350199--3/16/2007--CACHE

related topics

{customer, product, revenue}

{cost, regulation, environmental}

{product, market, service}

{stock, price, operating}

{system, service, information}

{operation, international, foreign}

{property, intellectual, protect}

{condition, economic, financial}

{provision, law, control}

{product, liability, claim}

{control, financial, internal}

{acquisition, growth, future}

{regulation, change, law}

{personnel, key, retain}

{cost, operation, labor}

Risks Related to Our Business Our growth will depend on our ability to successfully open and operate new stores. This may strain our ability to manage our business. Our expansion into new markets could adversely affect our financial condition and results of operations. Our new Cache Luxe concept may not be successful, which could adversely affect our financial condition and results of operations and divert management s time and attention from our core Cache store business. Our ability to attract new customers to our stores depends heavily on the success of the shopping malls in which we are located. Fluctuations in comparable store sales and quarterly results of operations could cause the price of our common stock to decline substantially. Our success depends in part on the efforts of our management team. We rely on a relatively small number of domestic vendors, and our success depends on maintaining good relationships with these vendors to source our products. Our manufacturers may be unable to manufacture and deliver products in a timely manner or meet our quality standards, which could result in lost sales, cancellation charges or excessive markdowns. Substantially all of our merchandise is produced in foreign facilities. This subjects us to the risks of international trade and other risks generally associated with doing business in foreign markets. We rely on our manufacturers to use acceptable ethical business practices, and if they fail to do so, the Cache brand name could suffer reputational harm and our sales could decline or our inventory supply could be interrupted. Our plans to increase our direct-sourcing of products sold in our stores from international vendors may not be successful, which could result in additional costs and manufacturing delays. To the extent that we increase direct-sourcing, interruptions in our direct-sourcing operations could result in lost sales and increased costs. We rely on third parties to distribute our merchandise. If these third parties do not adequately perform this function, our business would be disrupted. The raw materials used to manufacture our products and our distribution and labor costs are subject to availability constraints and price volatility, which could result in increased costs. Because our Cache brand is associated with all of our merchandise, our success depends heavily on the value associated with our brand. If the value associated with our brand were to diminish, our sales could decrease, causing losses or lower profits. We may be unable to protect our trademarks and other intellectual property rights. Any material disruption of our information systems could disrupt our business and reduce our sales. Our marketing efforts rely upon the effective use of customer information. Restrictions on the availability or use of customer information could adversely affect our marketing program, which could result in lost sales and a decrease in profits. We are subject to numerous regulations that could affect our operations. Changes in such regulations could impact the operation of our business through delayed shipments of our goods, fines or penalties that could affect our profitability. We reported a material weakness in our internal control over financial reporting and, if we are unable to improve our internal controls, our financial results may not be accurately reported. Risks Related to Our Industry Our success depends on our ability to respond rapidly to ever-changing fashion trends and customer demands. We may be adversely impacted at any time by a significant number of competitors. Our sales fluctuate on a seasonal basis and are sensitive to economic conditions and consumer spending patterns, leaving our operating results particularly susceptible to changes in shopping patterns. If new legislation restricting the importation or increasing the cost of textiles and apparel produced abroad is enacted, our business could be adversely affected. Risks Related to Our Common Stock Our share price has fluctuated significantly and could continue to fluctuate significantly. Provisions of our governing documents and Florida law could discourage acquisition proposals or delay a change in our control, and this may adversely affect the market price of our common stock or deny our stockholders a chance to realize a premium on their shares.

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350199--3/16/2007--CACHE_INC