Ross 2015 Annual Report Download - page 22

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To achieve growth, we need to expand in existing markets and enter new geographic markets.
Our growth strategy is based on successfully expanding our off-price model in current markets and in new geographic
regions. There are significant risks associated with our ability to continue to expand our current business and to enter new
markets. Stores we open in new markets may take longer to reach expected sales and profit levels on a consistent basis and
may have higher construction, occupancy, advertising, or operating costs than stores we open in existing markets, thereby
affecting our overall profitability. New markets may have competitive conditions, consumer tastes and discretionary spending
patterns that are more difficult to predict or satisfy than our existing markets. Our limited operating experience and limited
brand recognition in new markets may require us to build brand awareness in that market through greater investments in
advertising and promotional activity than we originally planned. We may find it more difficult in new markets to hire, motivate,
and retain qualified associates.
Consumer problems or legal issues involving the quality, safety, or authenticity of products we sell.
Various governmental authorities regulate the quality and safety of merchandise we sell. These laws and regulations
frequently change, and the ultimate cost of compliance cannot be precisely estimated. Because of our opportunistic buying
strategy, we sometimes obtain merchandise in new categories or from new vendors that we have not dealt with before.
Although our vendor arrangements typically place contractual responsibility on the vendor for resulting liability and we
generally rely on our vendors to provide authentic merchandise that matches the stated quality attributes and complies with
applicable product safety and other laws, vendor non-compliance with consumer product safety laws may subject us to
product recalls, make certain products unsalable, or require us to incur significant compliance costs.
But regardless of fault, any real or perceived issues with the quality and safety of merchandise, particularly products such as
food and children’s items, issues with the authenticity of merchandise, or our inability, or that of our vendors, to comply on a
timely basis with such laws and regulatory requirements, could adversely affect our reputation, result in lost sales, inventory
write-offs, uninsured product liability or other legal claims, penalties or losses, merchandise recalls, and increased costs.
An adverse outcome in various legal, regulatory, or tax matters could increase our costs.
As an ordinary part of our business, we are involved in various legal proceedings, regulatory reviews, tax audits, or other
legal matters. These may include lawsuits, inquiries, demands, and other claims or proceedings by governmental entities
and private plaintiffs, including those relating to employment and employee benefits (including classification, employment
rights, discrimination, wage and hour, and retaliation), securities, real estate, tort, consumer protection, privacy, product
compliance and safety, advertising, comparative pricing, intellectual property, tax, escheat, and whistle-blower claims. We
continue to be involved in a number of employment-related lawsuits, including class actions in California.
We are subject to federal, state, and local rules and regulations in the United States, and to various international laws, which
change from time to time. These legal requirements collectively affect multiple aspects of our business, including the cost of
health care, workforce management and employee benefits, minimum wages, advertising, comparative pricing,
import/export, sourcing and manufacturing, data protection, intellectual property, and others. If we fail to comply (or are
alleged not to comply) with any of these requirements, we may be subject to fines, settlements, penalties, or other costs. We
are also subject to the continuous examination of our tax returns and reports by federal, state, and local tax authorities, and
these examining authorities may challenge positions we take.
Significant judgment is required in evaluating and estimating our provision and accruals for both legal claims and for taxes.
Actual results may differ and our costs may exceed the reserves we establish in estimating the probable outcomes. In
addition, applicable accounting principles and interpretations may change from time to time, and those changes could have
material effects on our reported operating results and financial condition.
Damage to our corporate reputation or brands could adversely affect our sales and operating results.
Our reputation is partially based on perceptions of various subjective qualities and overall integrity. Any incident that erodes
the trust or confidence of our customers or the general public could adversely affect our reputation and business, particularly
if the incident results in significant adverse publicity or governmental inquiry. The use of social media platforms and similar
devices, including blogs, social media websites, and other forms of internet-based communications which allow individuals
access to a broad audience of consumers and other interested persons, continues to increase. The availability of information