Lowe's 2015 Annual Report Download - page 18

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impairment of goodwill or other intangible assets acquired or divested in a strategic transaction or charges to earnings
associated with any strategic transaction, may materially reduce our earnings. Our shareholders may react unfavorably to our
strategic transactions, and, if we do not realize any anticipated benefits from such transactions, we may be exposed to
additional liabilities of any acquired business or joint venture and we may be exposed to litigation in connection with the
strategic transaction. Further, we may finance these strategic transactions by incurring additional debt, which could increase
leverage or impact our ability to access capital in the future.
Our pending acquisition of RONA may not close when we expect, or at all.
The consummation of our pending transaction to acquire all of the issued and outstanding common shares and preferred shares
of RONA is subject to RONA common shareholder approval and satisfaction of customary closing conditions, including the
receipt of all necessary regulatory approvals. If these conditions are not satisfied or waived, the acquisition will not be
consummated. There can be no assurance that we will complete the acquisition on the time frame that we anticipate or under
the terms set forth in the arrangement agreement, or at all. Failure to complete the acquisition of RONA or any delays in
completing the acquisition could have an adverse impact on our future business and operations. In addition, we will have
incurred significant acquisition-related expenses without realizing the expected benefits.
Failure to achieve and maintain a high level of product and service quality could damage our image with customers and
negatively impact our sales, profitability, cash flows and financial condition.
Product and service quality issues could result in a negative impact on customer confidence in Lowe’s and the Company’s
brand image. If our product and service offerings do not meet applicable safety standards or our customers’ expectations
regarding safety or quality, we could experience lost sales and increased costs and be exposed to legal, financial and reputation
risks. Actual, potential or perceived product safety concerns could expose us to litigation as well as government enforcement
action and result in costly product recalls and other liabilities. As a result, Lowe’s reputation as a retailer of high quality
products and services, including both national and Lowe’s private brands, could suffer and impact customer loyalty.
We have many competitors who could take sales and market share from us if we fail to execute our merchandising, marketing
and distribution strategies effectively, or if they develop a substantially more effective or lower cost means of meeting customer
needs, resulting in a negative impact on our business and results of operations.
We operate in a highly competitive market for home improvement products and services and have numerous large and small,
direct and indirect competitors. The principal competitive factors in our industry include convenience, customer service,
quality and price of merchandise and services, in-stock levels, and merchandise assortment and presentation. We face growing
competition from online and multi-channel retailers who have a similar product or service offering. Customers are increasingly
able to quickly comparison shop and determine real-time product availability or price using digital tools. Our failure to
respond effectively to competitive pressures and changes in the markets for home improvement products and services could
affect our financial performance. Moreover, changes in the promotional pricing and other practices of our competitors,
including the effects of competitor liquidation activities, may impact our results.
Our inability to effectively manage our relationships with selected suppliers of brand name products could negatively impact
our business plan and financial results.
We form strategic relationships with selected suppliers to market and develop products under a variety of recognized and
respected national and international brand names. We also have relationships with certain suppliers to enable us to sell
proprietary products which differentiate us from other retailers. The inability to effectively and efficiently manage and
maintain these relationships with these suppliers could negatively impact our business operation and financial results.
Failure of a key vendor or service provider that we cannot quickly replace could disrupt our operations and negatively impact
our business, financial condition and results of operations.
No single vendor of the products we sell accounts for more than 6% of our total purchases, but we rely upon a number of
vendors as the sole or primary source of some of the products we sell. We also rely upon many independent service providers
for technology solutions and other services that are important to many aspects of our business. Many of these vendors and
service providers have certain products or specialized skills needed to support our business concept and our strategies. If these
vendors or service providers discontinue operations or are unable to perform as expected or if we fail to manage them properly
and we are unable to replace them quickly, our business could be adversely affected, at least temporarily, until we are able to
replace them and potentially, in some cases, permanently.
If our domestic or international supply chain or our fulfillment network for our products is disrupted for any reason, our sales
and gross margin would be adversely impacted.
We source, stock, and sell products from over 7,000 domestic and international vendors and their ability to reliably and
efficiently fulfill our orders is critical to our business success. We source a large number of those products from foreign