Kohl's 2010 Annual Report Download - page 10

Table of Contents
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Approximately 23% of the merchandise we sell is sourced through a third party purchasing agent. The remaining merchandise is sourced from a wide
variety of domestic and international vendors. All of our vendors must comply with applicable laws and our required Terms of Engagement. Our ability to
find qualified vendors and access products in a timely and efficient manner is a significant challenge which is typically even more difficult with respect to
goods sourced outside the United States. Political or financial instability, trade restrictions, tariffs, currency exchange rates, transport capacity and costs and
other factors relating to foreign trade, and the ability to access suitable merchandise on acceptable terms are beyond our control and could adversely impact our
performance.
If any of our vendors were to become subject to bankruptcy, receivership or similar proceedings, we may be unable to arrange for alternate or
replacement contracts, transactions or business relationships on terms as favorable as current terms, which could adversely affect our sales and operating
results.


We are beginning to experience inflation in our merchandise, raw materials, fuel and labor costs. The cost of cotton, which is a key raw material in
many of our products, has had the most dramatic increases. The price and availability of cotton may fluctuate substantially, depending on a variety of
factors, including demand, acreage devoted to cotton crops and crop yields, weather, supply conditions, transportation costs, energy prices, work stoppages,
government regulation and government policy, economic climates, market speculation and other unpredictable factors. Fluctuations in the price and
availability of fuel, labor and raw materials, such as cotton, have not materially affected our cost of goods in recent years, but an inability to mitigate these
cost increases, unless sufficiently offset with our pricing actions, might cause a decrease in our profitability; while any related pricing actions might cause a
decline in our sales volume. Additionally, any decrease in the availability of raw materials could impair our ability to meet our production or purchasing
requirements in a timely manner. Both the increased cost and lower availability of merchandise, raw materials, fuel and labor may also have an adverse
impact on our cash and working capital needs as well as those of our suppliers.

Our performance is dependent on attracting and retaining a large and growing number of quality associates. Many of those associates are in entry level or
part-time positions with historically high rates of turnover. Our ability to meet our labor needs while controlling costs is subject to external factors such as
unemployment levels, prevailing wage rates, minimum wage legislation and changing demographics. Changes that adversely impact our ability to attract and
retain quality associates could adversely affect our performance.

Our plan to continue to increase the number of our stores will depend in part upon the availability of existing retail stores or store sites on acceptable
terms. Increases in real estate, construction and development costs could limit our growth opportunities and affect our return on investment. There can be no
assurance that such stores or sites will be available for purchase or lease, or that they will be available on acceptable terms. If we are unable to grow our retail
business, our financial performance could be adversely affected.
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Various aspects of our operations are subject to federal, state or local laws, rules and regulations, any of which may change from time to time. We
continually monitor the state and federal employment law environment
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