Dick's Sporting Goods 2013 Annual Report Download - page 43

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Our product costs are also affected in part by the prices for raw materials used in said products. A substantial rise in the price of
one or more raw materials used in our products could dramatically increase the costs associated with the manufacturing of
merchandise that we purchase from our vendors for sale in our stores, as well as products manufactured for our private brands,
which could cause the cost of our products to increase and could potentially have a negative impact on our sales and
profitability.
Historically, political or economic instability in the countries from which our products originate has not had a material adverse
effect on our operations. However, we cannot predict the effect that future changes in economic or political conditions in such
foreign countries may have on our operations.
The loss of our key executives, especially Edward W. Stack, our Chairman and Chief Executive Officer, could have a
material adverse effect on our business due to the loss of their experience and industry relationships.
Our success depends on the continued services of our senior management, particularly Edward W. Stack, our Chairman and
Chief Executive Officer. Mr. Stack also holds a majority of the voting power of our capital stock, and has been operating the
Company since 1984. Mr. Stack possesses detailed and in-depth knowledge of the issues, opportunities and challenges facing
the Company and its businesses. If we were to lose any key senior executive, especially Mr. Stack, our business could be
materially adversely affected.
Our inability or failure to protect our intellectual property rights, or any claimed infringement by us of third party
intellectual rights could have a negative impact on our operating results.
Our trademarks, service marks, copyrights, patents, trade secrets, domain names and other intellectual property are valuable
assets that are critical to our success. Effective trademark and other intellectual property protection may not be available in
every country in which our products are manufactured or may be made available. The unauthorized reproduction or other
misappropriation of our intellectual property could diminish the value of our brands or goodwill and cause a decline in our
revenue. In addition, any infringement or other intellectual property claim made against us, whether or not it has merit, could
be time-consuming to address, result in costly litigation, cause product delays, require us to enter into royalty or licensing
agreements or result in our loss of ownership or use of the intellectual property. As a result, any such claim or our failure to
protect our intellectual property could have an adverse effect on our operating results.
Problems with our information system software could disrupt our operations and negatively impact our financial results and
materially adversely affect our business operations.
We utilize a number of third party information systems for core system needs of our business. For example, our Dick's Sporting
Goods stores 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. Any material disruption, malfunction or other
similar problems in or with our core information systems could negatively impact our financial results and materially adversely
affect our business operations.
We may be unable to attract, train, engage and retain qualified leaders and associates.
The training and development of our future leaders and key personnel is important to our long-term success. If we do not
effectively implement our strategic and business planning processes to attract, retain, train and develop future leaders, our
business may suffer. In addition, stores depend significantly on our ability to hire and retain quality associates, including store
managers and sales associates. We plan to expand our associate base to manage our anticipated growth. The market for non-
entry level personnel, particularly for associates with retail expertise, is highly competitive. Additionally, our ability to maintain
consistency in the quality of customer service in our stores is critical to our success. We are also dependent on the associates
who staff our distribution centers, many of whom are skilled. We may be unable to meet our leadership needs or our labor
needs. If we are unable to train and develop future leaders and key personnel, or hire and retain store-level and distribution
center associates capable of providing a high level of customer service, our business could be materially adversely affected.
We rely on four distribution centers, and if there is a natural disaster or other serious disruption at one or more 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, a 601,000 square foot distribution center in Smithton, Pennsylvania and a 624,000 square foot