Stein Mart 2015 Annual Report Download - page 10

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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 as well as those of external service providers. The reliability and capacity of these
technology systems are critical and any disruptions 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
information. The systems we utilize for credit card transactions, as well as the technology utilized in such transactions, are determined and
controlled by the credit card industry. Breaches of security measures at major retailers have resulted in the theft and dissemination of the
confidential information of millions of customers throughout the United States. Despite the security measures we have in place, our
facilities and systems, and those of our third-party service providers, may be vulnerable to security breaches, acts of vandalism, computer
viruses, misplaced or lost data, programming and/or human errors, or other similar events. Any security breach involving the
misappropriation, loss or other unauthorized disclosure of confidential information, whether by us or our service providers, could severely
damage our reputation, expose us to risks of litigation and liability, disrupt our operations and harm our business and results of operations.
We rely on a single supplier for shoes sold by our shoe department and disruptions with that supplier could materially affect our
reputation, operations or financial results. We have an agreement with DSW to be the exclusive supplier of shoes sold in our shoe
departments. We rely on DSW to determine the quantity and mix of shoes to be sold, the prices at which such items are to be sold and the
fulfillment and continuing supply of inventory. If DSW was unable to provide us with sufficient amounts of inventory or inventory that meets
the fashion preferences of our customers or if DSW was unable to continue being our supplier of shoes, we may attract fewer customers
and experience a loss in net sales, which could materially affect our reputation, operations or financial results.
A single third-party provider created, operates and maintains our e-commerce website operations, and disruptions with the
provider or in the services it provides to us could adversely affect our reputation, operations or financial results. We have
contracted with a single third party to create, operate and host our e-commerce website and provide related order fulfillment and customer
service. We rely on that party's operational, privacy and security procedures and controls to operate and host our e-commerce business.
Failure by such third party to adequately service these aspects of our e-commerce business could result in a prolonged disruption that
affects our customers' ability to utilize our website or receive product in a timely manner. As a result, we may lose customer sales and/or
experience increased costs, which could affect our reputation, operations or financial results. In addition, the e-commerce operations also
involve other risks that could have an impact on our results of operations including but not limited to diversion of sales from our physical
stores, liability for online content, credit card fraud and risks related to the failure of the computer systems that operate the website and its
related support systems, any of which could have an adverse effect on our business.
Acts or threats of terrorism, violence or unfavorable political conditions could harm our business. Acts of terrorism or war may
disrupt commerce and undermine consumer confidence, which could negatively impact our sales by causing consumer spending to
decline. Also, an act of terrorism or war, or the threat thereof, could negatively impact our business by interfering with our ability to obtain
merchandise from vendors. Inability to obtain merchandise from our vendors or substitute suppliers at similar costs in a timely manner
could have a material adverse effect on our operating results and financial condition.
Failure to comply with legal and regulatory requirements may adversely impact our business and results of operations. Our
business is subject to many legal and regulatory requirements, including, among others, employment, trade, healthcare, tax, securities and
privacy laws and regulations. Our policies, procedures and internal controls are designed to help us comply with all applicable laws;
however, the current high level of regulatory changes across many different areas and jurisdictions has led, and may continue to lead, to
substantial new regulations and disclosure obligations. Additional legal or regulatory requirements or more stringent interpretations of
applicable requirements could increase the complexity of the regulatory environment in which we operate and the cost of compliance.
Failure to comply with the various laws and regulations, as well as changes in laws and regulations, could have an adverse impact on our
reputation, operations or financial results.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.