Our sales and customer relationships may be negatively impacted if we do not anticipate and respond to consumer preferences  and fashion trends appropriately. The results of our Credit operations could be adversely affected by changes in market conditions.  Our business and operations could be materially and adversely affected by supply chain disruptions, port disruptions, severe  weather patterns, natural disasters, widespread pandemics and other natural or man-made disruptions. RISKS DUE TO LEGAL AND REGULATORY FACTORS We are subject to certain laws, litigation, regulatory matters and ethical standards, and our failure to comply with or adequately  address developments as they arise could adversely affect our reputation and operations.  We continue to face uncertainties due to financial services industry regulation and supervision that could have an adverse affect  on our operations.  Federal and state regulation and supervision of the financial industry has increased in recent years due to implementation of consumer  protection and financial reform legislation such as the Credit Card Accountability Responsibility and Disclosure Act of 2009 (“CARD Act”) and  the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Financial Reform Act”). The Financial Reform Act significantly  restructured regulatory oversight and other aspects of the financial industry, created the Consumer Financial Protection Bureau (“CFPB”) to  supervise and enforce consumer lending laws and regulations, and expanded state authority over consumer lending. The CARD Act included  new and revised rules and restrictions on credit card pricing, finance charges and fees, customer billing practices and payment application.  We anticipate more regulation and interpretations of the new rules to continue, and, depending on the nature and extent of these new  regulations and interpretations, we may be required to make changes to our credit card practices and systems, which could adversely impact  the revenues and profitability of our Credit segment. In addition, we operate in a regulated environment where financial supervisory agencies  provide oversight over our activities. Compliance with applicable laws and regulations could limit or restrict our activities and the conduct of  our business and enforcement actions by those agencies for failure to comply could have an adverse impact on us. Our policies, procedures and practices and the technology we implement are designed to comply with federal, state, local and foreign laws,  rules and regulations, including those imposed by the SEC and other regulatory agencies, the marketplace, the banking industry and foreign  countries, as well as responsible business, social and environmental practices, all of which may change from time to time. Significant  legislative changes, including those that relate to employment matters and health care reform, could impact our relationship with our  workforce, which could increase our expenses and adversely affect our operations. In addition, if we fail to comply with applicable laws and  regulations or implement responsible business, social, environmental and supply chain practices, we could be subject to damage to our  reputation, class action lawsuits, legal and settlement costs, civil and criminal liability, increased cost of regulatory compliance, restatements  of our financial statements, disruption of our business and loss of customers. Any required changes to our employment practices could result  in the loss of employees, reduced sales, increased employment costs, low employee morale and harm to our business and results of  operations. In addition, political and economic factors could lead to unfavorable changes in federal, state and foreign tax laws, which may  increase our tax liabilities. An increase in our tax liabilities could adversely affect our results of operations. We are also regularly involved in  various litigation matters that arise in the ordinary course of business. Litigation or regulatory developments could adversely affect our  business and financial condition. Our ability to predict or respond to constantly changing fashion trends, consumer preferences and spending patterns significantly impacts our  sales and operating results. If we do not identify and respond to emerging trends in consumer spending and preferences quickly enough, we  may harm our ability to retain our existing customers or attract new customers. If we purchase too much inventory, we may be forced to sell  our merchandise at lower average margins, which could harm our business. Conversely, if we fail to purchase enough merchandise, we may  lose opportunities for additional sales and damage our relationships with our customers. Our credit card revenues and profitability are subject in large part to economic and market conditions that are beyond our control, including,  but not limited to, interest rates, consumer credit availability, consumer debt levels, unemployment trends and other factors. These economic  and market conditions could impair our credit card revenues and the profitability of our credit card business due to factors such as lower  demand for credit, or could impair ability to assess the creditworthiness of our customers if the criteria and/or models we use to underwrite  and manage our customers become less predictive of future losses, causing our losses to rise and have a negative impact on our results of  operations. Deterioration of economic conditions and consumer confidence may also adversely affect our credit customers’ payment patterns  and delinquency rates, increasing our bad debt expense. We derive a significant amount of our total sales from stores located on the west and east coasts of the United States, particularly in  California, which increases our exposure to conditions in these regions. Similarly, merchandise received through west coast ports could be  adversely impacted by labor disruptions. These disruptions could cause, among other things, a decrease in consumer spending that would  negatively impact our sales, staffing shortages in our stores, distribution centers or corporate offices, interruptions in the flow of merchandise  to our stores, disruptions in the operations of our merchandise vendors or property developers, increased costs, and a negative impact on  our reputation and long-term growth plans.  Nordstrom, Inc. and subsidiaries 9