Staples 2013 Annual Report Download - page 97

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will be able to successfully implement these strategic initiatives or that the implementation of changes will result in the benefits
or costs savings at the levels that we anticipate or at all, which may result in an adverse impact on our business and financial results.
We have recognized substantial goodwill impairment charges in the past and may be required to recognize additional
goodwill impairment charges in the future.
At February 1, 2014, we had $3.23 billion of goodwill on our balance sheet. Certain factors, including consumer and
business spending levels, industry and macroeconomic conditions, the price of our stock and the future profitability of our businesses
might have a negative impact on the carrying value of our goodwill. We have recorded substantial goodwill impairment charges
in the past and we are closely monitoring the goodwill balances related to our China and Australia reporting units. These reporting
units have experienced challenging economic, industry and operating pressures, and if these pressures were to continue for a
sustained period of time, this would increase the risk associated with their significant goodwill balances. Additionally, if our stock
price were to experience a sustained and significant decline, we could incur impairment charges. The process of testing goodwill
for impairment involves numerous judgments, assumptions and estimates made by management which inherently reflect a high
degree of uncertainty. If the business climate deteriorates, if our plans change or if we fail to manage our restructuring activities
successfully, then actual results may not be consistent with these judgments, assumptions and estimates, and our goodwill may
become impaired in future periods. This could have an adverse impact on our financial position and results of operations.
We operate in a highly competitive market and we may not be able to continue to compete successfully.
We compete with a variety of local, regional, national and international retailers and online and traditional retailers, dealers
and distributors for customers, associates, locations, products, services, and other important aspects of our business. In most of
our geographic markets, we compete with other high-volume office supply providers such as Office Depot and Lyreco, as well as
mass merchants such as Wal-Mart, Target and Tesco, warehouse clubs such as Costco, computer and electronics retail stores such
as Best Buy, specialty technology stores such as Apple, copy and print businesses such as FedEx Office, online retailers such as
Amazon.com, and other discount retailers. We also compete with numerous mail order firms, contract stationer businesses,
electronic commerce distributors, regional and local dealers and direct manufacturers. Some of our current and potential competitors
are larger than we are, may have more experience in selling certain products or delivering services or may have substantially
greater financial resources. Also, many of our competitors have increased their presence in our markets in recent years by expanding
their assortment of office products and services, opening new stores near our existing stores, and offering direct delivery of office
products. Intense competitive pressures from one or more of our competitors could affect prices or demand for our products and
services. If we are unable to appropriately respond to these competitive pressures, or offer the appropriate mix of products and
services at competitive prices, our financial performance and market share could be adversely affected.
Global economic conditions could adversely affect our business and financial performance.
As a world-class provider of products and services that serve the needs of business customers and consumers in 25
countries, our operating results and performance depend significantly on worldwide economic conditions and their impact on
business and consumer spending. Increases in the levels of unemployment, particularly white collar unemployment, energy and
commodity costs, health care costs, higher interest rates and taxes, a return to tighter credit markets, reduced consumer credit
availability, fluctuation in the financial markets, lower consumer confidence, lack of small business formation and other factors
could result in a decline in business and consumer spending. Our business and financial performance may continue to be adversely
affected, and our ability to generate cash flow may be negatively impacted, by current and future economic conditions if there is
a renewed decline in business and consumer spending or if such spending remains stagnant.
Our international operations expose us to risks inherent in foreign operations.
We currently operate in 24 countries outside the United States. In certain international market segments, we may not
benefit from any first-to-market advantages or otherwise succeed. Cultural differences abroad and local practices of conducting
business may conflict with our own business practices and ethics standards. Ensuring compliance with foreign and U.S. laws and
our own policies may require that we implement new operational systems and financial controls, conduct audits or internal
investigations, train our associates and third parties on our existing compliance methods, and take other actions, all of which may
be expensive, divert management's time and impact our operations. There are also different employee/employer relationships and
in some cases the existence of workers' councils that may delay or impact the implementation of some of these operational systems.
In addition, differences in business practices in our international markets may cause customers to be less receptive to our business
model than we expect.