Dick's Sporting Goods 2014 Annual Report Download - page 41

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We depend on our suppliers, distributors and manufacturers to provide us with sufficient quantities of products in a timely
fashion.
We purchase merchandise from approximately 1,500 vendors. In fiscal 2014, purchases from Nike and Under Armour
represented approximately 19% and 12%, respectively, of our merchandise purchases. Although in fiscal 2014 purchases from
no other vendor represented 10% or more of our total purchases, our dependence on our principal suppliers involves risk. We
generally do not have long-term written contracts with our major suppliers that would require them to continue supplying us
with merchandise. If any of our key vendors fails to supply us with products or continue to develop new products that create
consumer demand, we may not be able to meet the demands of our customers and our revenue could materially decline. If there
is a disruption in supply from a principal supplier or distributor, we may be unable to obtain the merchandise or obtain an
adequate quantity that we desire to sell and that consumers desire to purchase. Moreover, many of our suppliers provide us with
incentives, such as return privileges, volume purchasing allowances and cooperative advertising. A decline or discontinuation of
these incentives could reduce or eliminate our profit margins. Further, to the extent our suppliers are affected by economic
uncertainty and other concerns relating to global economic conditions, there may be an adverse impact with respect to their
respective inventory and production levels, customer incentives and vendor allowances, product quality, or ability to continue
operations, all of which could ultimately have an adverse impact on our supply chain.
We may be subject to various types of litigation and other claims, and our insurance may not be sufficient to cover damages
related to those claims.
From time to time the Company or its subsidiaries may be involved in lawsuits or other claims arising in the ordinary course of
business, including those related to federal or state wage and hour laws, product liability, consumer protection, advertising,
employment, intellectual property, tort, privacy or data protection and other matters.
In addition, although we do not sell assault weapons or automatic firearms, we do sell hunting rifles, semi-automatic hunting
rifles and ammunition, and in some of our stores, including Field & Stream stores, handguns. These are products that are
associated with an increased risk of injury and related lawsuits with respect to our compliance with Bureau of Alcohol,
Tobacco, Firearms and Explosives (ATF) or state laws or regulations. In addition, any improper or illegal use by our customers
of ammunition or firearms sold by us could have a negative impact on our reputation and business.
We may incur losses relating to claims filed against us, including costs associated with defending against such claims, and there
is risk that any such claims or liabilities will exceed our insurance coverage, or affect our ability to retain adequate liability
insurance in the future. Even if a claim is unsuccessful or is not fully pursued, the negative publicity surrounding any such
assertions could adversely affect our reputation with our customers. Due to the inherent uncertainties of litigation and other
claims, we cannot accurately predict the ultimate outcome of any such matters.
If our product costs are adversely affected by foreign trade issues, currency exchange rate fluctuations, increasing prices for
raw materials, political instability or other reasons, our sales and profitability may suffer.
A significant portion of the products that we purchase, including those purchased from domestic suppliers, is manufactured
abroad in countries such as China, Taiwan and South Korea. In addition, most of our private brand merchandise is
manufactured abroad. Foreign imports subject us to risk relating to changes in import duties, quotas, loss of "most favored
nation" status with the U.S., shipment delays and shipping port constraints, labor strikes, work stoppages or other disruptions,
freight cost increases and economic uncertainties. In addition, the U.S. government periodically considers other restrictions on
the importation of products obtained by our vendors and us. If any of these or other factors were to cause a disruption of trade
from the countries in which our vendors' supplies or our private brand products' manufacturers are located, our inventory levels
may be reduced or the cost of our products may increase. In addition, to the extent that any foreign manufacturers from whom
we directly or indirectly purchase products utilize labor, environmental, worker safety and other practices that vary from those
commonly accepted in the U.S., we could be hurt by any resulting negative publicity or, in some cases, face potential liability.
Also, the prices charged by foreign manufacturers may be affected by the fluctuation of their local currency against the U.S.
dollar and the price of raw materials, which could cause the cost of our products to increase and negatively impact our sales or
profitability.