Express 2014 Annual Report Download - page 22

If an existing or future store is not profitable, and we decide to close it, we may nonetheless be committed to
perform our obligations under the applicable lease including, among other things, paying the base rent for the
balance of the lease term. Moreover, even if a lease has an early cancellation clause, we may not satisfy the
contractual requirements for early cancellation under that lease. As of January 31, 2015, our minimum annual
rental obligations under long-term lease arrangements for 2015 and 2016 were $222.6 million and $176.5
million. Our inability to enter into new leases or renew existing leases on terms acceptable to us or be released
from our obligations under leases for stores that we close could materially adversely affect us.
We rely on third parties to provide us with certain key services for our business. If any of these third parties
fails to perform their obligations to us or declines to provide services to us in the future, we may suffer a
disruption to our business. Furthermore, we may be unable to provide these services or implement substitute
arrangements on a timely and cost-effective basis on terms favorable to us.
We rely on many different third parties to provide us with key services. For example, we rely on a third party to
operate our central distribution facility in Columbus, Ohio and to provide certain inbound and outbound
transportation and delivery services, distribution services, customs, and brokerage services. We also rely on
another third party to provide us with logistics and other services related to our e-commerce operations. In
connection with our sourcing activities, we rely on approximately 60 buying agents and vendors to help us source
products from approximately 285 manufacturing facilities, and in connection with our marketing activities, we
rely on third parties to administer our customer database, our loyalty program, and our gift cards. We also rely on
third-party technology providers to provide us with various technology services we rely on a third party to
administer certain aspects of our payroll. If any of these third parties fails to perform their obligations to us or
declines to provide services to us in the future, we may suffer a disruption to our business. Furthermore, we may
be unable to provide these services or implement substitute arrangements on a timely and cost-effective basis on
terms favorable to us.
There are claims made against us from time to time that can result in litigation or regulatory proceedings
which could distract management from our business activities and result in significant liability.
We face the risk of litigation and other claims against us. Litigation and other claims arise in the ordinary course
of our business and include commercial disputes, intellectual property disputes, such as trademark, copyright,
and patent infringement, consumer protection and privacy matters, product-related allegations, employee claims,
and premise liability claims. In 2013, Express, LLC received notice of a potential claim alleging improper
collection of zip codes in violation of Massachusetts law. See Note 13 to our Consolidated Financial Statements
included in “Item 8. Financial Statements and Supplementary Data” in Part II of this Annual Report on
Form 10-K.
Any claims could result in litigation against us and could also result in regulatory proceedings being brought
against us by various federal and state agencies that regulate our business, including the United States Equal
Employment Opportunity Commission, the Federal Trade Commission, or the Consumer Product Safety
Commission. Often these cases raise complex factual and legal issues, which are subject to risks and
uncertainties and could require significant management time. Litigation and other claims and regulatory
proceedings against us could result in unexpected expenses, legal liability, and injunctions against us or
restrictions placed upon us, which could disrupt our operations, preclude us from selling products, or otherwise
have a material adverse effect on our operations, financial results, and our reputation.
Changes in laws, including employment laws and laws related to our merchandise, could make conducting
our business more expensive or otherwise change the way we do business.
We are subject to numerous laws and regulations, including labor and employment, product safety, customs,
consumer protection, privacy, zoning laws and ordinances, intellectual property laws, and other laws that regulate
retailers generally and/ or govern the import/export of goods, advertising and promotions, the sale of
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