Foot Locker 2013 Annual Report Download - page 25

Item 1A. Risk Factors
The statements contained in this Annual Report on Form 10-K (‘‘Annual Report’’) that are not historical facts,
including, but not limited to, statements regarding our expected financial position, business and financing
plans found in ‘‘Item 1. Business’’ and ‘‘Item 7. Management’s Discussion and Analysis of Financial Condition
and Results of Operations,’’ constitute ‘‘forward-looking statements’’ within the meaning of the Private Securi-
ties Litigation Reform Act of 1995. Please also see ‘‘Disclosure Regarding Forward-Looking Statements.’’ Our
actual results may differ materially due to the risks and uncertainties discussed in this Annual Report, including
those discussed below. Additional risks and uncertainties that we do not presently know about or that we
currently consider to be insignificant may also affect our business operations and financial performance.
Our inability to implement our strategic long range plan may adversely affect our future results.
Our ability to successfully implement and execute our long range plan is dependent on many factors. Our
strategies may require significant capital investment and management attention, which may result in the diver-
sion of these resources from our core business and other business issues and opportunities. Additionally, any
new initiative is subject to certain risks including customer acceptance of our products and renovated store
design, competition, product differentiation, and the ability to attract and retain qualified personnel. If we
cannot successfully execute our strategic growth initiatives or if the long range plan does not adequately
address the challenges or opportunities we face, our financial condition and results of operations may be
adversely affected. Additionally, failure to meet market expectations, particularly with respect to sales, oper-
ating margins, and earnings per share, would likely result in volatility in the market value of our stock.
The retail athletic footwear and apparel business is highly competitive with relatively low barriers to entry.
Our athletic footwear and apparel operations compete primarily with athletic footwear specialty stores, sporting
goods stores and superstores, department stores, discount stores, traditional shoe stores, and mass merchan-
disers, many of which are units of national or regional chains that have significant financial and marketing
resources. The principal competitive factors in our markets are selection of merchandise, reputation, store loca-
tion, price, quality, advertising, and customer service. Our success also depends on our ability to differentiate
ourselves from our competitors with respect to shopping convenience, a quality assortment of available mer-
chandise and superior customer service. We cannot assure that we will continue to be able to compete
successfully against existing or future competitors. Our expansion into markets served by our competitors and
entry of new competitors or expansion of existing competitors into our markets could have a material adverse
effect on our business, financial condition, and results of operations.
Although we sell merchandise via the Internet, a significant shift in customer buying patterns to purchasing
athletic footwear, athletic apparel, and sporting goods via the Internet could have a material adverse effect on
our business results. In addition, all of our significant vendors distribute products directly through the Internet
and others may follow. Some vendors operate retail stores and some have indicated that further retail stores
and venues will open. Should this continue to occur, and if our customers decide to purchase directly from our
vendors, it could have a material adverse effect on our business, financial condition, and results of operations.
The industry in which we operate is dependent upon fashion trends, customer preferences, product
innovations, and other fashion-related factors.
The athletic footwear and apparel industry is subject to changing fashion trends and customer preferences. In
addition, retailers in the athletic industry rely on their vendors to maintain innovation in the products they
develop. We cannot guarantee that our merchandise selection will accurately reflect customer preferences
when it is offered for sale or that we will be able to identify and respond quickly to fashion changes, particularly
given the long lead times for ordering much of our merchandise from vendors. A substantial portion of our
highest margin sales are to young males (ages 12 − 25), many of whom we believe purchase athletic footwear
and athletic and licensed apparel as a fashion statement and are frequent purchasers. Our failure to anticipate,
identify or react appropriately in a timely manner to changes in fashion trends that would make athletic foot-
wear or athletic and licensed apparel less attractive to these customers could have a material adverse effect on
our business, financial condition, and results of operations.
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