Urban Outfitters 2012 Annual Report Download - page 17

Table of Contents
margins during this period, or in the availability of working capital needed in the months preceding this period, could have a more material adverse effect on
our business, financial condition and results of operations than in other periods. Seasonal fluctuations also affect our inventory levels, as we usually order
merchandise in advance of peak selling periods and sometimes before new fashion trends are confirmed by customer purchases. We must carry a significant
amount of inventory, especially before the back-to-school and holiday selling periods. If we are not successful in selling our inventory during this period, we
may be forced to rely on markdowns or promotional sales to dispose of the inventory or we may not be able to sell the inventory at all, which could have a
material adverse effect on our business, financial condition and results of operations.
We may be unable to protect our trademarks and other intellectual property rights.
We believe that our trademarks and service marks are important to our success and our competitive position due to their name recognition with our
customers. We devote substantial resources to the establishment and protection of our trademarks and service marks on a worldwide basis. We are not aware
of any valid claims of infringement or challenges to our right to use any of our trademarks and service marks in the United States. Nevertheless, there can be
no assurance that the actions we have taken to establish and protect our trademarks and service marks will be adequate to prevent imitation of our products by
others or to prevent others from seeking to block sales of our products as a violation of the trademarks, service marks and intellectual property of others. Also,
others may assert rights in, or ownership of, trademarks and other intellectual property of ours and we may not be able to successfully resolve these types of
conflicts to our satisfaction. In addition, the laws of certain foreign countries may not protect proprietary rights to the same extent as do the laws of the United
States.
War, acts of terrorism, or the threat of either may negatively impact availability of merchandise and/or otherwise adversely impact our business.
In the event of war or acts of terrorism, or if either are threatened, our ability to obtain merchandise available for sale in our stores may be negatively
impacted. A substantial portion of our merchandise is imported from other countries, see "We rely significantly on international sources of production" on
page 13. If commercial transportation is curtailed or substantially delayed, our business may be adversely impacted, as we may have difficulty shipping
merchandise to our distribution centers and stores, as well as fulfilling catalog and website orders. In the event of war or acts of terrorism, or the threat of
either, we may be required to suspend operations in some or all of our stores, which could have a material adverse impact on our business, financial condition
and results of operations.
We may not be successful in introducing additional store concepts.
We may, from time to time, seek to develop and introduce new concepts or brands in addition to our established brands, Urban Outfitters,
Anthropologie and Free People. Our ability to succeed in Terrain, BHLDN, and other new concepts could require significant capital expenditures and
management attention. Additionally, any new concept is subject to certain risks, including customer acceptance, competition, product differentiation,
challenges relating to economies of scale in merchandise sourcing and the ability to attract and retain qualified personnel, including management and
designers. There can be no assurance that we will be able to develop and grow these or any other new concepts to a point where they will become profitable,
or generate positive cash flow. If we cannot successfully develop and grow these new concepts, our financial condition and results of operations may be
adversely impacted.
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