| OXFORD INDUSTRIES INC Item 1A Risk Factors Our business faces certain risks, of which many are outside of our control |
| The following factors, as well as factors described elsewhere in this report or in our other filings with the SEC, which could materially affect our business, financial condition or operating results should be carefully considered |
| The risks described below are not the only risks facing our company |
| If any of the following risks, or other risks or uncertainties not currently known to us or that we currently deem to be immaterial, actually occur, our business, financial condition or operating results could suffer |
| The apparel industry is heavily influenced by general economic cycles |
| The apparel industry is cyclical and dependent upon the overall level of discretionary consumer spending, which changes as domestic and international economic conditions change |
| Overall economic conditions that affect discretionary consumer spending include, but are not limited to, employment levels, energy costs, interest rates, tax rates, personal debt levels and stock market volatility |
| Uncertainty about the future may also impact the level of discretionary spending or result in shifts in consumer spending to products other than apparel |
| Any deterioration in general economic or political conditions, acts of war or terrorism or other factors that create uncertainty or alter the discretionary consumer habits in our key markets, particularly the United States and the United Kingdom, could have an adverse impact on our business, financial condition or operating results |
| The apparel industry is highly competitive and we face significant competitive threats to our business from various third parties |
| The apparel industry is highly competitive and fragmented |
| Our competitors include numerous apparel designers, manufacturers, distributors, importers, licensors and retailers, some of which may also be our customers |
| The level and nature of our competition varies and the number of our direct competitors and the intensity of competition may increase as we expand into other markets or as other companies expand into our markets |
| Retailers that are our customers may pose our most significant competitive threat by sourcing their products directly or marketing their own private label brands |
| Some of our competitors have greater financial and marketing resources than we have, which may place us at a competitive disadvantage |
| 12 _________________________________________________________________ [69]Table of Contents The apparel industry is subject to rapidly evolving fashion trends, and we must continuously offer innovative and upgraded products |
| We believe that the principal competitive factors in the apparel industry are design, brand image, preference, price, quality, marketing and customer service |
| Although certain of our products carry over from season to season, the apparel industry in general is subject to rapidly changing fashion trends and shifting consumer demands |
| Accordingly, we must anticipate, identify and capitalize upon emerging as well as proven fashion trends |
| We believe that our success depends on our ability to continuously develop, source, market and deliver a wide variety of innovative, fashionable, saleable brands and products |
| These products must be offered at competitive prices in the respective distribution channels |
| Revenue growth from our brands will depend largely upon our ability to continue to maintain and enhance the distinctive brand identities |
| Many other companies offer products that resemble and/or compete with our branded products |
| They may offer these products at significantly lower price points in order to directly compete with our branded merchandise sold at higher prices |
| To the extent such competitors are successful, we may not be able to maintain the premium price points that our branded products have traditionally commanded |
| Although we try to manage our inventory risk through early order commitments by our wholesale customers, we may place production orders with manufacturers before we have received all of a season’s orders and orders may be cancelled by our wholesale customers before shipment |
| Due to the competitive nature of the apparel industry, there can be no assurance that the demand for our products will not decline or that we will be able to successfully evaluate and adapt our products to align with consumers’ preferences and fashion trends |
| Any failure on our part to develop appealing products and update core products could limit our ability to differentiate our products |
| Additionally, such a failure could leave us with a substantial amount of unsold excess inventory, which we may be forced to sell at lower price points |
| Any of these risk factors or a shift in consumer demographics could result in the deterioration in the appeal of our brands and products, adversely affecting our business, financial condition and operating results |
| Our future success is dependent upon our ability to implement our business strategy |
| Our success depends on our ability to implement our business strategy |
| We face many challenges in implementing our strategy of shifting from primarily a private label apparel company to a branded apparel company |
| Important aspects of this strategy include our ability to maintain and grow our existing lines of business, acquire additional businesses in the future and selectively dispose of or discontinue certain operations that are not in line with our strategy, each of which has certain inherent risks |
| As changes occur in our industry, it may be necessary for us to alter our strategy |
| There can be no guarantees that our strategy, at any given time, will be the optimal strategy for our company or that we will be able to implement the strategy effectively due to various factors, some of which are beyond our control |
| An inappropriate strategy or ineffective implementation of our strategy could result in a material adverse affect on our business, financial condition and operating results |
| In order to maintain our existing business and offer new product lines, we may incur substantial costs which may not be recoverable |
| We intend to continue to maintain and grow our existing business through our current customer base as well as the growth of our retail business, which may require a substantial amount of fixed costs, long term leases, capital improvements and marketing and advertising costs |
| Additionally, we intend to offer new product lines in the future |
| As is typical with new products, market acceptance of new designs and products we may introduce is subject to uncertainty |
| In addition, the introduction of new lines and products often require substantial costs in design, marketing and advertising, which may not be recovered if the products are not successful |
| In the event that the products or brands that we internally develop are not successful, our image and operating results may be negatively impacted |
| 13 _________________________________________________________________ [70]Table of Contents The acquisition of new businesses has certain inherent risks, including, for example, strains on our management team, unexpected acquired costs, and, in some instances, earn-out payments |
| We intend to continue to acquire new business in the future if appropriate investment opportunities are available |
| Our sales growth may be limited if we are unable to find suitable acquisition candidates at reasonable prices in the future or if the acquisitions do not achieve the anticipated results |
| These acquisitions may strain our administrative, operational and financial resources and distract our management from our other businesses |
| The integration process could create a number of challenges and adverse consequences for us, including the unexpected loss of key employees, suppliers, customers, and sales or an increase in other operating costs |
| Further, we may not be able to manage the combined operations and assets effectively or realize all or any of the anticipated benefits of the acquisition |
| As a result of acquisitions that have occurred or may occur in the future, we may become responsible for unexpected liabilities that we failed to discover in the course of performing due diligence in connection with the acquired businesses |
| We cannot be assured that any indemnification to which we may be entitled from the sellers will be enforceable, collectible or sufficient in amount, scope or duration to fully offset the possible liabilities associated with the business acquired |
| Similar to the terms of the Tommy Bahama acquisition, the terms of any future acquisitions may require us to make substantial payments to the sellers in performance-based contingent payments for a number of years after the acquisition |
| The earnings upon which these payments are contingent may not be determined by actual cash flows and consequently may not reflect our ability to make such payments |
| Additionally, certain of the sellers may be key members of management |
| It is possible that their interests with respect to the contingent payments will differ from the interests of our company as a whole |
| Such differences may occur if they have incentives to maximize the profitability of the acquired business during the contingent payment term, which may be to the detriment of the longer term prospects for the business |
| When dispositions occur, we may be required to find alternative uses for our resources to reduce excess capacity and replace those operations |
| As we did in fiscal 2006 with respect to our Womenswear operations, we may determine that it is appropriate to dispose of certain operations |
| Dispositions of certain businesses that do not align with the strategy of our company as a whole or the discontinuation of certain product lines which may not provide the returns that we expect may result in excess capacity (such as under-utilized financial or production resources) to some degree in the event that the operations are not replaced with new lines of business either internally or through acquisition |
| There can be no guarantee that we will be able to replace the sales and profits related to these businesses, which may result in a decline in our operating results |
| The success of our operations depends on our ability to maintain an appropriate organization structure |
| As we continue to expand into new product categories, markets and lines of business or discontinue certain operations, it is necessary for us to continue to assess the appropriate organizational structure within our company as a whole |
| We must integrate complementary practices and processes in order to achieve synergies or other anticipated benefits |
| In the past, we have consolidated various operational processes in order to reduce costs or achieve related synergies |
| If we are unable to effectively organize our operations and manage our product lines in the future or, if we do not achieve expected cost reductions or synergies, our business, financial condition and operating results may be negatively impacted |
| We rely on key management, the loss of whom may have an adverse effect on our business, financial condition and operating results |
| Our success depends upon disciplined execution at all levels of our organization |
| This execution requires experienced and talented management in our design, sourcing, distribution, merchandising, advertising, and support functions |
| The loss of J Hicks Lanier, Chairman and Chief Executive Officer, Michael J Setola, President, S Anthony Margolis, Group Vice President, or any of our other executive officers or key 14 _________________________________________________________________ [71]Table of Contents employees, without an appropriate succession plan, or our inability to attract or retain qualified personnel could negatively impact our business, financial condition and operating results |
| The apparel industry has experienced price deflation in recent years, and price reductions in our products in the future could have an adverse impact on our business, financial condition and operating results |
| The average net selling price of apparel continues to decrease in the apparel industry |
| The decline is primarily attributable to increased competition, excess worldwide manufacturing capacity, increased product sourcing in lower cost countries, growth of the mass merchant and discount channels of distribution, consolidation in the retail industry, excess capacity of retail space, reduced relative spending on apparel and increased value consciousness on the part of consumers |
| To remain competitive, we may need to reduce our prices from time to time in response to these deflationary pressures |
| If one or more of our competitors is able to reduce their production or sourcing costs in any manner, we may experience additional pricing pressures and may be forced to reduce our prices or face a decline in sales |
| Our inability to lower costs in response to these pricing pressures could have an adverse impact on our business, financial condition and operating results |
| In addition, these deflationary pressures, even if met with reduced costs that do not adversely impact our sales volume, could reduce the revenues attributable to such sales and have an adverse impact on our business, financial condition and operating results |
| We depend on a group of key customers for a significant portion of our sales |
| We generate a significant percentage of our sales from a few major customers, to whom we extend credit without requiring collateral, resulting in a large amount of receivables from just a few customers |
| For fiscal 2006, sales to our ten largest customers accounted for approximately 44prca of our total net sales from continuing operations |
| In addition, the net sales of our individual business segments may be concentrated among several large customers |
| Continued consolidation in the retail industry may increase the concentration of our customers, and therefore our risks in the United States and other markets |
| This consolidation could result in a decrease in the number of stores that carry our products, restructuring of our customers’ operations, more centralized purchasing decisions, direct sourcing and greater leverage by customers, potentially resulting in lower prices, realignment of customer affiliations or other factors which could negatively impact our business, financial condition or operating results |
| We do not have long-term contracts with any of our customers, instead relying on long-standing relationships with these customers and our position within the marketplace |
| As a result, purchases generally occur on an order-by-order basis, and each relationship can generally be terminated by either party at any time |
| We face the risk that a decision by one or more major customers, whether motivated by competitive considerations, quality or style issues, financial difficulties, economic conditions or otherwise, could impact their desire or ability to purchase our products or change their manner of doing business with us |
| An unanticipated decline in sales to one or more major customers could adversely affect our profitability as it would be difficult to immediately, if at all, replace this business with new customers or increase sales volumes with other existing customers |
| We are subject to risks associated with changes in prices and availability of raw materials and other costs |
| We and our third party suppliers rely on the availability of raw materials at reasonable prices |
| Any decrease in the availability of raw materials could impair our ability to meet production requirements in a timely manner |
| The principal fabrics used in our business are cotton, linens, wools, silk, other natural fibers, synthetics and blends of these materials, some of which are heavily dependent on the cost of petroleum |
| The prices paid for these fabrics depend on the market price for raw materials used to produce them |
| The price and availability of certain raw materials has in the past fluctuated, and may in the future fluctuate, significantly depending on a variety of factors, including crop yields, weather, supply conditions, government regulation, economic climate and other unpredictable factors |
| Additionally, costs of our third party providers or our 15 _________________________________________________________________ [72]Table of Contents transportation costs may increase due to a variety of factors including weather, supply conditions, government regulation, economic climate, energy costs and other unpredictable factors |
| We have not historically entered into any futures contracts to hedge commodity prices |
| Any significant raw material price or transportation cost increases could materially adversely affect our business, financial condition and operating results |
| We are dependent upon our third party producers’ and sourcing agents’ ability to meet our requirements |
| We source substantially all of our products from non-exclusive third party producers and sourcing agents located in foreign countries |
| We have not entered into long-term contracts with any of these producers and sourcing agents |
| Therefore, we compete with other companies for the production capacity of independent manufacturers |
| We regularly depend upon the ability of third party producers to secure a sufficient supply of raw materials, adequately finance the production of goods ordered and maintain sufficient manufacturing and shipping capacity |
| We cannot be certain that we will not experience operational difficulties with our manufacturers, such as the reduction of availability of production capacity, errors in complying with product specifications, insufficient quality control, failures to meet production deadlines or increases in manufacturing costs |
| Such difficulties may negatively impact our business, financial condition and operating results |
| As more participants in the apparel industry continue to move towards sourcing from third parties, the competition for quality contractors has intensified |
| Some of these contractors have long-standing relationships with our competitors |
| To the extent we are not able to secure or maintain relationships with third party producers that are able to fulfill our requirements, our business, financial condition and operating results may be adversely impacted |
| We, and some of our customers, require third party producers to meet certain standards in terms of working conditions, environmental protection and other matters before placing business with them |
| As a result of higher costs relating to compliance with these standards, we may pay higher prices than some of our competitors for products |
| In addition, the labor and business practices of independent apparel manufacturers have received increased attention from the media, non-governmental organizations, consumers and governmental agencies in recent years |
| Any failure by us or our independent manufacturers to adhere to labor or other laws or business practices accepted as ethical in our key markets, and the potential litigation, negative publicity and political pressure relating to any of these events, could disrupt our operations or harm our reputation and impact our business, financial condition and operating results |
| Our dependence on foreign supply sources could result in disruptions to our operations in the event of disruptions in the global transportation network (including strikes and work stoppages at port facilities); political instability or other international events; economic disruptions; foreign currency fluctuations; labor disputes at factories; the imposition of new or adversely adjusted tariffs, duties, quotas, import and export controls, taxes and other regulations; changes in US customs procedures concerning the importation of apparel products; changes in domestic or foreign governmental policies; actual or threatened acts of war or terrorism; or the occurrence of an epidemic |
| These and other events beyond our control could interrupt our supply chain and delay receipt of our products in the United States or United Kingdom, which could result in higher costs, including product and transportation costs, unanticipated inventory accumulation, or the loss of revenues, customer orders and customer goodwill, each of which could negatively impact our business, financial condition and operating results |
| Our business is subject to regulatory risks associated with importing products |
| As we source substantially all of our products from foreign countries, we are at risk to changes relating to the laws and regulations governing the importing and exporting of apparel products into and from the countries in which we operate |
| Substantially all of our import operations are subject to tariffs and other charges imposed on imported products |
| In addition, the countries in which our products are manufactured or countries into which our products are imported may impose additional or new quotas, duties, tariffs, taxes or other restrictions or adversely modify existing restrictions |
| Our operations are also subject to international trade agreements and regulations such as the North American Free Trade Agreement and the WTO Trade agreements can impose requirements that adversely affect our 16 _________________________________________________________________ [73]Table of Contents business, such as limiting the countries from which we can purchase raw materials and setting quotas on products that may be imported into the United States from a particular country |
| Our or any of our supplier’s failure to comply with customs or similar laws could restrict our ability to import product or lead to fines or other penalties |
| We cannot guarantee that future trade agreements will not provide our competitors with a material advantage over us, which may negatively impact our business, financial condition and operating results |
| We may be unable to protect our trademarks and other intellectual property or may otherwise have our brand names harmed |
| We believe that our registered and common law trademarks and other intellectual property, as well as other contractual arrangements, including licenses and other proprietary intellectual property rights, have significant value and are important to our continued success and our competitive position due to their recognition by retailers and consumers |
| Therefore, our success depends to a significant degree upon our ability to protect and preserve our intellectual property |
| We rely on laws in the United States and other countries to protect our proprietary rights |
| However, we may not be able to prevent third parties from using our intellectual property without our authorization, particularly in those countries where the laws do not protect our proprietary rights as fully as in the United States |
| Infringements upon our intellectual property may negatively impact our business, financial condition and operating results |
| From time to time, we discover products in the marketplace that are unauthorized reproductions of certain of our branded products or that otherwise infringe upon our trademarks and other intellectual property |
| Such counterfeiting typically increases as brand recognition increases |
| Despite any precautions we may take to protect our intellectual property, policing unauthorized use of our intellectual property is difficult, expensive and time consuming and we may be unable to determine the extent of any unauthorized use |
| There can be no assurance that the actions that we have taken to establish and protect our trademarks and other intellectual property will be adequate to prevent the creation of counterfeits, knock-offs, imitations or infringement of our products or trademarks by third parties |
| In the future, we may have to rely on litigation and other legal action to enforce our intellectual property rights or contractual rights |
| If litigation that we initiate is unsuccessful, we may not be able to protect the value of our intellectual property and, in any case, any litigation or other legal action to enforce our intellectual property rights or contractual rights, whether successful or unsuccessful, could result in substantial costs to us and diversion of our management and other resources |
| Additionally, there can be no assurance that the actions that we have taken will be adequate to prevent others from seeking to block sales of our products as violations of proprietary rights |
| Although we have not been materially inhibited from selling products in connection with trademark disputes, as we extend our brands into new product categories and new product lines and expand the geographic scope of our marketing, we could become subject to litigation based on allegations of the infringement of intellectual property rights of third parties |
| In the event a claim of infringement against us is successful, we may be required to pay damages, royalties or license fees to continue to use intellectual property rights that we had been using or we may be unable to obtain necessary licenses from third parties at a reasonable cost or within a reasonable time |
| Any litigation and other legal action of this type, whether successful or unsuccessful, could result in substantial costs to us and diversion of our management and other resources |
| We make use of debt to finance our operations, which exposes us to risks that could adversely affect our business, financial position and operating results |
| Our levels of debt vary as a result of the seasonality of our business, investments in acquisitions and working capital and divestitures |
| As we continue to grow our business, and potentially make acquisitions in the future, our debt levels may increase under our existing facilities or potentially under new facilities, which may increase our exposure to the items discussed below |
| Our indebtedness includes certain obligations and limitations, including the periodic payment of principal and interest, maintenance of certain financial covenants and certain other limitations related to additional debt, dividend payments, investments and dispositions of assets |
| Our ability to satisfy these obligations will be 17 _________________________________________________________________ [74]Table of Contents dependent upon our business, financial condition and operating results |
| These obligations and limitations may increase our vulnerability to adverse economic and industry conditions, place us at a competitive disadvantage compared to our competitors that have less indebtedness and limit our flexibility in carrying out our business plan and planning for, or reacting to, changes in the industry in which we operate |
| Such limitations may negatively impact our business, financial condition and operating results |
| At the maturity of our indebtedness, we will be required to extend or refinance such indebtedness, sell assets to repay the indebtedness or raise equity to fund the repayment of the indebtedness |
| Additionally, a breach of any of the covenants relating to our indebtedness could result in an event of default under those instruments, allowing the holders of that indebtedness to declare all outstanding indebtedness immediately due and payable |
| If we are unable to refinance our debt, we would most likely be unable to pay our outstanding indebtedness at maturity or if our debt was declared immediately due and payable |
| We would, therefore, be required to seek alternative sources of funding, which may not be available on commercially reasonable terms or at all, or face bankruptcy |
| If we are unable to refinance our indebtedness or find alternative means of financing our operations, we may be required to curtail our operations or take other actions, which may adversely affect our business, financial condition and operating results |
| Also, borrowings under our credit facilities are at variable rates of interest and expose us to interest rate risk, and we generally do not engage in hedging activities with respect to our interest rate risk |
| These amounts are borrowed under such facilities in order to provide us with the necessary flexibility to adjust our debt levels as appropriate to provide us with sufficient liquidity to operate our business, including as a result of the impact of seasonality on our business |
| In the event that interest rates increase, we may have to revise or delay our business plans, reduce or delay capital expenditures or otherwise adjust our plans for operations |
| An increase in interest rates may require us to pay a greater amount of our cash flow towards interest even if the amount of borrowings outstanding remains the same, which could negatively impact our business, financial condition and operating results |
| The apparel industry is heavily influenced by weather patterns and natural disasters, and our business may be adversely affected disproportionately by unseasonable weather conditions or natural disasters |
| Like others in our industry, our business, financial condition and operating results may be adversely affected by unseasonable weather conditions or certain natural disasters which may cause consumers to alter their purchasing habits or result in a disruption to our operations |
| Because of the seasonality of our business, the occurrence of such events at certain times could disproportionately impact our business, financial condition and operating results |
| Our foreign sourcing operations as well as the sale of products in foreign markets result in an exposure to fluctuations in foreign currency exchange rates |
| As a result of our international operations, we are exposed to increased inherent risks in conducting business outside of the United States |
| Substantially all of our contracts to have goods produced in foreign countries are denominated in US dollars |
| Purchase prices for our products may be impacted by fluctuations in the exchange rate between the US dollar and the local currencies of the contract manufacturers, such as the Chinese Yuan, which may have the effect of increasing our cost of goods sold in the future |
| If the value of the US dollar decreases relative to certain foreign currencies in the future, then the prices that we negotiate for products could increase, and it is possible that we would not be able to pass this increase on to customers, which would negatively impact our margins |
| If the value of the US dollar increases between the time a price is set and payment for a product, the price we pay may be higher than that paid for comparable goods by any competitors that pay for goods in local currencies, and these competitors may be able to sell their products at more competitive prices |
| Additionally, currency fluctuations could also disrupt the business of our independent manufacturers that produce our products by making their purchases of raw materials more expensive and difficult to finance |
| We received US dollars for greater than 85prca of our product sales during fiscal 2006 |
| The sales denominated in foreign currencies primarily relate to Ben Sherman sales in the United Kingdom and Europe 18 _________________________________________________________________ [75]Table of Contents and to a lesser extent sales of certain products in Canada |
| An increase in the value of the US dollar compared to these other currencies in which we have sales could result in lower levels of sales and earnings in our consolidated statements of earnings, although the sales in foreign currencies could be equal to or greater than amounts in prior periods |
| We generally do not engage in hedging activities with respect to our exposure to foreign currency risk except that, on occasion, we do purchase foreign currency forward exchange contracts for our goods purchased on US dollar terms that are expected to be sold in the United Kingdom and Europe |
| Any fluctuations in foreign currency exchange rates in the markets that we operate could negatively impact our business, financial condition and operating results |
| We are dependent on a limited number of distribution centers, and if one becomes inoperable, our business, financial condition and operating results could be negatively impacted |
| Our ability to meet customer expectations, manage inventory and achieve objectives for operating efficiencies depends on the proper operation of our primary distribution facilities, some of which are owned and others of which are operated by third parties |
| Finished garments from our contractors are inspected and stored at these distribution facilities |
| If any of these distribution facilities were to shut down or otherwise become inoperable or inaccessible for any reason, we could have a substantial loss of inventory and incur significantly higher costs and longer lead times associated with the distribution of our products during the time it takes to reopen or replace the facility |
| This could negatively affect our business, financial condition and operating results |
| We license the right to use certain of our brand names under various agreements |
| Certain of our brands, such as Tommy Bahama and Ben Sherman, have a reputation of outstanding quality and name recognition, which makes the brands valuable as a royalty source |
| We are able to license complementary products and obtain royalty income from the use of our brands’ names |
| While we take significant steps to ensure the reputation of our brands is maintained through our license agreements, there can be no guarantee our brands will not be negatively impacted through our association with products outside of our core apparel products |
| The actions of a licensee may not only result in a decrease in the sales of our licensee’s products but also could significantly impact the perception of our brands |
| Additionally, while we believe that our relationship with our principal licensees are favorable and the termination of any single licensing agreement would not have a material adverse effect on our business as a whole, our long-term prospects will depend in part on the continuation of a significant percentage of existing licensing arrangements and the addition of other license agreements in the future, as well as ongoing consumer acceptance of the products sold under those license agreements |
| If the licensees’ products are not acceptable to consumers, if licensee’s actions are detrimental to our brands or if we do not add new license agreements, our business, financial condition and operating results may be negatively impacted |
| We hold licenses for the use of other parties’ brand names, and we may not be able to guarantee our continued use of such brand names or the quality or salability of such brand names |
| We have entered into license and design agreements to use well-known trademarks and trade names, such as Nautica, Tommy Hilfiger and Oscar de la Renta to market our products |
| These license and design agreements will expire at various dates in the future |
| Although we believe our relationships with our principal licensors are generally favorable, we cannot guarantee that we will be able to renew these licenses on acceptable terms upon expiration or that we will be able to acquire new licenses to use other popular trademarks |
| The loss of such sales and profits could negatively impact our business, financial condition and operating results if not replaced with new license agreements |
| In addition to certain compliance obligations, all of our significant licenses provide minimum thresholds for royalty payments and advertising expenditures for each license year which we must pay regardless of the level of our sales of the licensed products |
| If these thresholds are not met due to a general economic downturn 19 _________________________________________________________________ [76]Table of Contents or otherwise, our licensors may be permitted contractually to terminate these agreements or seek payment of minimum royalties even if the minimum sales are not achieved |
| In addition, our licensors produce their own products and license their trademarks to other third parties, and we are unable to control the quality of goods that others produce |
| If licensors or others do not maintain the quality of these trademarks or if the brand image deteriorates, our sales and profits generated by such brands may decline and our business, financial condition and operating results may be negatively impacted |
| We operate retail stores and restaurants which are subject to certain inherent risks |
| An integral part of our strategy is to develop and operate retail stores and restaurants for certain of our brands, including Tommy Bahama and Ben Sherman |
| In addition to the general risks associated with the apparel industry, risks associated with our retail operations include our ability to find and select appropriate retail locations |
| Other risks include our ability to negotiate acceptable lease terms; build-out the stores; source sufficient levels of consumer desirable inventory; hire, train and retain competent store personnel; install and operate effective retail systems; and apply appropriate pricing strategies |
| Retail stores involve a significant capital investment and incur significant fixed operating expenditures, including obligations under long term leases |
| We cannot be sure that current stores will be profitable or that we can successfully complete our planned expansion |
| Also, as we expand the number of our retail stores, we run the risk that our wholesale customers will perceive that we are increasingly competing directly with them, which may lead them to reduce or terminate purchases of our products |
| The restaurant industry is highly competitive and requires compliance with a variety of federal, state and local regulations |
| In particular, our restaurants typically serve alcohol and, therefore, maintain liquor licenses |
| Our ability to maintain our liquor licenses depends on our compliance with applicable laws and regulations |
| The loss of a liquor license would adversely affect the profitability of a restaurant |
| Additionally, as a participant in the restaurant industry, we face risks related to food quality, food-borne illness, injury and health inspection scores |
| The negative impact of adverse publicity relating to one restaurant may extend beyond the restaurant involved to affect some or all of the other restaurants, as well as the image of the brand as a whole |
| We operate in various countries with differing laws and regulations, which may impair our ability to maintain compliance with regulations and laws |
| In the ordinary course of business, we are party to certain claims, litigation or other regulatory actions |
| Such matters are subject to many uncertainties and we cannot predict with assurances the outcomes and ultimate financial impacts |
| There can be no guarantees that actions that have been or may be brought against us in the future will be resolved in our favor |
| Additionally, although we attempt to abide by the laws and regulations in each jurisdiction in which we operate, the complexity of the laws and regulations to which we are subject, including customs regulations, domestic and international tax legislation and environmental legislation, makes it difficult for us to ensure that we are currently, or will be in the future, compliant with all laws and regulations |
| In the event of an unfavorable resolution to litigation or a violation of applicable laws and regulations, our business, financial condition and operating results could be negatively impacted |
| Our operations are reliant on information technology, and any interruption or other failure in our information technology systems may impair our ability to provide services to our customers |
| The efficient operation of our business is dependent on information technology |
| Information systems are used in all stages of our operations from design to distribution and are used as a method of communication between our domestic and foreign employees, as well as our customers and suppliers |
| We also rely on information systems to provide relevant and accurate information to management in order to allocate resources and forecast our operating results |
| System failures or service interruptions may occur as a result of a number of factors, including computer viruses, hacking or other unlawful activities by third parties, disasters or failures to properly install, upgrade, integrate, protect, repair or maintain systems |
| Any interruption, or other failure, of critical business information systems may impair our ability to provide services to our customers and have a material adverse affect on our business, financial condition and operating results |