Express 2013 Annual Report Download - page 14

Table of Contents
•significant labor disputes, such as dock strikes.
We cannot predict whether the countries in which our merchandise is manufactured, or may be manufactured in the future, will be subject to new or additional
trade restrictions imposed by the United States or other foreign governments, including the likelihood, type, or effect of any such restrictions. Trade
restrictions, including new or increased tariffs or quotas, embargoes, safeguards, and customs restrictions against apparel items, as well as labor strikes and
work stoppages or boycotts, could increase the cost or reduce the supply of apparel available to us and adversely affect our business, financial condition, or
results of operations.
If we encounter difficulties associated with distribution facilities or if they were to shut down for any reason, we could face shortages of inventory,
delayed shipments to our online customers, and harm to our reputation. Any of these issues could have a material adverse effect on our business
operations.
Our distribution facilities are operated by third parties. Our Columbus facility operates as our central distribution facility and supports our entire North
American business, as all of our merchandise is shipped to the central distribution facility from our vendors and is then packaged and shipped to our stores
or the e-commerce distribution facility in Groveport for further distribution to our online customers. The success of our stores and the satisfaction of our online
customers depend on their timely receipt of merchandise. The efficient flow of our merchandise requires that the third parties who operate the distribution
facilities have adequate capacity in both distribution facilities to support our current level of operations and any anticipated increased levels that may follow
from the growth of our business. If we encounter difficulties with the distribution facilities or in our relationships with the third parties who operate the
facilities, or if either facility were to shut down for any reason, including as a result of fire or other natural disaster or work stoppage, we could face shortages
of inventory, resulting in “out of stock” conditions in our stores, incur significantly higher costs and longer lead times associated with distributing our
products to both our stores and online customers, and experience dissatisfaction from our customers. Any of these issues could have a material adverse effect
on our business and harm our reputation.
We rely upon independent third-party transportation providers for substantially all of our product shipments and are subject to increased
shipping costs as well as the potential inability of our third-party transportation providers to deliver on a timely basis.
We currently rely upon independent third-party transportation providers for substantially all of our product shipments, including shipments to and from all of
our stores and to our customers. Our utilization of these delivery services for shipments is subject to risks, including increases in fuel prices, which would
increase our shipping costs, and employee strikes and inclement weather, which may impact a shipping company's ability to provide delivery services that
adequately meet our shipping needs. If we change the shipping companies we use, we could face logistical difficulties that could adversely affect deliveries,
and we would incur costs and expend resources in connection with such change. Moreover, we may not be able to obtain terms as favorable as those received
from our current independent third-party transportation providers which, in turn, would increase our costs.
We depend on key executive management and may not be able to retain or replace these individuals or recruit additional personnel, which could
harm our business.
We depend on the leadership and experience of our key executive management. The loss of the services of any of our executive management members could
have a material adverse effect on our business and prospects, as we may not be able to find suitable individuals to replace such personnel on a timely basis or
without incurring increased costs, or at all. We believe that our future success will depend greatly on our continued ability to attract and retain highly skilled
and qualified personnel. There is a high level of competition for experienced, successful personnel in the retail industry. Our inability to meet our staffing
requirements in the future could impair our growth and harm our business.
Our growth strategy, including new store growth, e-commerce, and international expansion plans, is dependent on a number of factors, any of
which could strain our resources or delay or prevent the successful penetration into new markets.
Our growth strategy is partially dependent on opening new stores across North America, including outlet stores, remodeling existing stores in a timely manner,
and operating them profitably. Additional factors required for the successful implementation of our growth strategy include, but are not limited to, obtaining
desirable store locations, negotiating acceptable leases, completing projects on budget, supplying proper levels of merchandise and successfully hiring and
training store managers and sales associates. In order to optimize profitability for new stores, we must secure desirable retail lease space when opening stores in
new and existing markets. We must 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. We historically have received landlord allowances for store build outs, which offset certain capital
expenditures we must make to open a new store. If landlord allowances cease to be available to us in the future or are decreased, opening new stores would
require more capital
14