O'Reilly Auto Parts 2012 Annual Report Download - page 25

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Deteriorating economic conditions may adversely impact demand for our products, reduce access to credit and cause our
customers and others with which we do business to suffer financial hardship, all of which could adversely impact our business,
results of operations, financial condition and cash flows.
In recent years, worldwide economic conditions have deteriorated significantly in many countries and regions, including the United
States, and such conditions may worsen in the foreseeable future. Although demand for many of our products is primarily non-
discretionary in nature and tend to be purchased by consumers out of necessity, rather than on an impulse basis, our sales are impacted
by constraints on the economic health of our customers. The economic health of our customers is affected by many factors, including,
among others, general business conditions, interest rates, inflation, consumer debt levels, the availability of consumer credit, currency
exchange rates, taxation, fuel prices, unemployment trends and other matters that influence consumer confidence and spending. Many
of these factors are outside of our control. Our customers’ purchases, including purchases of our products, could decline during
periods when income is lower, when prices increase in response to rising costs, or in periods of actual or perceived unfavorable
economic conditions. If any of these events occur, or if unfavorable economic conditions challenge the consumer environment, our
business, results of operations, financial condition and cash flows could be adversely affected.
Overall demand for products sold in the automotive aftermarket is dependent upon many factors including the total number of vehicle
miles driven in the U.S., the total number of registered vehicles the U.S., the age and quality of these registered vehicles and the level
of unemployment in the U.S. Adverse changes in these factors could lead to a decreased level of demand for our products, which
could negatively impact our business, results of operations, financial condition and cash flows.
In addition, economic conditions, including decreased access to credit, may result in financial difficulties leading to restructurings,
bankruptcies, liquidations and other unfavorable events for our customers, suppliers, logistics and other service providers and financial
institutions which are counterparties to our credit facilities and interest rate swap transactions. Also, the ability of these third parties to
overcome these difficulties may increase. If third parties, on whom we rely for merchandise, are unable to overcome difficulties
resulting from the deterioration in economic conditions and provide us with the merchandise we need, or if counterparties to our credit
facilities do not perform their obligations, our business, results of operations, financial condition and cash flows could be adversely
affected.
The automotive aftermarket business is highly competitive, and we may have to risk our capital to remain competitive.
Both the DIY and professional service provider portions of our business are highly competitive, particularly in the more densely
populated areas that we serve. Some of our competitors are larger than we are and have greater financial resources. In addition, some
of our competitors are smaller than we are, but have a greater presence than we do in a particular market. We may have to expend
more resources and risk additional capital to remain competitive. For a list of our principal competitors, see the “Competition” section
of Item 1 of this annual report on Form 10-K.
We are sensitive to regional economic and weather conditions that could impact our costs and sales.
Our business is sensitive to national and regional economic and weather conditions. Unusually inclement weather, such as significant
rain, snow, sleet, freezing rain, flooding, seismic activity and hurricanes, has historically discouraged our customers from visiting our
stores during the affected period and reduced our sales, particularly to DIY customers. Extreme weather conditions, such as extreme
heat and extreme cold temperatures, may enhance demand for our products due to increased failure rates of our customers’ automotive
parts, while temperate weather conditions may have a lesser impact on failure rates of automotive parts. In addition, our stores and
DCs located in coastal regions may be subject to increased insurance claims resulting from regional weather conditions and our results
of operations and financial condition could be adversely affected.
We cannot assure future growth will be achieved.
We believe that our ability to open additional, profitable stores at a high growth rate will be a significant factor in achieving our
growth objectives for the future. Our ability to accomplish our growth objectives is dependent, in part, on matters beyond our control,
such as weather conditions, zoning and other issues related to new store site development, the availability of qualified management
personnel and general business and economic conditions. We cannot be sure that our growth plans for 2013 and beyond will be
achieved. Failure to achieve our growth objectives may negatively impact the trading price of our common stock. For a discussion of
our growth strategies, see the “Growth Strategy” section of Item 1 of this annual report on Form 10-K.
In order to be successful, we will need to retain and motivate key employees.
Our success has been largely dependent on the efforts of certain key personnel. In order to be successful, we will need to retain and
motivate executives and other key employees. Experienced management and technical personnel are in high demand and competition
for their talents is intense. We must also continue to motivate employees and keep them focused on our strategies and goals. Our
business and results of operations could be materially adversely affected by the unexpected loss of the services of one or more of our
key employees. We cannot be sure that we will be able to continue to attract qualified personnel, which could cause us to be less
efficient, and as a result, may adversely impact our sales and profitability. For a discussion of our management, see the “Business”
section of Item 1 of this annual report on Form 10-K.