Under Armour 2014 Annual Report Download - page 22

O
ur results o
f
o
p
erat
i
ons could be mater
i
all
y
harmed
if
we are unable to accuratel
yf
orecast demand
f
o
r
our
p
ro
d
ucts.
To ensure adequate inventor
y
suppl
y
, we must forecast inventor
y
needs and place orders with our
manufacturers before firm orders are placed b
y
our customers. In addition, a si
g
nificant portion of our net
r
evenues are
g
enerated b
y
at-once orders for immediate deliver
y
to customers, particularl
y
durin
g
our historical
p
eak season, durin
g
the last two quarters of the
y
ear. If we fail to accuratel
y
forecast customer demand we ma
y
experience excess inventor
y
levels or a shorta
g
e of product to deliver to our customers.
F
actors that could affect our ability to accurately forecast demand for our products include
:
•
an increase or decrease in consumer demand for our
p
roducts;
•
our
f
a
il
ure to accurate
ly f
orecast consumer acceptance
f
or our new pro
d
ucts;
•
product introductions by competitors
;
•
unanticipated chan
g
es in
g
eneral market conditions or other factors, which ma
y
result in cancellations
o
f advance orders or a reduction or increase in the rate of reorders placed b
y
retailers;
•
t
h
e
i
mpact on consumer
d
eman
dd
ue to unseasona
bl
e weat
h
er con
di
t
i
ons
;
•
weakening of economic conditions or consumer confidence in future economic conditions, which could
r
educe demand for discretionary items, such as our products; an
d
•
terrorism or acts of war, or the threat thereof, or political or labor instabilit
y
or unrest which could
a
dversel
y
affect consumer confidence and spendin
g
or interrupt production and distribution of product
a
nd ra
w
materials.
I
nventory levels in excess of customer demand may result in inventory write-downs or write-offs and the sale
o
f excess inventory at discounted prices, which could impair our brand image and have an adverse effect on gros
s
margin. In addition, if we underestimate the demand for our products, our manufacturers may not be able to produc
e
p
roducts to meet our customer requirements, and this could result in delays in the shipment of our products and ou
r
ability to recognize revenue, as well as damage to our reputation and retailer and distributor relationships
.
T
h
e
diffi
cu
l
t
yi
n
f
orecast
i
n
gd
eman
d
a
l
so ma
k
es
i
t
diffi
cu
l
t to est
i
mate our
f
uture resu
l
ts o
f
operat
i
ons an
d
fi
nanc
i
a
l
con
di
t
i
on
f
rom per
i
o
d
to per
i
o
d
.A
f
a
il
ure to accurate
ly
pre
di
ct t
h
e
l
eve
l
o
fd
eman
df
or our pro
d
ucts
cou
ld
a
d
verse
ly i
mpact our pro
fi
ta
bili
t
y
.
S
ales of performance products may not continue to
g
row and this could adversely impact our ability to
g
row our business
.
We believe continued growth in industry-wide sales of performance apparel, footwear and accessories wil
l
be largely dependent on consumers continuing to transition from traditional alternatives to performance products
.
If consumers are not convinced these products are a better choice than traditional alternatives, growth in th
e
industry and our business could be adversely affected. In addition, because performance products are often more
ex
p
ensive than traditional alternatives, consumers who are convinced these
p
roducts
p
rovide a better alternative
may still not be convinced they are worth the extra cost. If industry-wide sales of performance products do not
grow, our ability to continue to grow our business and our financial condition and results of operations could be
materially adversely impacted
.
We operate
i
nah
i
ghly compet
i
t
i
ve market and the s
i
ze and resources o
f
some o
f
our compet
i
tors ma
y
allow them to compete more e
ff
ect
i
vely than we can, result
i
ng
i
n a loss o
f
our market share and a decreas
e
i
n our net revenues and gross pro
fi
t
.
The market for performance apparel, footwear and accessories is hi
g
hl
y
competitive and includes man
y
ne
w
competitors as well as increased competition from established companies expandin
g
their production an
d
12