Foot Locker 2014 Annual Report Download - page 25

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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
Securities 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
diversion 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
designs, 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,
operating 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.
Our athletic footwear and apparel operations compete primarily with athletic footwear specialty stores, sporting
goods stores, department stores, discount stores, traditional shoe stores, mass merchandisers, and Internet
retailers, 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
location, quality, advertising, price, and customer service. Our success also depends on our ability to
differentiate ourselves from our competitors with respect to a quality merchandise assortment 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 suppliers distribute products directly through the Internet
and others may follow. Some of our suppliers currently operate retail stores and some have indicated that they
intend to open additional retail stores. Should this continue to occur, and if our customers decide to purchase
directly from our suppliers, 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 suppliers 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 suppliers. 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 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 footwear or athletic
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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