Stein Mart 2014 Annual Report Download - page 9

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A lack of adequate sources of merchandise at acceptable prices may adversely affect our sales. Our business is dependent to a
significant degree upon our ability to purchase fashion and brand name merchandise, and to do so at acceptable wholesale prices. We
continuously seek out buying opportunities and compete for these opportunities with other retailers. In the event of a further decrease in
retail sales and the resulting pressure on manufacturers, the opportunities to purchase merchandise could become limited by the
consolidation or demise of merchandise vendors. Our ability to obtain merchandise may also depend on manufacturersability to obtain
vendor financing through banks and factoring companies. To the extent they are unable to secure sufficient credit, they may not be able to
sell to us at acceptable terms. Although we do not depend on any single vendor or group of vendors and believe we can successfully
compete in seeking out new vendors, the loss of key vendors could make it difficult for us to acquire sufficient quantities and an
appropriate mix of merchandise, and to do so at acceptable prices which could have a material adverse effect on our results of operations.
Increases in the price of merchandise could increase our costs which could negatively impact our margins. The raw materials
used to manufacture our goods are subject to availability constraints and price volatility caused by high demand for fabrics, supply
conditions, government regulations, and other unpredictable factors. Our procurement of goods and services is subject to the effects of
price increases which we may or may not be able to pass through to our customers. Additionally, procurement of our merchandise is
subject to increases in demand for, or the price of, raw materials, services and labor. All of these factors may affect our ability to access
suitable merchandise on acceptable terms, are beyond our control and could negatively impact our results of operations.
We are dependent on certain key personnel and our ability to attract and retain qualified employees and increases in the cost of
employee compensation and benefits could impact our financial results and cash flows. Our business is dependent on attracting
and retaining quality employees. Many of our employees are in entry level or part-time positions with historically high rates of turnover.
Our ability to meet our labor needs while controlling our labor costs, including hourly wages and costs of providing retirement, health and
other employee benefits, and hiring and training new employees is subject to external factors such as unemployment levels, prevailing
wage rates, minimum wage legislation, changing demographics, health and other insurance costs, including health care legislation.
The seasonality of our business and fluctuations in sales and operating results could cause volatility in the price of our common
stock. Our business is seasonal with our highest sales occurring in the first and fourth quarters, which include the spring and holiday
seasons. Our annual operating results depend significantly upon sales generated during these quarters, and any factor that negatively
impacts these selling seasons could have a material adverse effect on our results of operations for the entire year. Comparable store
sales and quarterly operating results have fluctuated in the past and are expected to continue to fluctuate in the future. Our stock price is
influenced by these financial fluctuations, as well as other factors, including economic conditions, timing of promotional events, actions of
competitors, inventory management, changes in fashion trends and unseasonable weather conditions.
If we experience any business interruptions or disruptions in the distribution process, our profitability could be materially
impacted. We may not anticipate, respond adequately to or control all of the challenges of operating our distribution operations. In the
event that the orderly receipt and distribution of merchandise is disrupted, including by labor disputes at ports of entry, impeding the
timeliness or fulfillment quality of the products being distributed, or any of our distribution centers becomes inaccessible, or is otherwise not
fully usable, it would have a material adverse effect on our ability to distribute our products, which in turn would have a material adverse
effect on our sales, profitability, financial condition and operating performance.
We are subject to risks associated with importing merchandise from other countries. Much of the fashion and brand name
merchandise we acquire, either directly or through vendors, is sourced from various foreign countries. Political or financial instability,
terrorism, trade restrictions, tariffs, currency exchange rates, raw material shortages, disruptions, strikes, work stoppages and other factors
beyond our control could affect the availability of our merchandise inventory. Additionally, while our internal policies require our vendors
and the third parties from whom they source merchandise to comply with all applicable laws and regulations, we do not have the ability to
control our vendors, their manufacturers or their employment and business practices. The failure of our vendors and their suppliers to
comply with applicable laws, or the use of labor practices which deviate from those which generally are considered ethical in the United
States, could affect the availability and price of merchandise, damage our reputation or otherwise have a material adverse effect on our
sales, profitability, financial condition and operating performance.
Failure of information technology could disrupt operations and harm our business. The operation of our business and the effective
execution of our merchandising and distribution strategies as well as our financial reporting processes are dependent in large measure on
the effectiveness of our information technology systems. The reliability and capacity of our information technology systems are critical and
any disruptions affecting our information technology systems may have a material adverse impact on our business.
Unauthorized disclosure of sensitive or confidential customer or employee information could severely damage our reputation,
expose us to risks of litigation and liability, disrupt our operations and harm our business. As part of our normal course of
business, we collect, process and retain sensitive and confidential customer and employee information and we process customer credit
card and check information. In addition, we accept and transmit credit card applications through our retail locations. We also rely on
commercially available systems, software, tools and monitoring to provide security for processing, transmission and storage of confidential