Business review
ARG risks and uncertainties
The management team at ARG has identified the following factors as major potential risks to the successful performance of its business. Some, such as IT failures, are specific risks that require specific, identified actions to mitigate their effect. Others, such as the impact of competition, are areas addressed through strategic planning and operational management processes.
Competition in the retail industry
ARG operates in highly competitive markets and its failure to compete effectively could have a material adverse effect on its results.
Consumer preferences, perception and spending
The retail industry is subject to changes in consumer preferences, perceptions and spending habits. ARG’s performance depends on factors which may affect the level and patterns of consumer spending in the United Kingdom and on its ability to anticipate and respond to changes in consumer preferences.
Poor economic conditions
ARG derives a substantial proportion of its profits from the United Kingdom and a material proportion from the Republic of Ireland and is therefore sensitive to fluctuations in the UK and Irish economies.
Seasonal fluctuations in sales
ARG’s operations are characterised by seasonal fluctuations in sales requiring careful operational and stock management.
Failure or interruption in product supply
ARG purchases a substantial proportion of its products from third-party product suppliers in Great Britain, Europe and the Far East. Its operations may be interrupted or otherwise adversely affected by delays or interruptions in the supply of these products.
Raw material costs
The price of ARG’s products may be significantly affected by the cost of raw materials used to produce the product it sells (e.g. oil, plastic, wood and gold).
Failure or unavailability of operational infrastructure
Any failure, interruption or unavailability of ARG’s operational infrastructure could lead to increased costs or disruption to supply.
Failure or interruption in information technology systems
ARG is reliant on its IT systems for the provision of information regarding most aspects of its operational activity, including the sale of goods through stores, online and over the telephone together with the management of stock through the retail chains.
