Foot Locker 2014 Annual Report Download - page 29

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The effects of natural disasters, terrorism, acts of war, and public health issues may adversely affect our
business.
Natural disasters, including earthquakes, hurricanes, floods, and tornados may affect store and distribution
center operations. In addition, acts of terrorism, acts of war, and military action both in the United States and
abroad can have a significant effect on economic conditions and may negatively affect our ability to purchase
merchandise from suppliers for sale to our customers. Public health issues, such as flu or other pandemics,
whether occurring in the United States or abroad, could disrupt our operations and result in a significant part
of our workforce being unable to operate or maintain our infrastructure or perform other tasks necessary to
conduct our business. Additionally, public health issues may disrupt, or have an adverse effect on, our suppliers’
operations, our operations, our customers, or customer demand. Our ability to mitigate the adverse impact of
these events depends, in part, upon the effectiveness of our disaster preparedness and response planning as
well as business continuity planning. However, we cannot be certain that our plans will be adequate or
implemented properly in the event of an actual disaster. We may be required to suspend operations in some or
all of our locations, which could have a material adverse effect on our business, financial condition, and results
of operations. Any significant declines in public safety or uncertainties regarding future economic prospects
that affect customer spending habits could have a material adverse effect on customer purchases of our
products.
Manufacturer compliance with our social compliance program requirements.
We require our independent manufacturers to comply with our policies and procedures, which cover many
areas including labor, health and safety, and environmental standards. We monitor compliance with our policies
and procedures using internal resources, as well as third-party monitoring firms. Although we monitor their
compliance with these policies and procedures, we do not control the manufacturers or their practices. Any
failure of our independent manufacturers to comply with our policies and procedures or local laws in the country
of manufacture could disrupt the shipment of merchandise to us, force us to locate alternate manufacturing
sources, reduce demand for our merchandise, or damage our reputation.
Complications in our distribution centers and other factors affecting the distribution of merchandise may
affect our business.
We operate multiple distribution centers worldwide to support our businesses. In addition to the distribution
centers that we operate, we have third-party arrangements to support our operations in the United States,
Canada, Australia, and New Zealand. If complications arise with any facility or if any facility is severely damaged
or destroyed, our other distribution centers may be unable to support the resulting additional distribution
demands. We may be affected by disruptions in the global transportation network such as a port strike, weather
conditions, work stoppages or other labor unrest. These factors may adversely affect our ability to deliver
inventory on a timely basis. We depend upon third-party carriers for shipment of a significant amount of
merchandise. An interruption in service by these carriers for any reason could cause temporary disruptions in
our business, a loss of sales and profits, and other material adverse effects.
Our freight cost is affected by changes in fuel prices through surcharges. Increases in fuel prices and surcharges,
among and other factors, may increase freight costs and thereby increase our cost of sales. We enter into diesel
fuel forward and option contracts to mitigate a portion of the risk associated with the variability caused by these
surcharges.
Disruptions, failures or security breaches of our information technology infrastructure or unauthorized
disclosure of sensitive or confidential customer information could harm our business and standing with our
customers.
Information technology is a critically important part of our business operations. We depend on information
systems to process transactions, manage inventory, operate our websites, purchase, sell and ship goods on a
timely basis, and maintain cost-efficient operations. There is a risk that we could experience a business
interruption, theft of information, or reputational damage as a result of a cyber-attack, such as an infiltration of
a data center or data leakage of confidential information, either internally or at our third-party providers. We
may experience operational problems with our information systems as a result of system failures, system
implementation issues, viruses, malicious hackers, sabotage, or other causes.
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