Dollar Tree 2013 Annual Report Download - page 25

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to continue to provide value to the customer. We are dependent on our ability to adjust our product assortment, to operate more
efficiently or effectively or to increase our comparable store net sales in order to offset inflation or other cost increases. We can
give no assurance that we will be able to operate more efficiently or increase our comparable store net sales in the
future. Please see Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations,"
beginning on page 18 of this Form 10-K for further discussion of the effect of Inflation and Other Economic Factors on our
operations.
A downturn in economic conditions could impact our sales.
Deterioration in economic conditions, such as those caused by a recession, inflation, higher unemployment, consumer debt
levels, lack of available credit, cost increases, as well as adverse weather conditions or terrorism, could reduce consumer
spending or cause customers to shift their spending to products we either do not sell or do not sell as profitably. Adverse
economic conditions could disrupt consumer spending and significantly reduce our sales, decrease our inventory turnover,
cause greater markdowns or reduce our profitability due to lower margins.
Litigation may adversely affect our business, financial condition and results of operations.
Our business is subject to the risk of litigation involving employees, consumers, suppliers, competitors, shareholders,
government agencies, or others through private actions, class actions, governmental investigations, administrative proceedings,
regulatory actions or other litigation. Our products could also cause illness or injury, harm our reputation, and subject us to
litigation. We are currently defendants in several employment-related class and collective actions, litigation concerning leases,
and a governmental investigation concerning retail hazardous waste. The outcome of litigation is difficult to assess or
quantify. Plaintiffs in these types of lawsuits may seek recovery of very large or indeterminate amounts, and the magnitude of
the potential loss may remain unknown for substantial periods of time. In addition, certain of these matters, if decided
adversely to us or settled by us, may result in an expense that may be material to our financial statements as a whole or may
negatively affect our operating results if changes to our business operation are required. The cost to defend current and future
litigation may be significant. There also may be adverse publicity associated with litigation, including litigation related to
product safety, customer information and environmental requirements, which could negatively affect customer perception of
our business, regardless of whether the allegations are valid or whether we are ultimately found liable.
For a discussion of current legal matters, please see Item 3. “Legal Proceedings” beginning on page 13 of this Form 10-K
and Item 8. Financial Statements and Supplementary Data, "Note 4 - Commitments and Contingencies" under the caption
"Contingencies" beginning on page 42 to this Form 10-K. Resolution of these matters, if decided against the Company, could
have a material adverse effect on our results of operations, accrued liabilities or cash flows.
A significant disruption in our computer and technology systems could adversely affect our results of operation or business.
We rely extensively on our computer and technology systems to manage inventory, process credit card and customer
transactions and summarize results. Systems may be subject to damage or interruption from power outages, telecommunication
failures, computer viruses, security breaches and catastrophic events. If our systems are damaged or fail to function properly,
we may incur substantial costs to repair or replace them, may experience loss of critical data and interruptions or delays in our
ability to manage inventories or process customer transactions and may receive negative publicity, which could adversely affect
our results of operation or business.
If we are unable to secure our customers' credit card and confidential information, or other private data relating to our
associates, suppliers or our business, we could be subject to negative publicity, costly government enforcement actions or
private litigation, which could damage our business reputation and adversely affect our results of operation or business.
We have procedures and technology in place to safeguard our customers' debit and credit card information, our
associates' private data, suppliers' data, and our business records and intellectual property. Despite these measures, criminals are
constantly devising schemes to circumvent safeguards and we may be vulnerable to, and unable to detect and appropriately
respond to, data security breaches and data loss, including cyber-security attacks. Other sophisticated retailers have recently
suffered serious security breaches. If we experience a data security breach, we could be exposed to negative publicity,
government enforcement actions, private litigation, or costly response measures. In addition, our reputation within the business
community and with our customers may be affected, which could result in our customers discontinuing the use of debit or
credit cards in our stores or not shopping in our stores altogether. This could could have an adverse effect on our results of
operation or business.