consumers’ disposable income, particularly with respect to home improvement or construction projects, and could have an
adverse effect on our financial performance. Natural disasters or catastrophic climate events may increase demand for certain
of our products, and if we are unable to meet such customer demands, our reputation, business, and financial operations could
be harmed, particularly if our responses to such events are less adequate than those of our competitors. These types of events
can also adversely affect our workforce and prevent associates and customers from reaching our stores and other facilities.
They can also disrupt or disable operations of stores, support centers, and portions of our supply chain and distribution network,
including causing reductions in the availability of inventory and disruption of utility services. In addition, these events may
affect our information systems, resulting in disruption to various aspects of our operations, including our ability to transact with
customers and fulfill orders and to communicate with our stores. Unseasonable, unexpected or extreme weather conditions
such as excessive precipitation, warm temperatures during the winter season, or prolonged or extreme periods of warm or cold
temperatures, could render a portion of our inventory damaged or unsellable. As a consequence of these or other catastrophic
or uncharacteristic events, we may experience interruption to our operations, increased costs, or losses of property, equipment
or inventory, which would adversely affect our revenue and profitability.
Our business and operations are subject to risks related to the long-term effects of global climate change.
Our business and operations are subject to climate-related risks. These include both physical risks (such as extreme weather
conditions or rising sea levels) and transition risks (such as regulatory or technology changes), which are expected to be
widespread and unpredictable. Climate change, extreme weather conditions, wildfires, droughts, and rising sea levels may
impact the areas in which the Company’s operations and facilities are located, and they could also affect our ability to procure
commodities at costs and in quantities we currently experience. Such events could result in an increase in our costs and
expenses and harm our future revenue, cash flows, and financial performance. Government regulations limiting carbon dioxide
and other greenhouse gas emissions may increase compliance and merchandise costs, and other regulations affecting energy
inputs could materially affect our profitability. In addition, we use natural gas, diesel fuel, gasoline and electricity in our
operations, all of which could face increased regulation as a result of climate change or other environmental concerns.
Our costs of doing business could increase as a result of changes in, expanded enforcement of, or adoption of new federal, state
or local laws and regulations.
Our business is subject to a wide array of federal, state, and local laws and regulations. In recent years, a number of new laws
and regulations have been adopted, and there has been expanded enforcement of certain existing laws and regulations by
federal, state, and local agencies. These laws and regulations, and related interpretations and enforcement activity, may change
as a result of a variety of factors, including political, economic, or social events. Changes in, expanded enforcement of, or
adoption of new federal, state or local laws and regulations governing minimum wage requirements, collective bargaining, the
classification of exempt and non-exempt employees, the distinction between employees and contractors, other wage, labor or
workplace regulations, health care, data privacy and cybersecurity, the sale and pricing of some of our products, transportation,
logistics, international trade, responsible sourcing, supply chain transparency, taxes, unclaimed property, sustainability, the
environment and climate change, including energy costs and consumption, could increase our costs of doing business or impact
our operations. In addition, if we fail to comply with other applicable laws and regulations, including the Foreign Corrupt
Practices Act and local anti-bribery laws, we could be subject to reputational and legal risks, including government enforcement
action and class action civil litigation, which could adversely affect our business, financial condition, and results of operations.
Future litigation or governmental proceedings could result in material adverse consequences, including judgments or
settlements, negatively affecting our business, financial condition, and results of operations.
We are, and in the future will become, involved in lawsuits, including consumer, commercial, employment, tort and other
litigation, regulatory inquiries, and governmental and other legal proceedings arising out of the ordinary course of our business.
Some of these proceedings raise difficult and complicated factual and legal issues and are subject to uncertainties and
complexities. The timing of the final resolutions to lawsuits, regulatory inquiries and governmental and other legal proceedings
is typically uncertain. Additionally, the possible outcomes of, or resolutions to, these proceedings could include adverse
judgments or settlements, either of which could require substantial payments. Furthermore, defending against these
proceedings may require a diversion of management’s attention and resources. None of the legal proceedings in which we are
currently involved, individually or collectively, are considered material.
The inflation or deflation of commodity and other prices could affect our prices, demand for our products, and our sales.
Prices of certain commodity products, including lumber, copper, energy, and other raw materials, are historically volatile and
are subject to fluctuations arising from changes in domestic and international supply and demand, inflationary pressures, labor
costs, competition, market speculation, government regulations, tariffs and trade restrictions, and periodic delays in delivery.
Rapid and significant changes in commodity and other prices, such as changes in lumber prices, and our ability to pass them on
to our customers or manage them through our portfolio strategy, have affected, and may continue to affect, the demand for our
products and our sales.
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