence, name recognition, and financial, marketing and other resources than us. We compete, directly
or indirectly, with retailers from multiple categories, including stores and chains utilizing large format,
traditional and specialty formats, mass merchants, and catalog, Internet-based and direct-sell retailers.
We compete principally based on customer service, store location and appearance, and assortment,
quality and availability of merchandise.
Pressure from our competitors could require us to reduce our prices or increase our spending for
advertising and promotion. Increased competition in our current markets 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.
In addition, as the popularity and use of Internet 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 store and
eCommerce 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.