Dollar General (DG) 10-K risk factor changes: FY2017 vs FY2016

[removed: _Economic] [added: Economic] conditions and other economic factors may adversely affect our financial performance and other aspects of our business by negatively impacting our [removed: customers'] [added: customers’] disposable income or discretionary spending, [added: affecting our ability to plan and execute our strategic initiatives,] increasing our costs of goods sold and selling, general and administrative expenses, and adversely affecting our sales or [removed: profitability._][added: profitability.]

Any factor that could adversely affect that disposable income would decrease our [removed: customers' spending] [added: customers’ confidence, spending,] and [added: number of trips to our stores, and] could cause our customers to shift their spending to products other than those sold by us or to our less profitable product choices, all of which could result in lower net sales, decreases in inventory turnover, greater markdowns on inventory, a change in the mix of products we sell, and a reduction in profitability due to lower margins.

Factors that could reduce our [removed: customers'] [added: customers’] disposable income and over which we exercise no influence include but are not limited to adverse economic conditions such as increased or sustained high unemployment or underemployment levels, inflation, increases in fuel or other energy costs and interest rates, lack of available credit, consumer debt levels, higher tax rates and other changes in tax laws, concerns over government mandated participation in health insurance [removed: programs and] [added: programs,] increasing healthcare costs, and decreases [removed: in] [added: in, or elimination of,] government subsidies such as unemployment and food assistance programs.

Many of the factors identified above that affect disposable income, as well as commodity rates, transportation costs (including the costs of diesel fuel), costs of labor, insurance and healthcare, foreign exchange rate fluctuations, lease costs, measures that create barriers to or increase the costs associated with international trade, changes in other laws and regulations and other economic factors, also affect our [added: ability to plan and execute our strategic initiatives, our] cost of goods sold and our selling, general and administrative expenses, and may have other adverse consequences which we are unable to fully anticipate or control, all of which may adversely affect our sales or profitability.

[removed: _Our] [added: Our] plans depend significantly on strategies and initiatives designed to increase sales and improve the efficiencies, costs and effectiveness of our operations, and failure to achieve or sustain these plans could affect our performance [removed: adversely._][added: adversely.]

We have [added: short-term and long-term] strategies and initiatives (such as those relating to merchandising, [added: marketing, real estate,] sourcing, shrink, private brand, distribution and transportation, store operations, store formats, budgeting and expense reduction, and [removed: real estate)] [added: technology)] in various stages of testing, evaluation, and implementation, upon which we expect to rely to continue to improve our results of operations and financial condition and to achieve our financial plans.

[added: Failure to achieve] successful implementation of our initiatives or the cost of these initiatives exceeding [removed: management's] [added: management’s] estimates could adversely affect our business, results of operations and financial condition.

The success of our merchandising initiatives, particularly those with respect to [removed: non-consumable] [added: non‑consumable] merchandise and [removed: store-specific] [added: store‑specific] products and allocations, depends in part upon our ability to predict consistently and successfully the products that our customers will demand and to identify and timely respond to evolving trends in [removed: demographics] [added: demographic mixes in our markets] and consumer preferences, expectations and needs.

If our merchandising efforts in the [removed: non-consumables] [added: non‑consumables] area or the higher margin areas within consumables are unsuccessful, we could be further adversely affected by our inability to offset the lower margins associated with our consumables business.

Further, our merchandising efforts in the consumables [removed: area, including tobacco products,] [added: area] may not generate the net sales growth and increase customer traffic to the levels needed to offset the lower margins generated by sales of consumables and maintain our targeted gross profit margins.

[removed: _If] [added: If] we cannot open, relocate or remodel stores profitably and on schedule, our planned future growth will be impeded, which would adversely affect [removed: sales._][added: sales.]

[removed: _Our] [added: Our] profitability may be negatively affected by inventory [removed: shrinkage._][added: shrinkage.]

[removed: _We] [added: We] face intense competition that could limit our growth opportunities and adversely impact our financial [removed: performance._][added: performance.]

The retail business is highly competitive with respect to price, store location, merchandise quality, [added: product] assortment and presentation, [removed: in-stock] [added: in‑stock] consistency, customer service, [removed: aggressive] promotional activity, customers, [added: market share,] and employees.

We compete with discount stores and with many other retailers, including mass merchandise, warehouse club, grocery, drug, convenience, [removed: variety] [added: variety, online retailers,] and other specialty stores.

Competition for customers has intensified as competitors have moved into, or increased their presence in, our geographic markets and [removed: from] [added: increased] the [removed: use] [added: availability] of mobile and [removed: web-based] [added: web‑based] technology [removed: that facilitates] [added: to facilitate] online shopping and [removed: real-time] [added: real‑time] product and price [removed: comparisons.][added: comparisons and to create an omnichannel shopping experience.]

[removed: _Our] [added: Our] private brands may not maintain broad market acceptance and may increase the risks we [removed: face._][added: face.]

We believe that our success in maintaining broad market acceptance of our private brands depends on many factors, including pricing, our costs, [removed: quality and] [added: quality,] customer [removed: perception.][added: perception and the timely development and introduction of new products.]

The sale and expansion of our private brand offerings also subjects us to certain risks, such as: potential product liability risks and mandatory or voluntary product recalls; [added: potential supply chain and distribution chain disruptions for raw materials and finished products;] our ability to successfully protect our proprietary rights and successfully navigate and avoid claims related to the proprietary rights of third parties; our ability to successfully administer and comply with applicable contractual obligations and legal and regulatory requirements; and other risks generally encountered by entities that source, sell and market exclusive branded offerings for retail.

Any failure to appropriately address some or all of these risks could have a significant adverse effect on our [added: private brand initiatives and on our reputation,] business, results of operations and financial condition.

[removed: _A] [added: A] significant disruption to our distribution network, to the capacity of our distribution centers or to the timely receipt of inventory could adversely impact sales or increase our transportation costs, which would decrease our [removed: profits._][added: profits.]

We rely on our distribution and transportation network to provide goods to our stores in a timely and [removed: cost-effective] [added: cost‑effective] manner.

[added: Any disruption, unanticipated or] unusual expense or operational failure related to this process could affect store operations negatively.

Labor shortages or work stoppages in the transportation industry or [removed: long-term] [added: long‑term] disruptions to the national and international transportation infrastructure that lead to delays or interruptions of deliveries or which would necessitate our securing alternative labor or shipping suppliers could also increase our costs or otherwise negatively affect our business.

Delays in opening distribution centers could adversely affect our future financial performance by slowing store growth, which may in turn reduce revenue growth, or by increasing transportation [removed: costs.]

In addition, [removed: distribution-related] [added: distribution‑related] construction or expansion projects entail risks that could cause delays and cost overruns, such as: shortages of materials or skilled labor; work stoppages; unforeseen construction, scheduling, engineering, environmental or geological problems; weather interference; fires or other casualty losses; and unanticipated cost increases.

The completion date and ultimate cost of these projects could differ significantly from initial expectations due to [removed: construction-related] [added: construction‑related] or other reasons.

[removed: _Risks] [added: Risks] associated with or faced by our suppliers could adversely affect our financial [removed: performance._][added: performance.]

In [removed: 2015,] [added: 2016,] our largest and second largest suppliers each accounted for [removed: 7%] [added: approximately 8%] of our purchases.

Additionally, if a supplier fails to deliver on its commitments, whether due to financial difficulties or other reasons, we could experience merchandise [removed: out-of-stocks] [added: out‑of‑stocks] that could lead to lost sales and damage to our reputation.

We directly imported approximately 6% of our purchases (measured at cost) in [removed: 2015,] [added: 2016,] but many of our domestic vendors directly import their products or components of their products.

In addition, the United [removed: States'] [added: States’] foreign trade policies, [added: duties,] tariffs and other impositions on imported goods, trade sanctions imposed on certain countries, the limitation on the importation of certain types of goods or of goods containing certain materials from other countries and [added: other factors relating to foreign trade and port labor agreements are beyond our control.]

[removed: _Product liability and food] [added: Product liability, product recall or other product] safety claims could adversely affect our business, reputation and financial [removed: performance._][added: performance.]

All of our vendors and their products must comply with applicable product [removed: and food] safety laws, and we are dependent on them to ensure that the products we buy comply with all applicable safety standards.

We seek but may not be successful in obtaining contractual indemnification and insurance coverage from our [removed: suppliers.][added: vendors.]

[removed: _We] [added: We] are subject to governmental regulations, procedures and requirements.

A significant change in, or noncompliance with, these regulations could have a material adverse effect on our financial [removed: performance._][added: performance.]

Our business is subject to numerous and [removed: increasing] [added: frequently changing] federal, state and local laws and regulations.

The complexity of the regulatory environment in which we operate and the related cost of compliance are increasing due to [removed: expanding and] additional legal and regulatory [removed: requirements] [added: requirements, our expanding operations,] and increased enforcement efforts.

New [removed: laws or] [added: laws,] regulations, [added: policies and the related interpretations and enforcement practices,] particularly those dealing with environmental compliance, product safety, food safety, information security and privacy, and labor and employment, among others, or changes in existing [removed: laws and] [added: laws,] regulations, [added: policies and the related interpretations and enforcement practices,] particularly those governing the sale of products or employee wages, may result in significant added expenses or may require extensive system and operating changes that may be difficult to implement and/or could materially increase our cost of doing business.

costs.

However, product liability, personal injury or other claims may be asserted against us relating to product contamination, product tampering, mislabeling, recall and other safety issues with respect to the products that we sell.

Our ability to obtain indemnification from foreign vendors may be hindered by our ability to obtain jurisdiction over such vendors to enforce contractual indemnification obligations.

Further, uncertainties exist regarding the future application of certain of these legal requirements to our business.

As a result,

credit and debit card information in connection with sales), as required by law, or otherwise in accordance with our privacy policy.

There can be no assurances that our ability to obtain additional financing

Additionally, the FASB has issued accounting standards related to revenue recognition and intra-entity transfers that could result in changes to our financial statements.

Failure to achieve

Any disruption, unanticipated or

other factors relating to foreign trade and port labor agreements are beyond our control.

Despite our best efforts to ensure the quality, safety and freshness of the products that we sell in all of our stores, we may be subject to product liability claims from customers or actions required or penalties assessed by government agencies relating to products, including but not limited to food products that are recalled, defective or otherwise alleged to be harmful.

Such claims may result from tampering by unauthorized third parties, product contamination or spoilage, including the presence of foreign objects, substances, chemicals, other agents, or residues introduced during the growing, storage, handling and transportation phases.

Our ability to obtain indemnification from foreign suppliers may be hindered by the manufacturers' lack of understanding of U.S. product liability or other laws, which may result in our having to respond to claims or complaints from customers as if we were the manufacturer.

Nationally, the number of employment-related class

actions filed each year has continued to increase, and recent changes and proposed changes in federal and state laws, regulations and agency guidance may cause claims to rise even more.

If our buying decisions do not accurately

Additionally, under certain circumstances, we may

[removed: _This] [added: This] discussion and analysis should be read with, and is qualified in its entirety by, the Consolidated Financial Statements and the notes thereto.

It also should be read in conjunction with the Cautionary Disclosure Regarding [removed: Forward-Looking] [added: Forward‑Looking] Statements and the Risk Factors disclosures set forth in the Introduction and in Item 1A of this report, [removed: respectively._][added: respectively.]

[removed: Executive Overview][added: Executive Overview]

We are among the largest discount retailers in the United States by number of stores, with [removed: 12,575] [added: 13,429] stores located in [removed: 43] [added: 44] states as of [removed: February 26, 2016,] [added: March 3, 2017,] with the greatest concentration of stores in the southern, southwestern, midwestern and eastern United States.

Our merchandise includes high-quality national brands from leading manufacturers, as well as [added: our own value and] comparable quality [removed: and value] private brand selections with prices at substantial discounts to national brands.

We offer our customers these national brand and private brand products at everyday low prices (typically $10 or less) in our convenient small-box [removed: locations, with selling space averaging approximately 7,400 square feet per store.][added: locations.]

Because the customers we serve are value-conscious, many with low or fixed incomes, we [removed: have always been] [added: are] intensely focused on helping them make the most of their spending dollars.

Our core customers are often [added: among] the first to be affected by negative or uncertain economic [removed: conditions such as unemployment and fluctuating food, energy and medical costs,] [added: conditions,] and [added: are among] the last to feel the effects of improving economic [removed: conditions.][added: conditions particularly when, as in the recent past, trends are inconsistent and their duration unknown.]

[removed: We are keenly focused on executing] [added: Following this strategic review, we remain committed to] the following [removed: priorities:] [added: long-term operating priorities as we consistently strive to improve our performance while retaining our customer-centric focus:] 1) driving profitable sales growth, 2) capturing growth opportunities, 3) enhancing our position as a low-cost operator, and 4) investing in our people as a competitive advantage.

We seek to drive profitable sales growth through initiatives [removed: such as improvement in our in-stock position,] [added: aimed at increasing customer traffic and average transaction amount,] as well as an ongoing focus on enhancing our margins while maintaining both everyday low price and affordability.

We demonstrate our commitment to the affordability needs of our core customer by pricing more than [removed: 75%] [added: 80%] of our stock-keeping units at $5 or less [removed: as of] [added: at] the end of [removed: 2015.][added: 2016.]

However, as we work to provide everyday low prices and meet our [removed: customers'] [added: customers’] affordability needs, we also remain focused on enhancing our margins through effective category management, inventory shrink reduction initiatives, private brands penetration, efforts to improve distribution and [added: transportation efficiencies, global sourcing, and pricing and markdown optimization.]

With respect to category management, [added: we strive to maintain an appropriate mix of consumables and non-consumables sales because, as noted above,] the mix of sales affects profitability [removed: because] [added: due to] the [added: varying] gross [removed: margin associated with sales within our] [added: margins between, and even within, the] consumables [removed: category generally is lower than that associated with sales within our] [added: and] non-consumables categories.

To support our other operating [removed: priorities] [added: priorities,] we [removed: also are] [added: remain] focused on capturing growth opportunities and innovating within our channel.

[removed: We] [added: In 2016, we] continued to expand our store count, opening [removed: 730] [added: 900] stores [removed: during 2015.][added: and remodeling or relocating 906 stores.]

We continue to innovate within our channel, and during 2016 we [removed: will implement] [added: began implementing] the DG16 store [removed: format.][added: layout for all new stores, relocations and remodels.]

In addition, we [removed: are] [added: also began] testing a smaller format store (less than 6,000 square feet) which we believe could allow us to capture growth opportunities in metropolitan [removed: areas.][added: areas as well as rural areas with a low number of households.]

We have established a position as a low-cost operator, continuously seeking ways to [added: reduce or] control costs that do not affect our [removed: customer's] [added: customers’] shopping experience.

We [removed: have enhanced] [added: continued to enhance] this position during [removed: the latter part of 2015 and into] 2016 through our zero-based budgeting initiative, streamlining our business while also reducing [removed: expenses.][added: certain expenses as a percentage of sales.]

In addition, [removed: at the store level,] we remain committed to simplifying or eliminating [removed: various] [added: store-level] tasks [added: and processes] so that those time savings can be reinvested by our [removed: store managers] [added: Store Managers and their teams] in [removed: other] [added: important] areas such as [removed: ensuring] [added: enhanced] customer service, [removed: improved] [added: higher] in-stock levels, and improved store standards.

[removed: Our] [added: A] continued focus on [removed: these] [added: our] four operating [removed: priorities,] [added: priorities as discussed above,] coupled with strong cash flow management and share repurchases resulted in solid overall operating and financial performance in [removed: 2015] [added: 2016] as compared to [removed: 2014] [added: 2015,] as [removed: follows.][added: set forth below.]

Basis points, as referred to below, are equal to [removed: 0.01 percent] [added: 0.01% as a percentage] of net sales.

[removed: Sales] [added: The increase] in [removed: same-stores increased 2.8%, with] [added: sales reflects] increases in both customer traffic and average transaction [removed: amount.][added: amounts.]

[added: | | · | |] Our gross profit rate [removed: increased] [added: decreased] by [removed: 27] [added: 11] basis points due primarily to [removed: lower transportation costs] [added: higher markdowns, a greater proportion of sales of consumables,] and a [removed: lower] [added: higher] rate of inventory shrinkage. [added: |]

[added: | | · | | The increase in SG&A, as a percentage of sales, was due primarily to increases in retail labor costs.] For other factors, see the detailed discussion that follows. [added: |]

Interest expense decreased [removed: by] $1.3 million [added: to $86.9 million] in 2015 [added: compared] to [removed: $86.9 million.][added: 2014.]

[added: | | · | |] We reported net income of [removed: $1.17] [added: $1.25] billion, or [removed: $3.95] [added: $4.43] per diluted share, for [removed: 2015,] [added: 2016,] compared to net income of [removed: $1.07] [added: $1.17] billion, or [removed: $3.49] [added: $3.95] per diluted share, for [removed: 2014.][added: 2015. Stock repurchase activity during 2015 and 2016 contributed to the increase in diluted earnings per share. |]

[removed: We generated approximately $1.38 billion of cash] [added: Cash] flows from operating activities [added: were $1.4 billion] in 2015, an increase of [removed: 4.8%] [added: $64.8 million] compared to 2014.

[added: | | · | |] We [added: generated approximately $1.61 billion of cash flows from operating activities in 2016, an increase of 15.3% compared to 2015. We] primarily utilized our cash flows from operating activities to invest in the growth of our business, repurchase our common stock, and pay quarterly cash dividends. [added: |]

[added: | | · | |] Inventory turnover was 4.7 times on a rolling four-quarter basis. [added: Inventories decreased 0.7% on a per store basis compared to 2015. |]

[removed: During 2015 we] [added: | | · | | We] opened [removed: 730] [added: 900] new stores, remodeled or relocated [removed: 881] [added: 906] stores, and closed [removed: 36] [added: 63] stores. [added: |]

[removed: Also in] [added: In] 2015, we repurchased [removed: approximately] 17.6 million [added: outstanding] shares of our [removed: outstanding] common stock [removed: for] [added: at a total cost of] $1.3 billion.

[removed: In addition,] [added: To further enhance shareholder return in 2017,] we plan to continue to repurchase shares of our common [removed: stock] [added: stock, although we expect to do so in a lower amount than in 2016,] and pay quarterly cash dividends, subject to Board [removed: discretion, to further enhance shareholder return.][added: discretion.]

[removed: Results] [added: Results] of [removed: Operations][added: Operations]

[removed: _Accounting Periods._] The following text contains references to years [added: 2016,] 2015, [removed: 2014,] and [removed: 2013,] [added: 2014,] which represent fiscal years ended [added: February 3, 2017,] January 29, 2016, [added: and] January 30, 2015, [removed: and January 31, 2014,] respectively.

[removed: All referenced] [added: Fiscal year 2016 was a 53-week accounting period and] fiscal years [added: 2015 and 2014] were 52-week accounting periods.

[removed: _Seasonality._] The nature of our business is [removed: seasonal to a certain extent.][added: somewhat seasonal.]

Primarily because of sales of [removed: holiday-related] [added: Christmas-related] merchandise, sales in our fourth quarter (November, December and January) have historically been higher than sales achieved in each of the first three quarters of the fiscal year.

The following table contains results of operations data for fiscal years [removed: 2015, 2014] [added: 2016, 2015] and [removed: 2013,] [added: 2014,] and the dollar and percentage variances among those years.

| | | | | | | | | | | | [removed: 2015] [added: 2016] vs. [removed: 2014 |] [added: 2015] | | | | | [removed: 2014] [added: 2015] vs. [removed: 2013 |] [added: 2014] | | | | |

The primary macroeconomic factors that affect our core customers include the unemployment rate, the underemployment rate, wage growth, fuel prices, and changes to certain government assistance programs, such as the 2016 changes to the Supplemental Nutrition Assistance Program, which had the effect of not only reducing benefit levels but also eliminating benefit eligibility for certain individuals.

Additionally, our customers are impacted by increases in those expenses that generally comprise a large portion of their budget, such as rent and healthcare, and during 2016, these expenses increased at a rate that was greater than many of our core customers’ growth in income.

We believe the overall effect of the factors listed above have negatively affected our traffic and, along with deflationary pressures, including both lower commodity costs and pricing actions on our products, have negatively affected same-store sales.

During 2016, we undertook a strategic review of our business and the retail environment that was designed to help identify additional long-term growth opportunities.

This strategic review resulted in prioritizing those growth opportunities that we believe are most important for the business, such as leveraging digital tools and technology, while ensuring that we maintain our brand heritage and build upon our organizational capabilities.

Historically, our sales of consumables, which tend to have lower gross margins, have been the key drivers of net sales and customer traffic, while sales of non-consumables, which tend to have higher gross

margins, have contributed to profitable sales growth and an increase in average transaction amount.

We expect these trends to continue in 2017.

Same-store sales growth is key to achieving our objectives.

As noted above, in recent periods economic and competitive deflationary pressures resulting in lower commodity costs and prices has negatively affected our net and same store sales performance, and the continuation, if any, of these deflationary pressures could negatively impact sales of certain items going forward.

Additionally, we have made certain pricing adjustments and marketing investments in designated geographies with a focus on the consumables category to drive customer traffic.

These pricing adjustments and marketing investments are performing well in the majority of stores that received them with improvements in transactions, units, and same-store sales.

We expect to continue to evaluate and refresh these pricing adjustments across various items, categories and markets as needed.

During 2016, we made significant progress with the rollout of other initiatives designed to increase customer traffic and sales, such as the expansion of coolers in existing stores, the expansion of certain product classes including health and beauty care, party and stationery, and improvement in our in-stock position.

We plan to further this progress in 2017 with the continued expansion of coolers, the rollout of additional merchandising initiatives across all merchandise categories, a continued focus on improving our in-stock position, and the addition of a queue line, similar to that in our DG16 layout stores discussed below, in a portion of our existing store base.

We will continue to utilize our updated customer segmentation information, which has provided us with deeper insights into the spending habits for each of our core customer segments, to refine these initiatives and drive our category management process, as we optimize our assortment and expand into those products that are most likely to drive customer traffic to our stores.

We plan to enhance our advertising effectiveness in 2017 by further integrating our traditional and digital media mix, designed to ensure that we reach our target customers where, when and how they decide to engage with us while also targeting a higher return on investment.

We also plan to continue investing in our existing store base through many of these targeted merchandising initiatives, with a goal to drive increased customer traffic, average transaction amount and same-store sales.

To support our efforts to reduce inventory shrink, we continue to implement additional in-store defensive merchandising and technology-based tools, such as Electronic Article Surveillance and video-enabled exception-based reporting in select stores.

We strive to balance these and other shrink reduction efforts with our efforts to improve our in-stock position.

We seek to reduce our stem miles and optimize loads to improve distribution and transportation efficiencies.

In 2017, we intend to open approximately 1,000 stores and to relocate or remodel approximately 900 stores.

In 2017, we plan to incorporate into a portion of our existing store base certain lessons learned from the DG16 layout and smaller format stores, as well those learned in connection with the conversion of the larger format former Walmart Express stores we acquired during 2016.

To support our new store growth and drive productivity, we continue to make investments in our distribution center network.

During 2016, we opened new distribution centers in Texas and Wisconsin.

Our fifteenth distribution center in Jackson, Georgia is under construction with a goal to begin shipping from this facility in late 2017.

We

expect to break ground on our sixteenth distribution center in Amsterdam, New York in mid-2017 to support our northeast growth.

This initiative was successful in 2016, as evidenced by reductions in administrative payroll, advertising and certain other costs, and we believe this initiative has the momentum to assist in leveraging SG&A expenses at a lower same-store sales growth percentage over the long term.

During 2016, these efforts helped to achieve our lowest level of store manager turnover in four years.

During 2017, we will build upon this foundation by investing approximately $70 million, primarily for increased compensation and training for our store managers, as well as strategic initiatives.

Our store managers play a critical role in our customer experience, and we anticipate this investment in their compensation will contribute to improved customer experience scores, higher sales, lower shrink and improved turnover metrics.

The proposed changes to the overtime exemption regulations under the Fair Labor Standards Act (“FLSA”) are subject to an injunction by a federal court and if such regulations were to be implemented, we likely will incur incremental SG&A expenses.

| | · | | Net sales in 2016 increased 7.9% over 2015. Sales in same-stores increased 0.9%, primarily due to an increase in average transaction amount accompanied by traffic that was essentially unchanged from the prior year. Average sales per square foot in 2016 were $229, including a $4 contribution from the 53rd week, as compared to $226 per square foot in 2015. |

| --- | --- | --- | --- |

| | · | | Operating profit increased 6.3% to $2.06 billion, or 9.4% of sales, compared to $1.94 billion, or 9.5% of sales in 2015. The decrease in our operating profit rate reflects an 11 basis-point decrease in our gross profit rate and a 3 basis-point increase in SG&A. |

| --- | --- | --- | --- |

| --- | --- | --- | --- |

| --- | --- | --- | --- |

| | · | | Interest expense increased by $10.9 million in 2016 to $97.8 million due primarily to greater average debt outstanding and higher average interest rates. |

Our customer has experienced both positive and negative general economic factors during 2015, such as lower gasoline prices and unemployment rates coupled with rising rents and medical costs.

The overall financial impact of these factors to our customers has been inconsistent and their duration is unknown.

Our operating priorities continue to evolve as we consistently strive to improve our performance while retaining our customer-centric focus.

Our in-stock improvement initiative is designed to ensure the right products are available on the shelf when our customers shop in our stores.

To support this initiative and improve overall customer satisfaction, we are selectively investing incremental labor hours in those stores where we believe such increases will generate positive financial returns.

As of the end of 2015, this retail labor hour investment had been implemented across over 3,100 stores.

We have a disciplined approach to this labor investment and are able to quickly evaluate whether it delivers on our profitability expectations, reallocating resources as necessary.

transportation efficiencies, global sourcing, and pricing and markdown optimization.

Even within each category, however, there are varying levels of gross margin associated with the specific items.

With respect to inventory shrink reduction, the progress in 2015 was broad-based with shrink declining across all four product categories.

For a discussion of the sales mix, as well as the results of certain other margin-related initiatives in 2015, see "Results of Operations" below.

The degree of success of these initiatives is often reflected in our same-store sales results and in the level of improvement in shopper frequency and number of items sold and average transaction amount.

For the 2015 fourth quarter, we believe these ongoing initiatives helped to drive the same-store sales growth in three out of our four product categories, reflecting increases in both customer traffic and average transaction amount for the 32nd consecutive quarter when compared to the prior year quarter.

We also have continued our store remodeling efforts and remodeled or relocated a total of 881 stores during 2015.

In fiscal 2016, we have plans to open 900 stores and to relocate or remodel 875 stores, and we plan to maintain our accelerated square footage growth of approximately six to eight percent during 2017.

This store format will include additional cooler doors, a redesigned queueing area, and other enhancements that are focused on meeting the evolving demands of our core customer while also delivering on our operating priorities.

Our goal is to lower the same-store sales growth required to leverage selling, general and administrative ("SG&A") expenses.

As part of this initiative we reduced approximately 255 positions within our corporate support function in the third quarter of 2015 and expect to reinvest a portion of these savings in the business as we deem appropriate.

We will continue to seek additional opportunities to enhance our low-cost position.

Our training programs are continually evolving, as we work to ensure that our employees have the tools necessary to be successful in their positions.

Furthermore, we believe that reducing our store manager turnover likely results in improved store financial performance in areas such as shrink and sales.

We have also implemented training programs for high-potential employees, and believe that these and other efforts will produce a more stable, engaged workforce.

Net sales in 2015 increased 7.7% over 2014.

Consumables represented 76% of sales

in 2015.

Departments with the most significant increases in net sales were candy and snacks, perishables, tobacco, and food.

Average sales per square foot in 2015 were $226, up from $223 in 2014.

Operating profit increased 9.7% to $1.94 billion, or 9.5% of sales, compared to $1.77 billion, or 9.4% of sales in 2014.

The increase in our operating profit rate was attributable to a 27 basis-point increase in our gross profit rate, which was partially offset by a 10 basis-point increase in SG&A.

The increase in SG&A, as a percentage of sales, was due primarily to increases in incentive compensation expense, repairs and maintenance expense and occupancy costs.

Total long-term obligations as of January 29, 2016 were $2.97 billion.

Stock repurchase activity during 2014 and 2015 contributed to the increase in diluted earnings per share.

Inventories increased 4.3% on a per store basis over 2014.

In 2016, we plan to continue to focus on our four key operating priorities.

We expect our sales growth in 2016 to again be driven primarily by consumables, although we expect non-consumables sales to continue to contribute to our profitable sales growth.

Same-store sales growth is key to achieving our objectives, and we have implemented targeted actions to drive same-store sales in 2016, such as updating our customer segmentation to gain deeper insights into the spending habits for each of our core customer segments.

This helps drive our category management process, as we optimize our assortment and expand into those categories that are most likely to drive traffic to our stores.

Our continued focus on on-shelf availability and affordability also should assist in growing transactions and number of items sold.

Our new store format will offer a total of 22 cooler doors, an increase of six cooler doors as compared to our previous new store format and will be utilized for all new stores, relocations and remodels.

[removed: Financial] [added: Financial] Risk [removed: Management][added: Management]

[removed: Interest] [added: Interest] Rate [removed: Risk][added: Risk]

Our principal interest rate exposure relates to outstanding amounts under our unsecured debt [removed: Facilities.][added: facilities as well as our commercial paper program.]

As of [removed: January 29, 2016,] [added: February 3, 2017,] we had variable rate borrowings of $425 million under our [added: 2015] Term [removed: Facility and] [added: Facility,] borrowings of [removed: $251] [added: $490.5] million [added: under our commercial paper program, and no borrowings] outstanding under our [added: 2015] Revolving Facility.

In order to mitigate a portion of the variable rate interest exposure under the [removed: Facilities,] [added: credit facilities,] in prior years we have entered into various interest rate swaps.

As of [removed: January 29, 2016,] [added: February 3, 2017,] no such interest rate swaps were outstanding and, as a result, we are exposed to fluctuations in variable interest rates under the [removed: Facilities.][added: credit facilities and our commercial paper program.]

For a detailed discussion of our [removed: Facilities,] [added: credit facilities and our commercial paper program,] see Note 5 to the consolidated financial statements.

Based on our variable rate borrowing levels [removed: and interest rate swaps outstanding] as of [removed: January 29, 2016] [added: February 3, 2017] and January [removed: 30, 2015,] [added: 29, 2016,] the annualized effect of a one percentage point increase in variable interest rates would have resulted in a pretax reduction of our earnings and cash flows of approximately [removed: $6.9] [added: $9.2] million in [removed: 2015] [added: 2016] and [removed: $0.6] [added: $6.9] million in [removed: 2014.][added: 2015.]

[removed: General][added: General]

We are among the largest discount retailers in the United States by number of stores, with [removed: 12,575] [added: 13,429] stores located in [removed: 43] [added: 44] states as of [removed: February 26, 2016,] [added: March 3, 2017,] with the greatest concentration of stores in the southern, southwestern, midwestern and eastern United States.

We offer a broad selection of merchandise, including consumables, [removed: seasonal,] [added: seasonal items,] home products and apparel.

Our merchandise includes high quality national brands from leading manufacturers, as well as [added: our own value and] comparable quality private brand selections with prices at substantial discounts to national brands.

[removed: Our History][added: Our History]

[removed: Our] [added: Our] Business [removed: Model][added: Model]

We continually evaluate the needs and demands of our customers and modify our merchandise selections and pricing accordingly, while remaining focused on increasing [removed: profitability] [added: profitability, cash generation] and returns for our shareholders.

For more information on these operating priorities, see [removed: Management's] [added: the “Executive Overview” section of Management’s] Discussion and Analysis of Financial Condition and Results of Operations, [removed: under the heading "Executive Overview",] included in Part II, Item 7 of this report.

In fiscal year [removed: 2015,] [added: 2016,] we achieved our [removed: 26th] [added: 27th] consecutive year of [added: positive] same-store sales growth.

This [removed: growth, which] [added: growth] has taken place in a variety of economic conditions, [removed: suggests that we have a less cyclical business model than most retailers and,] [added: which] we [removed: believe,] [added: believe] is a result of our compelling value and convenience [removed: proposition.][added: proposition, although no assurances can be given that we will achieve positive same-store sales growth in any given year.]

[removed: _Compelling Value and Convenience Proposition._] Our ability to deliver highly competitive prices in convenient locations and our easy [removed: "in] [added: “in] and [removed: out"] [added: out”] shopping format create a compelling shopping experience that [added: we believe] distinguishes us from other discount retailers as well as convenience, [removed: drug] [added: drug, grocery, online] and [removed: grocery] [added: mass merchant] retailers.

We believe our ability to effectively deliver both value and convenience allows us to succeed in small markets with limited shopping alternatives, as well as [removed: to profitably coexist alongside larger retailers] in [added: larger and more competitive markets.]

[removed: _Convenient Locations._] [added: | | · | | Convenient Locations.] Our stores are conveniently located in a variety of rural, suburban and urban communities. [added: We seek to locate our stores in close proximity to our customers, which |]

[removed: We seek to locate our stores in close proximity to our customers, which drives] [added: | helps drive] customer loyalty and trip frequency and makes us an attractive alternative to large discount and other [removed: large-box] [added: large‑box] retail and grocery stores. [added: |]

[added: | | · | | Time‑Saving Shopping Experience. We also provide customers with a highly convenient, easy to navigate shopping experience.] Our [added: small-box stores are easy to get in and out of quickly. Our] product offering includes most necessities, such as basic packaged and refrigerated food and dairy products, cleaning supplies, paper products, health and beauty care items, greeting cards, basic apparel, housewares, hardware and automotive supplies, among others. [added: Our convenient hours and broad merchandise offering allow our customers to fulfill their routine shopping requirements and minimize their need to shop elsewhere. |]

[removed: _Everyday] [added: | | · | | Everyday] Low Prices on Quality [removed: Merchandise._] [added: Merchandise.] Our research indicates that we offer a price advantage over most food and drug retailers and that our prices are [removed: highly] competitive with even the largest discount retailers. [added: Our ability to offer everyday low prices on quality merchandise is supported by our low‑cost operating structure and our strategy to maintain a limited number of items per merchandise category, which we believe helps us maintain strong purchasing power. We offer quality nationally advertised brands at these everyday low prices in addition to offering our own value and comparable quality private brands at substantially lower prices. |]

[removed: _Substantial Growth Opportunities._] We believe we have substantial [removed: long-term] [added: long‑term] growth potential in the U.S. We have identified significant opportunities to add new stores in both existing and new markets.

Our attractive store economics, including a relatively low initial investment and simple, [removed: low-cost] [added: low‑cost] operating model have allowed us to grow our store base to current levels and provide us significant opportunities to continue our profitable store growth strategy.

[removed: Our Merchandise][added: Our Merchandise]

We offer a focused assortment of everyday necessities, which [added: help to] drive frequent customer visits, and key items in a broad range of general merchandise categories.

We sell [removed: high-quality] [added: high‑quality] nationally advertised brands from leading manufacturers.

Additionally, our private brand consumables offer even greater value with options to purchase [removed: value items and] national brand equivalent products [added: as well as value items] at substantial discounts to the national brand.

Consumables include paper and cleaning products (such as paper towels, bath tissue, paper dinnerware, trash and storage bags, laundry and other home cleaning supplies); packaged food (such as cereals, canned soups and vegetables, condiments, spices, sugar and flour); perishables (such as milk, eggs, bread, [added: refrigerated and] frozen [removed: meals,] [added: food,] beer and wine); snacks (such as candy, cookies, crackers, salty snacks and carbonated beverages); health and beauty (such as [removed: over-the-counter] [added: over‑the‑counter] medicines and personal care [removed: products, such as] [added: products including] soap, body wash, shampoo, dental hygiene and foot care products); pet (such as pet supplies and pet food); and tobacco products.

| | | [removed: 2015 | | | 2014] [added: 2016] | | [added: 2015] | [removed: 2013] | [added: 2014] | |

| Consumables | | [removed: | 75.9] [added: 76.4] | % | [removed: | 75.7] [added: 75.9] | % | [removed: | 75.2] [added: 75.7] | % |

| Seasonal | | [removed: | 12.4] [added: 12.2] | % | [removed: |] 12.4 | % | [removed: | 12.9] [added: 12.4] | % |

| Home products | | [removed: | 6.3] [added: 6.2] | % | [removed: | 6.4] [added: 6.3] | % | [removed: |] 6.4 | % |

| Apparel | | [removed: | 5.4] [added: 5.2] | % | [removed: | 5.5] [added: 5.4] | % | [removed: |] 5.5 | % |

Our [removed: seasonal and] home products [added: and seasonal] categories typically account for the highest gross profit margins, and the consumables category typically accounts for the lowest gross profit margin.

[removed: The] [added: The] Dollar General [removed: Store][added: Store]

Our stores generally feature a [removed: low-cost,] [added: low‑cost,] no frills building with limited maintenance capital, low operating costs, and a focused merchandise offering within a broad range of categories, allowing us to deliver low retail prices while generating strong cash flows and [added: capital] investment returns.

| [removed: Year] [added: Year] | | [removed: Stores at Beginning] of [removed: Year | | | Stores Opened |] [added: Year] | | [removed: Stores Closed] [added: Opened] | | [added: Closed] | [removed: Net Store Increase] | [added: Increase] | | [removed: Stores at] End of [removed: Year |] [added: Year] | |

| 2014 | | [removed: |] 11,132 | | [removed: |] 700 | | [removed: |] 43 | | [removed: |] 657 | | [removed: |] 11,789 | |

| 2015 | | [removed: |] 11,789 | | [removed: |] 730 | | [removed: |] 36 | | [removed: |] 694 | | [removed: |] 12,483 | |

[removed: Our Customers][added: Our Customers]

Depending on their financial situation and geographic proximity, [removed: customers'] [added: customers’] reliance on Dollar General varies from [removed: fill-in] [added: fill‑in] shopping, to making periodic trips to stock up on household items, to making weekly or more frequent trips to meet most essential needs.

[removed: Our Suppliers][added: Our Suppliers]

Despite our broad offering, we maintain only a limited number of items per category, giving us a [removed: pricing] [added: negotiating] advantage in dealing with our suppliers.

Our largest and second largest suppliers each accounted for approximately [removed: 7%] [added: 8%] of our purchases in [removed: 2015.][added: 2016.]

We directly imported approximately 6% of our purchases at cost in [removed: 2015.][added: 2016.]

Compelling Value and Convenience Proposition.

| --- | --- | --- | --- |

| --- |

| --- | --- | --- | --- |

| --- | --- | --- | --- |

Substantial Growth Opportunities.

| | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | Stores at | | | | | | Net | | | |

| | | Beginning | | Stores | | Stores | | Store | | Stores at | |

| 2016 | | 12,483 | | 900 | | 63 | | 837 | | 13,320 | |

sources without experiencing a substantial disruption of our business.

Our fifteenth distribution center in Jackson, Georgia is under construction with a goal to begin shipping from this facility in late 2017.

We have announced plans to build our sixteenth distribution center in Amsterdam, New York with a planned completion date in fall 2018.

We also own 39 trucks with which we transport our merchandise.

Our business is somewhat seasonal.

Competition has intensified and will continue to do so as competitors move into or increase their presence in our geographic markets and increase the availability of mobile and web-based technology to facilitate online shopping and real‑time product and price comparisons and to create an omnichannel shopping experience.

employees, and we believe that the quality, performance and morale of our employees continue to be an important part of our success in recent years.

The information on our website is not incorporated by reference into, and is not a part of, this Form 10-K.

more competitive markets.

_Time-Saving Shopping Experience._ We also provide customers with a highly convenient, easy to navigate shopping experience.

Our small box stores are easy to get in and out of quickly.

Our convenient hours and broad merchandise offering allow our customers to fulfill their routine shopping requirements and minimize their need to shop elsewhere.

Our ability to offer everyday low prices on quality merchandise is supported by our low-cost operating structure and our strategy to maintain a limited number of items per merchandise category, which we believe helps us maintain strong purchasing power.

We offer quality nationally advertised brands at these everyday low prices in addition to offering our own comparable quality private brands at value prices.

| | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| 2013 | | | 10,506 | | | 650 | | | 24 | | | 626 | | | 11,132 | |

We recently broke ground on our fourteenth distribution center in Wisconsin.

Our business is seasonal to a certain extent.

The information contained in Note [removed: 8] [added: 7] to the consolidated financial statements under the heading [removed: "Legal proceedings"] [added: “Legal proceedings”] contained in Part II, Item 8 of this report is incorporated herein by this reference.

[removed: UNITED] [added: UNITED] STATES

[removed: Washington,] [added: Washington,] D.C. [removed: 20549][added: 20549]

[removed: FORM 10-K][added: FORM 10‑K]

[removed: ANNUAL] [added: ANNUAL] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF [removed: 1934][added: 1934]

[removed: For] [added: For] the fiscal year ended [removed: January 29, 2016][added: February 3, 2017]

[removed: Commission] [added: Commission] file number: [removed: 001-11421][added: 001‑11421]

[removed: DOLLAR] [added: DOLLAR] GENERAL CORPORATION

[removed: (Exact] [added: (Exact] name of registrant as specified in its charter)

| [removed: TENNESSEE] (State or other jurisdiction of [removed: incorporation or organization)] | [removed: | 61-0502302] (I.R.S. Employer [removed: Identification No.)] |

[removed: 100] [added: 100] MISSION RIDGE

GOODLETTSVILLE, TN [removed: 37072][added: 37072]

[removed: Registrant's] [added: Registrant’s] telephone number, including area code: [removed: (615) 855-4000][added: (615) 855-4000]

| [removed: Title] [added: Title] of each [removed: class] [added: class] | | [removed: Name] [added: Name] of the exchange on which [removed: registered] [added: registered] |

Securities registered pursuant to Section 12(g) of the Act: [removed: None][added: None]

Indicate by check mark if the registrant is a [removed: well-known] [added: well‑known] seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes [removed: ý] [added: ☒] No [removed: o][added: ☐]

Yes [removed: o] [added: ☐] No [removed: ý][added: ☒]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation [removed: S-T] [added: S‑T] during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation [removed: S-K] [added: S‑K] is not contained herein, and will not be contained, to the best of [removed: registrant's] [added: registrant’s] knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form [removed: 10-K] [added: 10‑K] or any amendment to this Form [removed: 10-K. o][added: 10‑K.]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a [removed: non-accelerated] [added: non‑accelerated] filer, or a smaller reporting company.

See the definitions of [removed: "large] [added: “large] accelerated [removed: filer," "accelerated filer"] [added: filer,” “accelerated filer”] and [removed: "smaller] [added: “smaller] reporting [removed: company"] [added: company”] in Rule [removed: 12b-2] [added: 12b‑2] of the Exchange Act.

| [removed: Large accelerated filer ý | | Accelerated filer o | | Non-accelerated] [added: Non‑accelerated] filer [removed: o |] [added: ☐] | Smaller reporting company [removed: o] [added: ☐] |

Indicate by check mark whether the registrant is a shell company (as defined in Rule [removed: 12b-2] [added: 12b‑2] of the Exchange Act).

The aggregate fair market value of the [removed: registrant's] [added: registrant’s] common stock outstanding and held by [removed: non-affiliates] [added: non‑affiliates] as of July [removed: 31, 2015] [added: 29, 2016] was [removed: $23.66] [added: $26.7] billion calculated using the closing market price of our common stock as reported on the NYSE on such date [removed: ($80.37).][added: ($94.74).]

The registrant had [removed: 286,468,872] [added: 275,095,294] shares of common stock outstanding as of March [removed: 15, 2016.][added: 17, 2017.]

[removed: DOCUMENTS] [added: DOCUMENTS] INCORPORATED BY [removed: REFERENCE][added: REFERENCE]

Certain of the information required in Part III of this Form [removed: 10-K] [added: 10‑K] is incorporated by reference to the [removed: Registrant's] [added: Registrant’s] definitive proxy statement to be filed for the Annual Meeting of Shareholders to be held on May [removed: 25, 2016.][added: 31, 2017.]

[removed: INTRODUCTION][added: INTRODUCTION]

[removed: General][added: General]

This report contains references to years [added: 2017,] 2016, 2015, 2014, 2013, [removed: 2012,] and [removed: 2011,] [added: 2012,] which represent fiscal years ending or ended February [added: 2, 2018, February] 3, 2017, January 29, 2016, January 30, 2015, January 31, 2014, [added: and] February 1, 2013, [removed: and February 3, 2012,] respectively.

[added: Our] 2016 [removed: will consist and 2011] [added: fiscal year] consisted of 53 weeks, while each of the remaining years listed [added: are or] were 52-week years.

Solely for convenience, our trademarks and tradenames may appear in this report without the ® or [removed: ™] [added: TM] symbol which is not intended to indicate that we will not assert, to the fullest extent under applicable law, our rights or the right to these trademarks and tradenames.

[removed: Cautionary] [added: Cautionary] Disclosure Regarding [removed: Forward-Looking Statements][added: Forward‑Looking Statements]

We include [removed: "forward-looking statements"] [added: “forward-looking statements”] within the meaning of the federal securities laws throughout this report, particularly under the headings [removed: "Business," "Management's] [added: “Business,” “Management’s] Discussion and Analysis of Financial Condition and Results of [removed: Operations,"] [added: Operations,”] and [removed: "Note 8—Commitments] [added: “Note 7 – Commitments] and [removed: Contingencies,"] [added: Contingencies,”] among others.

You can identify these statements because they are not limited to historical fact or they use words such as [removed: "may," "will," "should," "could," "would," "believe," "anticipate," "project," "plan," "expect," "estimate," "forecast," "goal," "potential," "opportunity," "intend," "predict," "committed," "will likely result,"] [added: “may,” “will,” “should,” “could,” “can,” “would,” “believe,” “anticipate,” “project,” “plan,” “expect,” “estimate,” “forecast,” “goal,” “seek,” “ensure,” “potential,” “opportunity,” “objective,” “intend,” “predict,” “committed,” “likely to,” “continue,” “scheduled to,” “focused on,”] or [removed: "will continue"] [added: “subject to”] and similar expressions that concern our strategy, plans, [added: initiatives,] intentions or beliefs about future occurrences or results.

For example, all statements relating [removed: to] [added: to, among others,] our estimated and projected expenditures, cash flows, results of operations, financial condition and liquidity; our [removed: plans,] [added: plans and] objectives [added: for,] and expectations [removed: for] [added: regarding] future operations, [added: economic and competitive market conditions,] growth or [removed: initiatives;] [added: initiatives including but not limited to the number of planned store openings, remodels and relocations, progress of merchandising initiatives, trends in sales of consumable and non-consumable products, investment in our personnel and the level of future costs and expenses; potential future stock repurchases and cash dividends; anticipated borrowing under our credit facilities and commercial paper program;] or the expected outcome or effect of legislative or regulatory changes or initiatives, [added: and our responses thereto, or of] pending or threatened litigation or audits are forward-looking statements.

Important factors that could cause actual results to differ materially from the expectations expressed [added: or implied] in our forward-looking statements are disclosed under [removed: "Risk Factors"] [added: “Risk Factors”] in Part I, Item 1A and elsewhere in this document (including, without limitation, in conjunction with the forward-looking statements themselves and under the heading [removed: "Critical] [added: “Critical] Accounting Policies and [removed: Estimates").][added: Estimates”).]

You should evaluate [removed: such] [added: forward-looking] statements in the context of these risks and [removed: uncertainties.][added: uncertainties and are cautioned not to place undue reliance on such statements.]

We cannot assure you that we will realize the results or developments we [added: expect or] anticipate or, even if substantially realized, that they will result in the consequences or affect us [added: or our operations] in the way we expect.

10-K 1 dg-20170203x10k.htm 10-K

| TENNESSEE | 61‑0502302 |

| --- | --- |

| incorporation or organization) | Identification No.) |

Yes ☒ No ☐

Yes ☒ No ☐

| Large accelerated filer ☒ | Accelerated filer ☐ |

| --- | --- |

Yes ☐ No ☒

TABLE OF CONTENTS

| [INTRODUCTION](#INTRODUCTION_973018) | | |

| [PART I](#PARTI_339286) | | |

| | [ITEM 1. BUSINESS](#ITEM1BUSINESS_302968) | 4 |

| | [ITEM 1A. RISK FACTORS](#ITEM1ARISKFACTORS_549373) | 9 |

| | [ITEM 1B. UNRESOLVED STAFF COMMENTS](#ITEM1BUNRESOLVEDSTAFFCOMMENTS_709342) | 17 |

| | [ITEM 2. PROPERTIES](#ITEM2PROPERTIES_848852) | 17 |

| | [ITEM 3. LEGAL PROCEEDINGS](#ITEM3LEGALPROCEEDINGS_83582) | 18 |

| | [ITEM 4. MINE SAFETY DISCLOSURES](#ITEM4MINESAFETYDISCLOSURES_135281) | 18 |

| | [EXECUTIVE OFFICERS OF THE REGISTRANT](#EXECUTIVEOFFICERSOFTHEREGISTRANT_442806) | 19 |

| [PART II](#PARTII_636053) | | |

| | | |

| | [ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES](#ITEM5MARKETFORREGISTRANTSCOMMONEQUITY_76) | 21 |

| | [ITEM 6. SELECTED FINANCIAL DATA](#ITEM6SELECTEDFINANCIALDATA_356509) | 22 |

| | [ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](#ITEM7MANAGEMENTSDISCUSSIONANDANALYSIS_58) | 25 |

| | [ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](#ITEM7AQUANTITATIVEANDQUALITATIVEDISCLOSU) | 41 |

| | [ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA](#ITEM8FINANCIALSTATEMENTSANDSUPPLEMENTARY) | 42 |

| | | |

| [Report of Independent Registered Public Accounting Firm](#ReportofIndependentRegisteredPublicAccou) | | 42 |

| [DOLLAR GENERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except per share amounts)](#BALANCESHEETS_88009) | | 43 |

| [DOLLAR GENERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts)](#STATEMENTSOFINCOME_317344) | | 44 |

| [DOLLAR GENERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands)](#COMPREHENSIVEINCOME_803563) | | 45 |

| [DOLLAR GENERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (In thousands except per share amounts)](#SHAREHOLDERSEQUITY_636150) | | 46 |

| [DOLLAR GENERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)](#CASHFLOWS_532721) | | 47 |

| [DOLLAR GENERAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS](#NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS_6) | | 48 |

| | | |

| | [ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE](#ITEM9CHANGESINANDDISAGREEMENTSWITHACCOUN) | 70 |

| | [ITEM 9A. CONTROLS AND PROCEDURES](#ITEM9ACONTROLSANDPROCEDURES_424309) | 70 |

| | | |

| [Report of Independent Registered Public Accounting Firm](#ReportofIndependent1_574395) | | 71 |

| | | |

10-K 1 a2227409z10-k.htm 10-K

[QuickLinks](#15ZCW44601_1) \-- Click here to rapidly navigate through this document

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As of [removed: February 26, 2016,] [added: March 3, 2017,] we operated [removed: 12,575] [added: 13,429] retail stores located in [removed: 43] [added: 44] states as follows:

| [removed: State] [added: State] | | [removed: Number] [added: Number] of [removed: Stores |] [added: Stores] | | [removed: State] [added: State] | | [removed: Number] [added: Number] of [removed: Stores |] [added: Stores] | |

| Alabama | | [removed: | 658] [added: 688] | | Nebraska | | [removed: | 99] [added: 111] | |

| Arizona | | [removed: | 89] [added: 99] | | Nevada | | [removed: |] 24 | |

| Arkansas | | [removed: | 365] [added: 392] | | New Hampshire | | [removed: | 17] [added: 23] | |

| California | | [removed: | 170] [added: 185] | | New Jersey | | [removed: | 87] [added: 94] | |

| Colorado | | [removed: |] 30 | | New Mexico | | [removed: | 84] [added: 87] | |

| Connecticut | | [removed: | 29] [added: 33] | | New York | | [removed: | 337] [added: 358] | |

| Delaware | | [removed: | 42] [added: 43] | | North Carolina | | [removed: | 674] [added: 730] | |

| Minnesota | | [removed: | 73] [added: 97] | | [removed: West] Virginia | | [removed: | 199] [added: 362] | |

Many stores are subject to [removed: build-to-suit] [added: build‑to‑suit] arrangements with landlords, which typically carry a primary lease term of up to 15 years with multiple renewal options.

We also have stores subject to [removed: shorter-term] [added: shorter‑term] leases and many of these leases have renewal options.

A significant portion of our new stores are subject to [removed: build-to-suit] [added: build‑to‑suit] arrangements.

As of [removed: February 26, 2016,] [added: March 3, 2017,] we operated [removed: thirteen] [added: fourteen] distribution centers, as described in the following table:

| [removed: Location | | Year Opened] [added: Location] | | [added: Opened] | [removed: Approximate Square Footage] | [added: Footage] | | [removed: Number of] Stores [removed: Served |] [added: Served] | |

| Scottsville, KY | | [removed: |] 1959 | | [removed: |] 720,000 | | [removed: | 786] [added: 746] | |

| Ardmore, OK | | [removed: |] 1994 | | [removed: |] 1,310,000 | | [removed: | 1,442] [added: 1,342] | |

| South Boston, VA | | [removed: |] 1997 | | [removed: |] 1,250,000 | | [removed: | 922] [added: 996] | |

| Indianola, MS | | [removed: |] 1998 | | [removed: |] 820,000 | | [removed: | 934] [added: 788] | |

| Fulton, MO | | [removed: |] 1999 | | [removed: |] 1,150,000 | | [removed: | 1,256] [added: 1,290] | |

| Alachua, FL | | [removed: |] 2000 | | [removed: |] 980,000 | | [removed: | 1,012] [added: 960] | |

| Zanesville, OH | | [removed: |] 2001 | | [removed: |] 1,170,000 | | [removed: | 1,161] [added: 1,159] | |

| Jonesville, SC | | [removed: |] 2005 | | [removed: |] 1,120,000 | | [removed: | 1,141] [added: 1,185] | |

| Marion, IN | | [removed: |] 2006 | | [removed: |] 1,110,000 | | [removed: | 1,267] [added: 1,270] | |

| Bessemer, AL | | [removed: |] 2012 | | [removed: |] 940,000 | | [removed: | 1,160] [added: 1,148] | |

| Lebec, CA | | [removed: |] 2012 | | [removed: |] 600,000 | | [removed: | 321] [added: 352] | |

| Bethel, PA | | [removed: |] 2014 | | [removed: |] 1,000,000 | | [removed: | 872] [added: 939] | |

| San Antonio, TX | | [removed: |] 2016 | | [removed: |] 920,000 | | [removed: | 301] [added: 852] | |

As of [removed: January 29, 2016,] [added: February 3, 2017,] we leased approximately [removed: 745,000] [added: 871,000] square feet of additional temporary warehouse space to support our distribution needs.

| | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- |

| Florida | | 781 | | North Dakota | | 5 | |

| Georgia | | 758 | | Ohio | | 705 | |

| Illinois | | 481 | | Oklahoma | | 408 | |

| Indiana | | 459 | | Oregon | | 19 | |

| Iowa | | 205 | | Pennsylvania | | 604 | |

| Kansas | | 220 | | Rhode Island | | 6 | |

| Kentucky | | 474 | | South Carolina | | 484 | |

| Louisiana | | 511 | | South Dakota | | 32 | |

| Maine | | 29 | | Tennessee | | 700 | |

| Maryland | | 118 | | Texas | | 1,353 | |

| Massachusetts | | 22 | | Utah | | 6 | |

| Michigan | | 401 | | Vermont | | 32 | |

| Mississippi | | 447 | | West Virginia | | 216 | |

| Missouri | | 464 | | Wisconsin | | 133 | |

| | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- |

| | | Year | | Approximate Square | | Number of | |

| Janesville, WI | | 2016 | | 1,000,000 | | 402 | |

| | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Florida | | | 738 | | Ohio | | | 659 | |

| Georgia | | | 711 | | Oklahoma | | | 391 | |

| Illinois | | | 454 | | Oregon | | | 7 | |

| Indiana | | | 434 | | Pennsylvania | | | 556 | |

| Iowa | | | 189 | | Rhode Island | | | 4 | |

| Kansas | | | 210 | | South Carolina | | | 457 | |

| Kentucky | | | 458 | | South Dakota | | | 26 | |

| Louisiana | | | 494 | | Tennessee | | | 655 | |

| Maine | | | 14 | | Texas | | | 1,301 | |

| Maryland | | | 113 | | Utah | | | 7 | |

| Massachusetts | | | 22 | | Vermont | | | 30 | |

| Michigan | | | 356 | | Virginia | | | 336 | |

| Mississippi | | | 414 | | Wisconsin | | | 126 | |

| Missouri | | | 436 | | | | | | |

| | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

[removed: EXECUTIVE] [added: EXECUTIVE] OFFICERS OF THE [removed: REGISTRANT][added: REGISTRANT]

Information regarding our current executive officers as of March [removed: 15, 2016] [added: 24, 2017] is set forth below.

| [removed: Name |] [added: Name] | [removed: Age] | [added: Age] | | [removed: Position] [added: Position] |

| Todd J. Vasos | | [removed: | 54] [added: 55] | | Chief Executive Officer and Director |

| John W. Garratt | | [removed: | 47] [added: 48] | | Executive Vice President and Chief Financial Officer |

| [removed: John W. Flanigan |] [added: Michael J. Kindy] | | [removed: 64] [added: 51] | | [removed: Executive] [added: Senior] Vice President, Global Supply Chain |

| Jeffery C. Owen | | [removed: | 46] [added: 47] | | Executive Vice President, Store Operations |

| Robert D. Ravener | | [removed: | 57] [added: 58] | | Executive Vice President and Chief People Officer |

| Rhonda M. Taylor | | [removed: | 48] [added: 49] | | Executive Vice President and General Counsel |

| James W. Thorpe | | [removed: | 57] [added: 58] | | Executive Vice [removed: President,] [added: President and] Chief Merchandising Officer |

| Anita C. Elliott | | [removed: | 51] [added: 52] | | Senior Vice President and Chief Accounting Officer |

[removed: Vasos_] [added: Mr. Vasos] has served as Chief Executive Officer and a member of our Board since June [removed: 3,] 2015.

Prior to joining Dollar General, Mr. Vasos served in executive positions with Longs Drug Stores Corporation for 7 years, including Executive Vice President and Chief Operating Officer (February 2008 through November 2008) and Senior Vice President and Chief Merchandising Officer (2001 - 2008), where he was responsible for all pharmacy and [removed: front-end] [added: front‑end] marketing, merchandising, procurement, supply chain, advertising, store development, store layout and space allocation, and the operation of three distribution centers.

He also previously served in leadership positions at [removed: Phar-Mor] [added: Phar‑Mor] Food and Drug Inc. and Eckerd Corporation.

[removed: Garratt_] [added: Mr. Garratt] has served as Executive Vice President and Chief Financial Officer since December 2, 2015.

He also served as the Senior Director, Yum Corporate Strategy, from March 2010 to October 2013, reporting directly to the corporate Chief Financial Officer and leading corporate strategy as well as driving key [removed: cross-divisional] [added: cross‑divisional] initiatives.

[removed: Owen_] [added: Mr. Owen] returned to Dollar General in June 2015 as Executive Vice President of Store Operations, with over 21 years of previous employment experience with the Company.

[removed: Ravener_] [added: Mr. Ravener] joined Dollar General as Senior Vice President and Chief People Officer in August 2008.

Prior to joining Dollar General, he served in human resources executive roles with Starbucks Corporation, a roaster, marketer and retailer of specialty coffee, from [removed: September 2005 until August 2008 as the Senior Vice President of U.S. Partner Resources and, prior to that, as the Vice President, Partner Resources—Eastern Division.]

[removed: Taylor_] [added: Ms. Taylor] has served as Executive Vice President and General Counsel since March 17, 2015.

[removed: Thorpe_] [added: Mr. Thorpe] returned to Dollar General in August 2015 as Executive Vice President and Chief Merchandising Officer, with over six years of previous employment experience with the Company.

Following his departure from Dollar General, Mr. Thorpe provided on a limited [removed: ad-hoc] [added: ad‑hoc] basis certain retail industry consulting services as President of JW Thorpe & Associates, Inc. Prior to Dollar General, he served in various positions of increasing importance and responsibility with Sears Holdings Corporation, a leading integrated retailer, from March 1991 to May 2006 where his last position was Vice President and General Merchandise Manager—Hard Home of Sears Home Group.

[removed: Elliott_] [added: Ms. Elliott] has served as Senior Vice President and Chief Accounting Officer since December 2, 2015.

Prior to serving at Big Lots, she served as Vice President and Controller for [removed: Jitney-Jungle] [added: Jitney‑Jungle] Stores of America, Inc., a grocery retailer, from April 1998 to March 2001.

At [removed: Jitney-Jungle,] [added: Jitney‑Jungle,] Ms. Elliott was responsible for the accounting operations and the internal and external financial reporting functions.

Prior to serving at [removed: Jitney-Jungle,] [added: Jitney‑Jungle,] she practiced public accounting for 12 years, 6 of which were with Ernst & Young LLP.

[removed: PART] [added: PART] II

| --- | --- | --- | --- | --- |

September 2005 until August 2008 as the Senior Vice President of U.S. Partner Resources and, prior to that, as the Vice President, Partner Resources—Eastern Division.

Mr. Thorpe has advised the Company of his intention to resign, which will be effective April 15, 2017.

Mr. Kindy joined Dollar General as Vice President, Distribution Centers in December 2008.

He became Vice President, Transportation in May 2013 and was promoted to Senior Vice President, Global Supply Chain in June 2015.

Prior to joining Dollar General, Mr. Kindy had 14 years of grocery distribution management and 5 years of logistics and distribution consulting experience.

He served as Senior Director, Warehouse Operations, for ConAgra Foods, one of North America’s largest packaged food companies, from November 2007 to December 2008.

Since beginning his career in July 1989, Mr. Kindy also held various distribution and warehouse leadership positions at Safeway, Inc., Crum & Crum Logistics, and Specialized Distribution Management, Inc., and served as a principal consultant for PricewaterhouseCoopers.

| | | | | | |

| --- | --- | --- | --- | --- | --- |

_Mr.

Flanigan_ joined Dollar General as Senior Vice President, Global Supply Chain in May 2008.

He was promoted to Executive Vice President in March 2010.

Mr. Flanigan plans to retire from Dollar General effective April 29, 2016.

He has almost 30 years of management experience in retail logistics.

Prior to joining Dollar General, he was Group Vice President of Logistics and Distribution for Longs Drug Stores Corporation, an operator of a chain of retail drug stores on the West Coast and Hawaii, from October 2005 to April 2008.

In this role, he was responsible for overseeing warehousing, inbound and outbound transportation and facility maintenance to service over 500 retail outlets.

From September 2001 to October 2005, he served as the Vice President of Logistics for Safeway Inc., a food and drug retailer, where he oversaw distribution of food products from Safeway distribution centers to all retail outlets, inbound traffic and transportation.

He also has held distribution and logistics

leadership positions at Vons—a Safeway company, Specialized Distribution Management Inc., and Crum & Crum Logistics.

_Ms.

[removed: Market Information][added: Market Information]

Our common stock is traded on the New York Stock Exchange under the symbol [removed: "DG."] [added: “DG.”] The high and low sales prices during each quarter in fiscal [removed: 2015] [added: 2016] and [removed: 2014] [added: 2015] were as follows:

| [removed: 2015] | | [removed: First Quarter] [added: First] | | | [removed: Second Quarter] [added: Second] | | | [removed: Third Quarter] [added: Third] | | | [removed: Fourth Quarter] [added: Fourth] | | |

| [removed: 2014] | | [removed: First Quarter] [added: First] | | | [removed: Second Quarter] [added: Second] | | | [removed: Third Quarter] [added: Third] | | | [removed: Fourth Quarter] [added: Fourth] | | |

On March [removed: 15, 2016,] [added: 17, 2017,] our stock price at the close of the market was [removed: $85.04] [added: $72.33] and there were approximately [removed: 1,874] [added: 2,148] shareholders of record of our common stock.

[removed: Dividends][added: Dividends]

On March [removed: 8, 2016,] [added: 15, 2017,] our Board of Directors declared a quarterly cash dividend of [removed: $0.25] [added: $0.26] per share, [removed: to be paid] [added: which is payable] on April [removed: 12, 2016] [added: 25, 2017] to shareholders of record of our common stock on [removed: March 29, 2016.][added: April 11, 2017.]

We paid quarterly cash dividends of [added: $0.25 in 2016 and] $0.22 per share in 2015.

[removed: While] [added: Although] the Board intends to continue regular quarterly cash dividends, the declaration and [removed: payment] [added: amount] of future cash dividends are subject to the [removed: Board's] [added: Board’s] discretion based on an evaluation of our earnings performance, financial condition, capital needs and other relevant [removed: factors.][added: factors and will depend on, among other things, our results of operations, cash requirements, financial condition, contractual restrictions and other factors that the Board may deem relevant.]

[removed: Issuer] [added: Issuer] Purchases of Equity [removed: Securities][added: Securities]

The following table contains information regarding purchases of our common stock made during the quarter ended [removed: January 29, 2016] [added: February 3, 2017] by or on behalf of Dollar General or any [removed: "affiliated purchaser,"] [added: “affiliated purchaser,”] as defined by Rule [removed: 10b-18(a)(3)] [added: 10b‑18(a)(3)] of the Securities Exchange Act of 1934:

[added: | | (a) | |] A $500 million share repurchase program was publicly announced on September 5, 2012, and increases in the authorization under such program were announced on March 25, 2013 ($500 million increase), December 5, 2013 ($1.0 billion increase), March 12, 2015 ($1.0 billion [removed: increase) and] [added: increase),] December 3, 2015 ($1.0 billion [added: increase) and August 25, 2016 ($1.0 billion] increase). [added: Under the authorization, purchases may be made in the open market or in privately negotiated transactions from time to time subject to market and other conditions. This repurchase authorization has no expiration date. |]

| 2016 | | Quarter | | | Quarter | | | Quarter | | | Quarter | | |

| High | | $ | 87.42 | | $ | 96.88 | | $ | 94.75 | | $ | 80.67 | |

| Low | | $ | 67.90 | | $ | 78.91 | | $ | 66.50 | | $ | 68.04 | |

| 2015 | | Quarter | | | Quarter | | | Quarter | | | Quarter | | |

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | Total Number | | Approximate | | |

| | | | | | | | of Shares | | Dollar Value | | |

| | | | | | | | Purchased | | of Shares that May | | |

| | | Total Number of | | Average | | | as Part of Publicly | | Yet Be Purchased | | |

| | | Shares | | Price Paid | | | Announced Plans or | | Under the Plans | | |

| Period | | Purchased | | per Share | | | Programs(a) | | or Programs(a) | | |

| 10/29/16-11/30/16 | | 3,119,816 | | $ | 73.74 | | 3,119,816 | | $ | 1,014,328,000 | |

| 12/01/16-12/31/16 | | 733,148 | | $ | 76.38 | | 733,148 | | $ | 958,329,000 | |

| 01/01/17-02/03/17 | | 339,323 | | $ | 73.68 | | 339,323 | | $ | 933,329,000 | |

| Total | | 4,192,287 | | $ | 74.20 | | 4,192,287 | | $ | 933,329,000 | |

| --- | --- | --- | --- |

| | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| High | | $ | 61.18 | | $ | 65.99 | | $ | 65.10 | | $ | 71.78 | |

| Low | | $ | 54.43 | | $ | 53.00 | | $ | 55.48 | | $ | 62.50 | |

| Period | | Total Number of Shares Purchased | | | Average Price Paid per Share | | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(a) | | | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(a) | | |

| 10/31/15 - 11/30/15 | | | — | | $ | — | | | — | | $ | 214,007,000 | |

| 12/01/15 - 12/31/15 | | | 4,128,913 | | $ | 70.29 | | | 4,128,913 | | $ | 923,803,000 | |

| 01/01/16 - 01/29/16 | | | — | | $ | — | | | — | | $ | 923,803,000 | |

| Total | | | 4,128,913 | | $ | 70.29 | | | 4,128,913 | | $ | 923,803,000 | |

(a)

Under the authorization, purchases may be made in the open market or in privately negotiated transactions from time to time subject to market and other conditions.

This repurchase authorization has no expiration date.

The selected historical statement of [removed: operations] [added: income] data and statement of cash flows data for the fiscal years ended [added: February 3, 2017,] January 29, 2016, [removed: January 30, 2015,] and January [removed: 31, 2014] [added: 30, 2015] and balance sheet data as of [removed: January 29, 2016] [added: February 3, 2017] and January [removed: 30, 2015,] [added: 29, 2016,] have been derived from our historical audited consolidated financial statements included elsewhere in this report.

The selected historical statement of [removed: operations] [added: income] data and statement of cash flows data for the fiscal years ended [added: January 31, 2014 and] February 1, 2013 and [removed: February 3, 2012 and] balance sheet data as of January [added: 30, 2015, January] 31, 2014, [removed: February 1, 2013,] and February [removed: 3, 2012] [added: 1, 2013] presented in this table have been derived from audited consolidated financial statements not included in this report.

The information set forth below should be read in conjunction with, and is qualified by reference to, the Consolidated Financial Statements and related notes included in Part II, Item 8 of this report and the [removed: Management's] [added: Management’s] Discussion and Analysis of Financial Condition and Results of Operations [added: included in Part II,]

[removed: included in Part II,] Item 7 of this report.

| | | [removed: Year Ended | | | | |] [added: Year Ended] | | | | | | | | | |

| [removed: (Amounts in millions, excluding per share data,] number of stores, selling square feet, and net sales [removed: per square foot)] | | [removed: January] [added: February 3, | | | January] 29, [removed: 2016] | | | [removed: January] [added: January] 30, [removed: 2015] | | | [removed: January] [added: January] 31, [removed: 2014] | | | [removed: February] [added: February] 1, [removed: 2013] | | | [removed: February 3, 2012(1) | | |]

| [removed: Statement] [added: Statement] of Income [removed: Data:] [added: Data:] | | | | | | | | | | | | | | | | |

| Net sales | | $ | [removed: 20,368.6] [added: 21,986.6] | | $ | [removed: 18,909.6] [added: 20,368.6] | | $ | [removed: 17,504.2] [added: 18,909.6] | | $ | [removed: 16,022.1] [added: 17,504.2] | | $ | [removed: 14,807.2] [added: 16,022.1] | |

| Cost of goods sold | | | [added: 15,204.0 | | |] 14,062.5 | | | 13,107.1 | | | 12,068.4 | | | 10,936.7 | | [removed: | 10,109.3 | |]

| Gross profit | | | [added: 6,782.6 | | |] 6,306.1 | | | 5,802.5 | | | 5,435.7 | | | 5,085.4 | | [removed: | 4,697.9 | |]

| Selling, general and administrative expenses | | | [added: 4,719.2 | | |] 4,365.8 | | | 4,033.4 | | | 3,699.6 | | | 3,430.1 | | [removed: | 3,207.1 | |]

| Operating profit | | | [added: 2,063.4 | | |] 1,940.3 | | | 1,769.1 | | | 1,736.2 | | | 1,655.3 | | [removed: | 1,490.8 | |]

| Interest expense | | | [added: 97.8 | | |] 86.9 | | | 88.2 | | | 89.0 | | | 127.9 | | [removed: | 204.9 | |]

| Other (income) expense | | | [added: — | | |] 0.3 | | | — | | | 18.9 | | | 30.0 | | [removed: | 60.6 | |]

| Income before income taxes | | | [added: 1,965.6 | | |] 1,853.0 | | | 1,680.9 | | | 1,628.3 | | | 1,497.4 | | [removed: | 1,225.3 | |]

| Income tax expense | | | [added: 714.5 | | |] 687.9 | | | 615.5 | | | 603.2 | | | 544.7 | | [removed: | 458.6 | |]

| Net income | | $ | [removed: 1,165.1] [added: 1,251.1] | | $ | [removed: 1,065.3] [added: 1,165.1] | | $ | [removed: 1,025.1] [added: 1,065.3] | | $ | [removed: 952.7] [added: 1,025.1] | | $ | [removed: 766.7] [added: 952.7] | |

| Earnings per share—basic | | $ | [removed: 3.96] [added: 4.45] | | $ | [removed: 3.50] [added: 3.96] | | $ | [removed: 3.17] [added: 3.50] | | $ | [removed: 2.87] [added: 3.17] | | $ | [removed: 2.25] [added: 2.87] | |

| Earnings per share—diluted | | | [added: 4.43 | | |] 3.95 | | | 3.49 | | | 3.17 | | | 2.85 | | [removed: | 2.22 | |]

| Dividends per share | | | [removed: 0.88] [added: 1.00] | | | [removed: —] [added: 0.88] | | | — | | | — | | | — | |

| [removed: Statement] [added: Statement] of Cash Flows [removed: Data:] [added: Data:] | | | | | | | | | | | | | | | | |

| Investing activities | | | [removed: (503.4] [added: (550.9)] | [removed: )] | | [removed: (371.7] [added: (503.4)] | [removed: )] | | [removed: (250.0] [added: (371.7)] | [removed: )] | | [removed: (569.8] [added: (250.0)] | [removed: )] | | [removed: (513.8] [added: (569.8)] | [removed: )] |

| Total capital expenditures | | | [removed: (504.8] [added: (560.3)] | [removed: )] | | [removed: (374.0] [added: (504.8)] | [removed: )] | | [removed: (538.4] [added: (374.0)] | [removed: )] | | [removed: (571.6] [added: (538.4)] | [removed: )] | | [removed: (514.9] [added: (571.6)] | [removed: )] |

| [removed: Other] [added: Other] Financial and Operating [removed: Data:] [added: Data:] | | | | | | | | | | | | | | | | |

| Same store sales growth(2) | | | [removed: 2.8] [added: 0.9] | % | | 2.8 | % | | [removed: 3.3] [added: 2.8] | % | | [removed: 4.7] [added: 3.3] | % | | [removed: 6.0] [added: 4.7] | % |

| Same store sales(2) | | $ | [removed: 19,254.3] [added: 20,348.1] | | $ | [removed: 17,818.7] [added: 19,254.3] | | $ | [removed: 16,365.5] [added: 17,818.7] | | $ | [removed: 14,992.7] [added: 16,365.5] | | $ | [removed: 13,626.7] [added: 14,992.7] | |

| Number of stores included in same store sales calculation | | | [added: 12,383 | | |] 11,706 | | | 11,052 | | | 10,387 | | | 9,783 | | [removed: | 9,254 | |]

| Number of stores (at period end) | | | [added: 13,320 | | |] 12,483 | | | 11,789 | | | 11,132 | | | 10,506 | | [removed: | 9,937 | |]

| Selling square feet (in thousands at period end) | | | [added: 98,943 | | |] 92,477 | | | 87,205 | | | 82,012 | | | 76,909 | | [removed: | 71,774 | |]

| Net sales per square foot(3) | | $ | [removed: 226] [added: 229] | | $ | [removed: 223] [added: 226] | | $ | [removed: 220] [added: 223] | | $ | [removed: 216] [added: 220] | | $ | [removed: 213] [added: 216] | |

| Consumables sales | | | [removed: 75.9] [added: 76.4] | % | | [removed: 75.7] [added: 75.9] | % | | [removed: 75.2] [added: 75.7] | % | | [removed: 73.9] [added: 75.2] | % | | [removed: 73.2] [added: 73.9] | % |

| Seasonal sales | | | [removed: 12.4] [added: 12.2] | % | | 12.4 | % | | [removed: 12.9] [added: 12.4] | % | | [removed: 13.6] [added: 12.9] | % | | [removed: 13.8] [added: 13.6] | % |

| Home products sales | | | [removed: 6.3] [added: 6.2] | % | | [removed: 6.4] [added: 6.3] | % | | 6.4 | % | | [removed: 6.6] [added: 6.4] | % | | [removed: 6.8] [added: 6.6] | % |

| Apparel sales | | | [removed: 5.4] [added: 5.2] | % | | [removed: 5.5] [added: 5.4] | % | | 5.5 | % | | [removed: 5.9] [added: 5.5] | % | | [removed: 6.2] [added: 5.9] | % |

| Rent expense | | $ | [removed: 856.9] [added: 942.4] | | $ | [removed: 785.2] [added: 856.9] | | $ | [removed: 686.9] [added: 785.2] | | $ | [removed: 614.3] [added: 686.9] | | $ | [removed: 542.3] [added: 614.3] | |

| [removed: Balance] [added: Balance] Sheet Data (at period [removed: end):] [added: end):] | | | | | | | | | | | | | | | | |

| Cash and cash equivalents and short-term investments | | $ | [removed: 157.9] [added: 187.9] | | $ | [removed: 579.8] [added: 157.9] | | $ | [removed: 505.6] [added: 579.8] | | $ | [removed: 140.8] [added: 505.6] | | $ | [removed: 126.1] [added: 140.8] | |

| Total assets | | | [removed: 11,251.0] [added: 11,672.3] | | | [removed: 11,208.6] [added: 11,257.9] | | | [removed: 10,848.2] [added: 11,208.6] | | | [removed: 10,340.8] [added: 10,848.2] | | | [removed: 9,663.6] [added: 10,340.8] | |

| Long-term debt(4) | | | [added: 3,211.5 | | |] 2,970.6 | | | 2,725.1 | | | 2,799.5 | | | 2,745.3 | | [removed: | 2,593.6 | |]

| Total [removed: shareholders'] [added: shareholders’] equity | | | [added: 5,406.3 | | |] 5,377.9 | | | 5,710.0 | | | 5,402.2 | | | 4,985.3 | | [removed: | 4,674.6 | |]

| (Amounts in millions, excluding per share data, | | Year Ended | | | | | | | | | | | | | | |

| per square foot) | | 2017(1) | | | 2016 | | | 2015 | | | 2014 | | | 2013 | | |

| Operating activities | | $ | 1,605.0 | | $ | 1,391.7 | | $ | 1,326.9 | | $ | 1,244.1 | | $ | 1,219.1 | |

| Financing activities | | | (1,024.1) | | | (1,310.2) | | | (880.9) | | | (629.3) | | | (634.6) | |

| --- | --- | --- | --- |

| --- | --- | --- | --- |

| --- | --- | --- | --- |

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| | | February 3, | | January 29, | | January 30, | | January 31, | | February 1, | |

| Ratio of earnings to fixed charges(2): | | 4.3 | x | 4.5 | x | 4.4 | x | 4.7 | x | 4.7 | x |

| | (1) | | The fiscal year ended February 3, 2017 was comprised of 53 weeks. |

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| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |

| Operating activities | | $ | 1,378.0 | | $ | 1,314.7 | | $ | 1,213.1 | | $ | 1,131.4 | | $ | 1,050.5 | |

| Financing activities | | | (1,296.5 | ) | | (868.8 | ) | | (598.3 | ) | | (546.8 | ) | | (908.0 | ) |

(1)

(2)

We include stores that have been remodeled, expanded or relocated in our same-store sales calculation.

When applicable, we exclude the sales in the non-comparable week of a 53-week year from the same-store sales calculation.

(3)

(4)

| Ratio of earnings to fixed charges(1): | | | 4.5x | | | 4.4x | | | 4.7x | | | 4.7x | | | 3.8x | |

[removed: Report] [added: Report] of Independent Registered Public Accounting Firm

We have audited the accompanying consolidated balance sheets of Dollar General Corporation and subsidiaries as of [removed: January 29, 2016] [added: February 3, 2017] and January [removed: 30, 2015,] [added: 29, 2016,] and the related consolidated statements of income, comprehensive income, [removed: shareholders'] [added: shareholders’] equity and cash flows for each of the three years in the period ended [removed: January 29, 2016.][added: February 3, 2017.]

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Dollar General Corporation and subsidiaries at [removed: January 29, 2016] [added: February 3, 2017] and January [removed: 30, 2015,] [added: 29, 2016,] and the consolidated results of their operations and their cash flows for each of the three years in the period ended [removed: January 29, 2016,] [added: February 3, 2017,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Dollar General Corporation and [removed: subsidiaries'] [added: subsidiaries’] internal control over financial reporting as of [removed: January 29, 2016,] [added: February 3, 2017,] based on criteria established in Internal [removed: Control—Integrated] [added: Control-Integrated] Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March [removed: 22, 2016] [added: 24, 2017] expressed an unqualified opinion thereon.

| | [removed: |] /s/ Ernst & Young LLP |

[removed: March 22,] [added: | | |] 2016 [added: | | | | | | | |]

| | | [removed: January] [added: | | As of January] 29, [removed: 2016] [added: 2016] | | | [removed: January 30, 2015] | | | [added: | | |]

| [removed: ASSETS] [added: ASSETS] | | | | | | | |

| Cash and cash [removed: equivalents] [added: equivalents, beginning of period] | | [removed: $] | 157,947 | | [removed: $] | 579,823 | | [added: | 505,566 | |]

| Merchandise inventories | | | [removed: 3,074,153] [added: 3,258,785] | | | [removed: 2,782,521] [added: 3,074,153] | |

| Income [removed: tax] [added: taxes] receivable | | | [removed: 6,843] [added: 11,050] | | | [removed: —] [added: 6,843] | |