Dollar General (DG) 10-K risk factor changes: FY2018 vs FY2017

Factors that could reduce our 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, [removed: concerns over] [added: uncertainty regarding] government mandated participation in health insurance programs, increasing healthcare [added: and housing] costs, and decreases 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 [removed: 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 [removed: trade,] [added: trade (including increased import duties or tariffs), or] changes in other laws and regulations and other economic factors, also affect our ability to plan and execute our strategic initiatives, our cost of goods [removed: sold and] [added: sold,] our selling, general and administrative expenses, and [added: our real estate costs, 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.

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

We have short-term and long-term strategies and initiatives (such as those relating to merchandising, marketing, real [removed: estate,] [added: estate and new store development, digital,] sourcing, shrink, private brand, [added: inventory management,] distribution and transportation, store operations, store formats, budgeting and expense reduction, and 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.

[removed: Failure to achieve successful] implementation of our initiatives or the cost of these initiatives exceeding 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 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.

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

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

Also, [removed: companies like ours,] [added: as a discount retailer,] due to customer demographics and other factors, [added: we] may have limited ability to increase prices in response to increased costs without losing competitive position.

[removed: If we fail to] respond effectively to competitive pressures and changes in the retail markets, it could adversely affect our financial performance.

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

Further, consolidation within the [removed: discount] retail industry could significantly alter the competitive dynamics of the retail marketplace.

Our inventory balance represented approximately [removed: 53%] [added: 52%] of our total assets exclusive of goodwill and other intangible assets as of February [removed: 3, 2017.][added: 2, 2018.]

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 [added: 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.

[removed: The] [added: For these reasons, the] completion date and ultimate cost of these projects could differ significantly from initial [removed: expectations due to construction‑related] [added: expectations, and we cannot guarantee that any project will be completed on time] or [removed: other reasons.][added: within established budgets.]

In [removed: 2016,] [added: 2017,] our largest and second largest suppliers each accounted for approximately 8% of our purchases.

We have not experienced any difficulty in obtaining sufficient quantities of core merchandise and believe that, if one or more of our current sources of supply became unavailable, we would generally be able to obtain alternative [removed: sources without experiencing a substantial disruption of our business.][added: sources.]

We directly imported approximately [removed: 6%] [added: 5%] of our purchases (measured at cost) in [removed: 2016,] [added: 2017,] but many of our domestic vendors directly import their products or components of their products.

While we are working to [removed: reduce] [added: diversify] our [removed: dependency on] [added: sources of imported] goods [removed: produced in] [added: and reduce the percentage of goods imported from] China, a substantial amount of our imported merchandise still comes from China, and thus, a change in the Chinese leadership, economic and market conditions, internal economic stimulus actions, or currency or other policies, as well as increases in costs of labor and wage taxes, could negatively impact our merchandise costs.

Our private brands may not [removed: maintain broad market acceptance] [added: be successful in improving our gross profit rate] and may increase [added: certain of] the risks we face.

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

All of our vendors and their products must comply with applicable product safety [removed: laws,] [added: laws] and [added: regulations (including those relating to product labeling), and] we are dependent on them to ensure that the products we buy comply with all applicable safety [added: and labeling] standards.

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

New laws, regulations, policies and the related interpretations and enforcement practices, particularly those dealing with environmental compliance, product [removed: safety,] [added: safety or labeling,] food safety, information security and privacy, and labor and employment, among others, or changes in existing laws, regulations, 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.

Untimely compliance or noncompliance with applicable regulations or untimely or incomplete execution of a required product recall, can result in the imposition of [removed: penalties, including] [added: penalties (including] loss of [removed: licenses] [added: licenses, eligibility to accept certain government benefits such as SNAP] or significant fines or monetary [removed: penalties,] [added: penalties),] class action litigation or other litigation, in addition to reputational damage.

Additionally, changes in tax laws, the interpretation of existing laws, or our failure to sustain our reporting positions on examination could adversely affect our [added: overall] effective tax rate.

[removed: Litigation] [added: As a result, litigation] may adversely affect our business, results of operations and financial condition.

Our insurance coverage reflects deductibles, [removed: self‑insured] [added: self-insured] retentions, limits of liability and similar provisions that we believe are prudent based on the dispersion of our operations.

However, there are types of losses we may incur but against which we cannot be insured or which we believe are not economically reasonable to insure, such as losses due to acts of war, employee and certain other crime, certain wage and hour and other [removed: employment‑related] [added: employment-related] claims, including class actions, actions based on certain consumer protection laws, and some natural and other disasters or similar events.

To offset negative insurance market trends, we may elect to [removed: self‑insure,] [added: self-insure,] accept higher deductibles or reduce the amount of coverage in response to these market changes.

In addition, we [removed: self‑insure] [added: self-insure] a significant portion of expected losses under our workers’ compensation, automobile liability, general liability [added: (including claims made against certain of our landlords)] and group health insurance programs.

Although we continue to maintain property insurance for catastrophic events at our store support center and distribution centers, we are effectively [removed: self‑insured] [added: self-insured] for other property losses.

Uncharacteristic or significant weather conditions can affect consumer shopping patterns, which could lead to lost sales or greater than expected markdowns and adversely affect our [removed: short‑term] [added: short-term] results of operations.

In addition, these events could result in increases in fuel (or other energy) prices or a fuel shortage, delays in opening new stores, the temporary lack of an adequate work force in a market, the temporary or [removed: long‑term] [added: long-term] disruption in the supply of products from some domestic and overseas suppliers, the temporary disruption in the transport of goods from overseas, delay [added: or increased transportation costs] in the delivery of goods to our distribution centers or stores, the inability of customers to reach or have transportation to our stores directly affected by such events, the temporary reduction in the availability of products in our stores and disruption of our utility services or to our information systems.

Any failure to maintain the security of information we hold relating to [added: proprietary business information or] our customers, employees and vendors, whether as a result of cybersecurity attacks or otherwise, could expose us to litigation, government enforcement actions and costly response measures, and could materially disrupt our operations and harm our reputation and sales.

Additionally, under certain circumstances, we may share information with vendors that assist us in conducting our business (for example, [removed: third‑party vendors] [added: third-party service providers] assist us in the transmittal of [added: credit and debit card information in connection with sales), as required by law, or otherwise in accordance with our privacy policy.]

While we have implemented procedures and technology intended to protect and safeguard our information and require appropriate controls of our [removed: vendors,] [added: service providers,] it is possible that [removed: cyber-attackers] [added: cyberattackers] might compromise our security measures or those of our technology and other vendors [added: or service providers] in the future and obtain the personal information of our customers, employees and vendors that we hold or our business information, as cyberattacks [removed: are rapidly evolving and becoming increasingly sophisticated and may not immediately produce signs of intrusion.]

Failure to achieve successful

In addition, our construction costs could increase as a result of economic factors discussed above.

If we fail to

Some of this information is stored digitally in connection with our e-commerce website and our mobile applications, some of which may leverage third-party service providers.

are rapidly evolving and those threats and the means for obtaining access to information in digital and other storage media are becoming increasingly sophisticated and may not immediately produce signs of intrusion.

If customer passwords are obtained through unrelated third-party breaches, cyberattackers also could gain access to our customers’ accounts.

We depend on a variety of information technology systems for the efficient functioning of our business, including, without limitation the processing of transactions and the management of our employees, facilities, logistics, inventories, stores and customer-facing digital operations.

ransomware), software upgrade failures or code defects, natural disasters and human error.

Primarily because of sales of Christmas-related merchandise, our most profitable sales mix generally occurs in the fourth quarter.

Further, our merchandising efforts in the consumables 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.

costs.

We cannot guarantee that any project will be completed on time or within established budgets.

As a result,

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

PCI DSS contains compliance guidelines and standards with regard to our security surrounding the physical and electronic storage, processing, and transmission of cardholder data.

In addition, potential regulatory changes relating to overtime exemptions for certain employees under federal and state laws could result in increased labor costs to our business and negatively affect our operating results if the regulatory changes are implemented.

We do not currently maintain key person life insurance policies with respect to our executive officers or key personnel.

We generally recognize our highest volume of net sales during the Christmas selling season, which occurs in the fourth quarter of our fiscal year.

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

We are among the largest discount retailers in the United States by number of stores, with [removed: 13,429] [added: 14,609] stores located in 44 states as of March [removed: 3, 2017,] [added: 2, 2018,] with the greatest concentration of stores in the southern, southwestern, midwestern and eastern United States.

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

We believe our convenient store [removed: format] [added: formats, locations,] and broad selection of high-quality products at compelling values have driven our substantial growth and financial success over the [removed: years.][added: years and through a variety of macroeconomic environments.]

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 [removed: 2016 changes to the] Supplemental Nutrition Assistance [removed: Program, which had the effect of not only reducing benefit levels but also eliminating benefit eligibility for certain individuals.][added: Program.]

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

[removed: Following this strategic review, we] [added: We] remain committed to the following 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 aimed at increasing customer traffic and average transaction amount, as well as an ongoing focus on enhancing our [added: gross] margins while maintaining both everyday low price and affordability.

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

[removed: Same-store] [added: We believe same-store] sales growth is key to achieving our [added: financial] objectives.

We [removed: plan to further this] [added: made significant] progress in 2017 [removed: with] [added: on many of these initiatives, which included] the continued expansion of coolers, the rollout of additional [removed: merchandising initiatives] [added: strategies] across [removed: all] [added: many of our] merchandise [removed: categories,] [added: departments, including] a [added: redesign of our Health and Beauty department to drive further product awareness and market share, a] continued focus on improving our in-stock [removed: position,] [added: position] and the addition of a queue [removed: line, similar] [added: line containing items intended] to [removed: that in our DG16 layout stores discussed below,] [added: drive impulse purchases] in a portion of our existing store base.

[removed: We also plan] [added: Many of these initiatives support our plans] to continue investing in our existing store [removed: base through many of these targeted merchandising initiatives,] [added: base,] with a goal to drive increased customer [removed: traffic,] [added: traffic and] average transaction amount [removed: and] [added: and, as a result, our] same-store sales.

We demonstrate our commitment to the affordability needs of our core customer [removed: by pricing] [added: as] more than 80% of our stock-keeping units [added: were priced] at $5 or less at the end of [removed: 2016.][added: 2017.]

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

[removed: We] [added: However, we continue to] seek to reduce our stem miles and optimize [added: shipment] loads to improve distribution and transportation efficiencies.

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

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

Our fifteenth distribution center in Jackson, Georgia [removed: is under construction with a goal to begin] [added: began] shipping [removed: from this facility] in [removed: late] [added: October] 2017.

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

We invest in our employees in an effort to create an environment that attracts and retains talented personnel, as we believe that, particularly at the store level, employees who are promoted from within [added: our company] generally have longer tenures and are greater contributors to improvements in our financial performance.

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

A continued focus on our four operating priorities as discussed above, coupled with strong cash flow management and share repurchases resulted in solid overall operating and financial performance in [removed: 2016] [added: 2017] as compared to [removed: 2015,] [added: 2016,] as set forth below.

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

| | · | | Our gross profit rate decreased by [removed: 11] [added: 8] basis points due primarily to [removed: higher markdowns,] a greater proportion of sales of [removed: consumables, and a] [added: consumables compared to non-consumables,] higher [removed: rate of inventory shrinkage.] [added: markdowns, and increased transportation costs.] |

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

| | · | | We reported net income of [removed: $1.25] [added: $1.54] billion, or [removed: $4.43] [added: $5.63] per diluted share, for [removed: 2016,] [added: 2017] compared to net income of [removed: $1.17] [added: $1.25] billion, or [removed: $3.95] [added: $4.43] per diluted share, for [removed: 2015. Stock repurchase activity during 2015 and 2016] [added: 2016. Reduced income tax expense in 2017 due to the Act] contributed to the increase in diluted earnings per share. |

| | · | | We generated approximately [removed: $1.61] [added: $1.8] billion of cash flows from operating activities in [removed: 2016,] [added: 2017,] an increase of [removed: 15.3%] [added: 12.3%] compared to [removed: 2015.] [added: 2016.] 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. |

| | · | | Inventory turnover was 4.7 times on a rolling four-quarter basis. Inventories [removed: decreased 0.7%] [added: increased 1.5%] on a per store basis compared to [removed: 2015.] [added: 2016.] |

[removed: | | · | | We] [added: During 2017, we] opened [removed: 900] [added: 1,315] new [removed: stores,] [added: stores and] remodeled or relocated [removed: 906 stores, and closed 63] [added: 764] stores. [removed: |]

| | · | | We repurchased approximately [removed: 12.4] [added: 7.1] million shares of our outstanding common stock for [removed: $990] [added: $580] million. |

Readers should refer to the detailed discussion of our operating results below for additional comments on financial performance in the current year [removed: periods] as compared with the prior [removed: year periods.][added: years presented.]

The following text contains references to years [added: 2017,] 2016, [removed: 2015,] and [removed: 2014,] [added: 2015,] which represent fiscal years ended February [added: 2, 2018, February] 3, 2017, [added: and] January 29, 2016, [removed: and January 30, 2015,] respectively.

Fiscal year 2016 was a 53-week accounting period and fiscal years [removed: 2015] [added: 2017] and [removed: 2014] [added: 2015] were 52-week accounting periods.

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

The following table contains results of operations data for fiscal years [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014,] [added: 2015,] and the dollar and percentage variances among those years.

| | | | | | | | | | | | [removed: 2016] [added: 2017] vs. [removed: 2015] [added: 2016] | | | | | [removed: 2015] [added: 2016] vs. [removed: 2014] [added: 2015] | | | | |

| (amounts in millions, except [removed: per share] | | | | | | | | | | | Amount | | | % | | Amount | | | % | |

| [added: per share] amounts) | | [removed: 2016] [added: 2017] | | | [removed: 2015] [added: 2016] | | | [removed: 2014] [added: 2015] | | | Change | | | Change | | Change | | | Change | |

| Consumables | | $ | [removed: 16,798.9] [added: 18,054.8] | | $ | [removed: 15,457.6] [added: 16,798.9] | | $ | [removed: 14,321.1] [added: 15,457.6] | | $ | [removed: 1,341.3] [added: 1,255.9] | | [removed: 8.7] [added: 7.5] | % | $ | [removed: 1,136.5] [added: 1,341.3] | | [removed: 7.9] [added: 8.7] | % |

| % of net sales | | | [removed: 76.41] [added: 76.92] | % | | [removed: 75.89] [added: 76.41] | % | | [removed: 75.73] [added: 75.89] | % | | | | | | | | | | |

| Seasonal | | | [removed: 2,674.3] [added: 2,837.3] | | | [removed: 2,522.7] [added: 2,674.3] | | | [removed: 2,345.0] [added: 2,522.7] | | | [removed: 151.6] [added: 163.0] | | [removed: 6.0] [added: 6.1] | | | [removed: 177.7] [added: 151.6] | | [removed: 7.6] [added: 6.0] | |

We believe that at various times the overall effect of the factors listed above has negatively affected our customer traffic and could do so in the future.

During 2017, we continued to make progress on certain strategic initiatives to pursue long-term growth opportunities.

Such opportunities include leveraging existing and developing additional digital tools and technology to provide our customers with additional shopping access points and even greater convenience, as well as an in-depth analysis of and refreshed approach to our non-consumables product offerings.

These growth initiatives will be ongoing priorities in 2018, while ensuring that we maintain our brand heritage and build upon our organizational capabilities.

In addition, throughout 2017, our sales mix continued to shift slightly toward consumables, and, within consumables, slightly

toward lower margin departments such as perishables and tobacco.

We expect the trends of consumables, and lower margin consumables, comprising an increasingly larger percentage of our sales than non-consumables to continue throughout at least the beginning of 2018.

Certain of our initiatives, including those related to the non-consumables categories, are intended to address these trends, although there can be no assurance we will be successful in their reversal.

Accordingly, our initiatives are designed to increase customer traffic and average transaction amounts.

In 2018, we plan to continue expanding the cooler count, as well as to launch a second phase of the Health and Beauty initiative.

Additionally, we plan to implement a redesign of the snack and beverage aisle to enhance customer awareness, particularly in immediate consumption items.

We also plan to test an expanded assortment of “better-for-you” food choices across a select group of stores.

In non-consumables, the planned introduction of new and expanded product classes will provide increased opportunities for our customers to take advantage of our value and convenience offering.

We believe expanded and improved private brand offerings in 2018 will provide increased value offerings for our customers in addition to improving the profitability of certain product categories.

To support our efforts to reduce inventory shrink, in 2018 we expect to continue to implement in-store defensive merchandising and technology-based tools, including a significant increase in the number of stores utilizing Electronic Article Surveillance (“EAS”), as the results from stores in which EAS has been implemented suggest these measures help reduce shrink and improve our in-stock position.

Increasing carrier and fuel rates pressured our overall gross margin in the latter half of 2017, and we anticipate that these negative impacts will continue into and throughout 2018.

In 2017, we opened 1,315 new stores, along with remodeling or relocating 764 stores.

For 2018, we plan to open approximately 900 new stores, remodel approximately 1,000 mature store locations, and relocate approximately 100 stores for an approximate total of 2,000 real estate projects.

We continue to innovate within our channel and are able to utilize the most productive of our various store formats based on the specific market opportunity.

We expect that our traditional 7,300 square foot store format will continue to be the primary store layout for new stores, relocations and remodels in 2018.

We expect a significant number of the planned 1,000 remodels in 2018 to include a greater cooler count for increased selection of perishable items.

We continue to incorporate into our existing store base lessons learned from our various store formats and layouts with a goal of driving increased customer traffic, average transaction amount, same-store sales and overall store productivity.

We began construction on our sixteenth and seventeenth distribution centers in Longview, Texas and Amsterdam, New York, respectively, in 2017 to continue to support our growth.

We expect both of these distribution centers to open in 2019.

We plan to continue enhancing this position over time as we aim to continually streamline our business while also employing ongoing cost discipline to reduce certain expenses as a percentage of sales.

Although we did not leverage Selling, General & Administrative (“SG&A”) expenses in 2017, as discussed in more detail below, it was largely because of specific planned investments such as store manager pay and training, and the increased store openings in the second half of the year, both of which will pressure SG&A comparisons in the first half of 2018.

In 2017, we installed LED lighting in a significant number of stores, which reduces utilities and maintenance costs across our store base in addition to fostering a more customer and environmentally friendly shopping experience.

We anticipate the remaining stores in the chain that are eligible for our LED lighting program will be completed in 2018.

Over the long term, we believe actions such as these will support our goal of leveraging SG&A expenses at a lower same store sales growth percentage.

Our store managers play an important role in our customer experience and individual store profitability, and beginning in March 2017 we implemented certain investments in compensation and training for this position in the form of increased SG&A expenses that we believe have already contributed to improved customer experience scores, higher sales and improved turnover metrics.

In 2018, we intend to continue our share repurchase activity, at a significantly greater dollar amount than in 2017, and to pay quarterly cash dividends, subject to Board discretion and approval.

On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was signed into law.

Among other impacts, the Act reduces the federal corporate tax rate to 21% from 35% effective January 1, 2018.

The Act reduced our effective tax rate in 2017 primarily as a result of the one-time remeasurement of the federal portion of our deferred tax assets and liabilities to a lower rate, accompanied by a reduction in the current year federal corporate tax rate to 33.7%, due to our fiscal year ending approximately one month after the effective date of the Act.

The Act will have a positive material impact on our effective tax rate in 2018 and subsequent years.

| | · | | Net sales in 2017 increased 6.8% over 2016. Sales in same-stores increased 2.7%, due to an increase in average transaction amount and increased customer traffic. Average sales per square foot in 2017 were $227 compared to $229, including a $4 contribution from the 53rd week, in 2016. |

| | · | | The decrease in the effective income tax rate to 19.3% in 2017 from 36.3% in 2016 was due primarily to changes (some of which are nonrecurring) to the federal income tax laws pursuant to the Act. |

In 2017, our 13,150 same-stores accounted for sales of $21.9 billion.

Same-store sales in 2017 increased in the consumables and seasonal categories, and declined in the home products and apparel categories, compared to 2016.

Same-store sales results in 2017 for the three non-consumables categories, when aggregated, were positive.

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.

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

We expect these trends to continue in 2017.

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 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.

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.

In 2016, we continued to expand our store count, opening 900 stores and remodeling or relocating 906 stores.

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

We continue to innovate within our channel, and during 2016 we began implementing the DG16 store layout for all new stores, relocations and remodels.

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.

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

We

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

We continued to enhance this position during 2016 through our zero-based budgeting initiative, streamlining our business while also reducing certain expenses as a percentage of sales.

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.

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

| | · | | 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. |

| | · | | The decrease in the effective income tax rate to 36.3% in 2016 from 37.1% in 2015 was due primarily to an accounting change related to share-based compensation. |

For more information about the seasonality of our business, see “Seasonality” included in Part 1, Item 1 of this report.

The net sales increase in 2016 reflects a same-store sales increase of 0.9% compared to 2015, primarily due to an increase in average transaction amount accompanied by traffic that was essentially unchanged as compared to the prior year.

Same-store sales were affected by the factors discussed in the Executive Overview above.

For 2015, there were 11,706 same-stores, which accounted for sales of $19.25 billion.

Same-store sales results reflect positive results in all four of our product categories, with the greatest increases in sales of consumables and seasonal, followed by home products and apparel.

The gross profit rate as a percentage of sales was 30.8% in 2016.

We recorded a LIFO benefit of $12.2 million in 2016 compared to a LIFO benefit of $2.3 million in 2015.

The gross profit rate as a percentage of sales was 31.0% in 2015 compared to 30.7% in 2014.

Gross profit increased by 8.7% in 2015, and as a percentage of sales, increased by 27 basis points.

As of February [removed: 3, 2017,] [added: 2, 2018,] we had variable rate borrowings of [removed: $425] [added: $175] million under our [removed: 2015] Term Facility, [added: consolidated] borrowings of [removed: $490.5] [added: $430.2] million under our commercial paper program, and no borrowings outstanding under our [removed: 2015] Revolving Facility.

As of February [removed: 3, 2017,] [added: 2, 2018,] no such interest rate swaps were outstanding and, as a result, we are exposed to fluctuations in variable interest rates under the credit facilities and our commercial paper program.

Based on our variable rate borrowing levels as of February [removed: 3, 2017] [added: 2, 2018] and [removed: January 29, 2016,] [added: February 3, 2017,] 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: $9.2] [added: $6.1] million in [removed: 2016] [added: 2017] and [removed: $6.9] [added: $9.2] million in [removed: 2015.][added: 2016.]

We are among the largest discount retailers in the United States by number of stores, with [removed: 13,429] [added: 14,609] stores located in 44 states as of March [removed: 3, 2017,] [added: 2, 2018,] with the greatest concentration of stores in the southern, southwestern, midwestern and eastern United States.

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

We offer our [removed: merchandise] [added: customers these national brand and private brand products] at everyday low prices [removed: through] [added: (typically $10 or less) in] our convenient small-box locations.

Our [added: long-term] operating priorities [removed: are summarized as follows:] [added: remain:] 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.

In fiscal year [removed: 2016,] [added: 2017,] we achieved our [removed: 27th] [added: 28th] consecutive year of positive same-store sales growth.

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

| 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. |

| | · | | [removed: Time‑Saving] [added: Time-Saving] Shopping Experience. We [removed: also] [added: strive to] provide customers with a highly convenient, easy to navigate shopping experience. Our small-box stores [removed: are easy] [added: make it easier] to get in and out [removed: 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 [removed: cards,] [added: cards and other stationery items,] basic apparel, housewares, hardware and automotive supplies, among others. Our convenient hours and broad merchandise offering allow our customers to fulfill their routine shopping requirements and minimize their need to shop elsewhere. |

| | · | | Everyday Low Prices on Quality Merchandise. Our research indicates that we offer a price advantage over most food and drug retailers and that our prices are competitive with even the largest discount retailers. Our ability to offer everyday low prices on quality merchandise is supported by our [removed: low‑cost] [added: 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 [removed: quality] nationally advertised brands at these everyday low prices in addition to offering our own [removed: value and comparable quality] private brands at substantially lower prices. |

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.

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

We [removed: sell high‑quality] [added: offer a wide selection of] nationally advertised brands from leading manufacturers.

Additionally, our private brand [removed: consumables] [added: products] offer even greater value with options to purchase [removed: national brand equivalent] products [added: that we believe to be of comparable quality to national brands] as well as value [removed: items] [added: items, each] at substantial discounts to the national [removed: brand.][added: brands.]

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, refrigerated and frozen 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 products including soap, body wash, shampoo, dental hygiene and foot care products); pet (such as pet supplies and pet food); and tobacco products.

| | | [removed: 2016] [added: 2017] | | [removed: 2015] [added: 2016] | | [removed: 2014] [added: 2015] | |

| Consumables | | [removed: 76.4] [added: 76.9] | % | [removed: 75.9] [added: 76.4] | % | [removed: 75.7] [added: 75.9] | % |

| Seasonal | | [removed: 12.2] [added: 12.1] | % | [removed: 12.4] [added: 12.2] | % | 12.4 | % |

| Home products | | [removed: 6.2] [added: 6.0] | % | [removed: 6.3] [added: 6.2] | % | [removed: 6.4] [added: 6.3] | % |

| Apparel | | [removed: 5.2] [added: 5.0] | % | [removed: 5.4] [added: 5.2] | % | [removed: 5.5] [added: 5.4] | % |

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

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 capital investment returns.

Our stores average approximately 7,400 square feet of selling space and approximately [removed: 70%] [added: 75%] of our stores are located in towns of 20,000 or fewer people.

Depending on their financial situation and geographic proximity, 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.

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

Our largest and second largest suppliers each accounted for approximately 8% of our purchases in [removed: 2016.][added: 2017.]

We directly imported approximately [removed: 6%] [added: 5%] of our purchases at cost in [removed: 2016.][added: 2017.]

We have consistently managed to obtain sufficient quantities of core merchandise and believe that, if one or more of our current sources of supply became unavailable, we generally would be able to obtain alternative [added: sources; however, such alternative sources could increase our merchandise costs or reduce the quality of our merchandise, and an inability to obtain alternative sources could adversely affect our sales.]

Our stores are currently supported by [removed: fourteen] [added: fifteen] distribution centers located strategically throughout our geographic footprint.

We continually analyze and rebalance the network to ensure that it remains efficient and provides the service [added: levels] our stores require.

Most of our merchandise flows through our distribution centers and is delivered to our stores by [removed: third‑party] [added: third-party] trucking firms, utilizing our trailers.

We also own [removed: 39] [added: 79 semi-trailer] trucks with which we transport our merchandise.

In addition, vendors or [removed: third‑party] [added: third-party] distributors ship certain food items and other merchandise directly to our stores.

Generally, our [removed: highest] [added: most profitable] sales [removed: volume] [added: mix] occurs in the fourth quarter, which includes the Christmas selling season.

We operate in the basic discount consumer goods market, which is highly competitive with respect to price, store location, merchandise quality, assortment and presentation, [removed: in‑stock] [added: in-stock] consistency, and customer service.

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

Our direct competitors include Family Dollar, Dollar Tree, Big Lots, Fred’s, 99 Cents Only and various local, independent operators, as well as Walmart, Target, Kroger, Aldi, [added: Lidl,] Walgreens, CVS, and RiteAid, among others.

Competition has intensified and [added: we believe it] will continue to do so as competitors move into or increase their presence in our geographic [added: and product] markets and increase the availability of [removed: mobile and] [added: mobile,] web-based [added: and other digital] technology to facilitate [removed: online shopping and real‑time product] [added: a more convenient] and [removed: price comparisons] [added: competitive customer online] and [removed: to create an omnichannel] [added: in-store] shopping experience.

We believe that we differentiate ourselves from other forms of retailing by offering consistently low prices in a convenient, [removed: small‑store] [added: small-store] format.

We believe that our prices are competitive due in part to our [removed: low‑cost] [added: low-cost] operating structure and the relatively limited assortment of products offered.

| 2017 | | 13,320 | | 1,315 | | 101 | | 1,214 | | 14,534 | |

Our sixteenth and seventeenth distribution centers in Longview, Texas and Amsterdam, New York, respectively, are under construction and each is expected to be completed in 2019.

We believe our overall relationship with our employees is good.

™, Perfect Harvest™, In.Out.Save.

™, and the Good Choices – Smart Prices – Good & Smart stylized logo™.

| 2014 | | 11,132 | | 700 | | 43 | | 657 | | 11,789 | |

sources without experiencing a substantial disruption of our business.

However, such alternative sources could increase our merchandise costs or reduce the quality of our merchandise, and an inability to obtain alternative sources could adversely affect our sales.

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 have increasingly focused on recruiting, training, motivating and retaining

We currently are not a party to any collective bargaining agreements.

FORM [removed: 10‑K][added: 10-K]

For the fiscal year ended February [removed: 3, 2017][added: 2, 2018]

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

| TENNESSEE | [removed: 61‑0502302] [added: 61-0502302] |

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

| Common Stock, par value $0.875 per share | | [added: |] New York Stock Exchange |

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.

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 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.][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, [removed: or] a smaller reporting [added: company, or emerging growth] company.

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

| [removed: Non‑accelerated] [added: Non-accelerated] filer ☐ | Smaller reporting company ☐ |

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 registrant’s common stock outstanding and held by [removed: non‑affiliates] [added: non-affiliates] as of [removed: July 29, 2016] [added: August 4, 2017] was [removed: $26.7] [added: $18.1] billion calculated using the closing market price of our common stock as reported on the NYSE on such date [removed: ($94.74).][added: ($74.86).]

The registrant had [removed: 275,095,294] [added: 268,741,400] shares of common stock outstanding as of March [removed: 17, 2017.][added: 16, 2018.]

Certain of the information required in Part III of this Form [removed: 10‑K] [added: 10-K] is incorporated by reference to the Registrant’s definitive proxy statement to be filed for the Annual Meeting of Shareholders to be held on May [removed: 31, 2017.][added: 30, 2018.]

| | [ITEM 2. PROPERTIES](#ITEM2PROPERTIES_848852) | [removed: 17] [added: 18] |

| | [ITEM 3. LEGAL PROCEEDINGS](#ITEM3LEGALPROCEEDINGS_83582) | [removed: 18] [added: 19] |

| | [ITEM 4. MINE SAFETY DISCLOSURES](#ITEM4MINESAFETYDISCLOSURES_135281) | [removed: 18] [added: 19] |

| | [EXECUTIVE OFFICERS OF THE REGISTRANT](#EXECUTIVEOFFICERSOFTHEREGISTRANT_442806) | [removed: 19] [added: 20] |

| | [ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES](#ITEM5MARKETFORREGISTRANTSCOMMONEQUITY_76) | [removed: 21] [added: 23] |

| | [ITEM 6. SELECTED FINANCIAL DATA](#ITEM6SELECTEDFINANCIALDATA_356509) | [removed: 22] [added: 24] |

| | [ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](#ITEM7MANAGEMENTSDISCUSSIONANDANALYSIS_58) | [removed: 25] [added: 27] |

| | [ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](#ITEM7AQUANTITATIVEANDQUALITATIVEDISCLOSU) | [removed: 41] [added: 43] |

| | [ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA](#ITEM8FINANCIALSTATEMENTSANDSUPPLEMENTARY) | [removed: 42] [added: 44] |

| [Report of Independent Registered Public Accounting Firm](#ReportofIndependentRegisteredPublicAccou) | | [removed: 42] [added: 44] |

| [DOLLAR GENERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE [removed: SHEETS (In thousands, except per share amounts)](#BALANCESHEETS_88009)] [added: SHEETS](#BALANCESHEETS_88009)] | | [removed: 43] [added: 45] |

| [DOLLAR GENERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF [removed: INCOME (In thousands, except per share amounts)](#STATEMENTSOFINCOME_317344)] [added: INCOME](#STATEMENTSOFINCOME_317344)] | | [removed: 44] [added: 46] |

| [DOLLAR GENERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE [removed: INCOME (In thousands)](#COMPREHENSIVEINCOME_803563)] [added: INCOME](#COMPREHENSIVEINCOME_803563)] | | [removed: 45] [added: 47] |

| [DOLLAR GENERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' [removed: EQUITY (In thousands except per share amounts)](#SHAREHOLDERSEQUITY_636150)] [added: EQUITY](#SHAREHOLDERSEQUITY_636150)] | | [removed: 46] [added: 48] |

| [DOLLAR GENERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH [removed: FLOWS (In thousands)](#CASHFLOWS_532721)] [added: FLOWS](#CASHFLOWS_532721)] | | [removed: 47] [added: 49] |

| [DOLLAR GENERAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS](#NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS_6) | | [removed: 48] [added: 50] |

| | [ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE](#ITEM9CHANGESINANDDISAGREEMENTSWITHACCOUN) | [removed: 70] [added: 74] |

| | [ITEM 9A. CONTROLS AND PROCEDURES](#ITEM9ACONTROLSANDPROCEDURES_424309) | [removed: 70] [added: 74] |

| [Report of Independent Registered Public Accounting Firm](#ReportofIndependent1_574395) | | [removed: 71] [added: 75] |

| | [ITEM 9B. OTHER INFORMATION](#ITEM9BOTHERINFORMATION_957047) | [removed: 72] [added: 76] |

| | [ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE](#ITEM10DIRECTORSEXECUTIVEOFFICERSANDCORPO) | [removed: 73] [added: 78] |

| | [ITEM 11. EXECUTIVE COMPENSATION](#ITEM11EXECUTIVECOMPENSATION_872380) | [removed: 73] [added: 78] |

| | [ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS](#ITEM12SECURITYOWNERSHIPOFCERTAINBENEFICI) | [removed: 74] [added: 79] |

| | [ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE](#ITEM13CERTAINRELATIONSHIPSANDRELATEDTRAN) | [removed: 74] [added: 79] |

10-K 1 dg-20180202x10k.htm 10-K

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

| (Do not check if a smaller reporting company) | Emerging growth company ☐ |

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

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

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

| [EXHIBIT INDEX](#EXHIBITINDEX_308487) | | 77 |

As of March [removed: 3, 2017,] [added: 2, 2018,] we operated [removed: 13,429] [added: 14,609] retail stores located in 44 states as follows:

| Arizona | | [removed: 99] [added: 109] | | Nevada | | [removed: 24] [added: 22] | |

| Arkansas | | [removed: 392] [added: 414] | | New Hampshire | | [removed: 23] [added: 30] | |

| California | | [removed: 185] [added: 202] | | New Jersey | | [removed: 94] [added: 121] | |

| Colorado | | [removed: 30] [added: 42] | | New Mexico | | [removed: 87] [added: 97] | |

| Connecticut | | [removed: 33] [added: 47] | | New York | | [removed: 358] [added: 439] | |

| Delaware | | [removed: 43] [added: 44] | | North Carolina | | [removed: 730] [added: 787] | |

| Florida | | [removed: 781] [added: 825] | | North Dakota | | [removed: 5] [added: 15] | |

| Indiana | | [removed: 459] [added: 494] | | Oregon | | [removed: 19] [added: 38] | |

| Kansas | | [removed: 220] [added: 230] | | Rhode Island | | [removed: 6] [added: 13] | |

| Kentucky | | [removed: 474] [added: 500] | | South Carolina | | [removed: 484] [added: 518] | |

| Louisiana | | [removed: 511] [added: 536] | | South Dakota | | [removed: 32] [added: 47] | |

| Maine | | [removed: 29] [added: 46] | | Tennessee | | [removed: 700] [added: 733] | |

| Massachusetts | | [removed: 22] [added: 41] | | Utah | | [removed: 6] [added: 11] | |

| Michigan | | [removed: 401] [added: 468] | | Vermont | | [removed: 32] [added: 35] | |

| Minnesota | | [removed: 97] [added: 119] | | Virginia | | [removed: 362] [added: 395] | |

| Mississippi | | [removed: 447] [added: 483] | | West Virginia | | [removed: 216] [added: 234] | |

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 March [removed: 3, 2017,] [added: 2, 2018,] we operated [removed: fourteen] [added: fifteen] distribution centers, as described in the following table:

| Scottsville, KY | | 1959 | | 720,000 | | [removed: 746] [added: 695] | |

| Ardmore, OK | | 1994 | | 1,310,000 | | [removed: 1,342] [added: 1,242] | |

| South Boston, VA | | 1997 | | 1,250,000 | | [removed: 996] [added: 1,055] | |

| Indianola, MS | | 1998 | | 820,000 | | [removed: 788] [added: 787] | |

| Fulton, MO | | 1999 | | 1,150,000 | | [removed: 1,290] [added: 1,204] | |

| Alachua, FL | | 2000 | | 980,000 | | [removed: 960] [added: 977] | |

| Zanesville, OH | | 2001 | | 1,170,000 | | [removed: 1,159] [added: 1,223] | |

| Jonesville, SC | | 2005 | | 1,120,000 | | [removed: 1,185] [added: 1,085] | |

| Marion, IN | | 2006 | | 1,110,000 | | [removed: 1,270] [added: 1,191] | |

| Bessemer, AL | | 2012 | | 940,000 | | [removed: 1,148] [added: 1,137] | |

| Lebec, CA | | 2012 | | 600,000 | | [removed: 352] [added: 385] | |

| Bethel, PA | | 2014 | | 1,000,000 | | [removed: 939] [added: 1,004] | |

| San Antonio, TX | | 2016 | | 920,000 | | [removed: 852] [added: 993] | |

| Janesville, WI | | 2016 | | 1,000,000 | | [removed: 402] [added: 895] | |

As of February [removed: 3, 2017,] [added: 2, 2018,] we leased approximately [removed: 871,000] [added: 1,082,000] square feet of additional temporary warehouse space to support our distribution needs.

Our executive offices are located in approximately 302,000 square feet of owned buildings and approximately [removed: 56,000] [added: 42,000] square feet of leased office space in Goodlettsville, Tennessee.

| Alabama | | 720 | | Nebraska | | 120 | |

| Georgia | | 827 | | Ohio | | 755 | |

| Illinois | | 521 | | Oklahoma | | 429 | |

| Iowa | | 224 | | Pennsylvania | | 675 | |

| Maryland | | 136 | | Texas | | 1,413 | |

| Missouri | | 501 | | Wisconsin | | 153 | |

| Jackson, GA | | 2017 | | 1,000,000 | | 736 | |

| Alabama | | 688 | | Nebraska | | 111 | |

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

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

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

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

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

Information regarding our current executive officers as of March [removed: 24, 2017] [added: 23, 2018] is set forth below.

| Todd J. Vasos | | [removed: 55] [added: 56] | | Chief Executive Officer and Director |

| John W. Garratt | | [removed: 48] [added: 49] | | Executive Vice President and Chief Financial Officer |

| Jeffery C. Owen | | [removed: 47] [added: 48] | | Executive Vice President, Store Operations |

| Robert D. Ravener | | [removed: 58] [added: 59] | | Executive Vice President and Chief People Officer |

| Rhonda M. Taylor | | [removed: 49] [added: 50] | | Executive Vice President and General Counsel |

| [removed: James W. Thorpe] [added: Jason S. Reiser] | | [removed: 58] [added: 49] | | Executive Vice President and Chief Merchandising Officer |

| Anita C. Elliott | | [removed: 52] [added: 53] | | Senior Vice President and Chief Accounting Officer |

| Michael J. Kindy | | [removed: 51] [added: 52] | | Senior Vice President, Global Supply Chain |

Prior to joining Dollar General, Mr. Vasos served in executive positions with Longs Drug Stores Corporation for [removed: 7] [added: seven] years, including Executive Vice President and Chief Operating Officer (February 2008 through November 2008) and Senior Vice President and Chief Merchandising Officer (2001 [removed: -] [added: –] 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.

Mr. Garratt has served as Executive Vice President and Chief Financial Officer since December [removed: 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.

Mr. Owen has served as a director of Kirkland’s Inc. since March [removed: 30,] 2015.

[removed: Prior to joining Dollar General, he served in] human resources executive roles with Starbucks Corporation, a roaster, marketer and retailer of specialty coffee, from [added: 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.]

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

She has also held attorney positions with Ford & Harrison LLP and Stokes [removed: &] Bartholomew.

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

[removed: 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.

| Carman R. Wenkoff | | 50 | | Executive Vice President and Chief Information Officer |

Prior to joining Dollar General, he served in

Mr. Reiser has served as Executive Vice President and Chief Merchandising Officer since July 12, 2017.

Prior thereto, he served as the Executive Vice President and Chief Operating Officer of Vitamin Shoppe, Inc., a multi-channel specialty retailer and contract manufacturer of vitamins, minerals, herbs, specialty supplements, sports nutrition and other health and wellness products, from July 2016 to June 2017, where he was responsible for leading merchandising, operations, end-to-end supply chain, information technology, real estate and construction, planning, pricing and merchandising operations.

He also previously served as Executive Vice President, Chief Merchandising Officer from January 2014 to June 2016 and as Senior Vice President, Hardlines Merchandising from July 2013 to January 2014, for Dollar Tree, Inc. (successor to Family Dollar Stores, Inc.).

Prior to his employment with Family Dollar, Mr. Reiser was employed by Walmart Stores, Inc. for 17 years in a variety of roles, including Vice President, Merchandising, Health & Family Care of Sam’s Club from November 2010 to June 2013; Vice President, Operations & Compliance, Health & Wellness of Sam’s Club from May 2010 to November 2010; Divisional Merchandise Manager, Wellness, from May 2009 to May 2010; Senior Buyer Pharmacy/OTC of Sam’s Club from November 2006 to May 2009; Director, Government Relations and Regulatory Affairs from August 2002 to November 2006; Pharmacy District Manager from August 2000 to August 2002; and Pharmacy Manager from October 1995 to August 2000.

Mr. Wenkoff has served as Executive Vice President and Chief Information Officer since July 10, 2017.

Prior thereto, he served as the Chief Information Officer (May 2012 – June 2017) and Chief Digital Officer (June 2016 – June 2017) of Franchise World Headquarters, LLC (“Subway”), where he was responsible for global technology and digital strategy, execution and operations for the Subway brand and all of its restaurants.

He also owned a Subway franchise in Southport, Connecticut from July 2015 until October 2017.

Prior to joining Subway, he served as the Chairman of the Board and Co-President of Retail Gift Card Association, a member organization of diverse, closed loop gift card retailers committed to promoting and protecting the use of gift cards, from February 2008 to May 2012.

He also served as the Deputy Chief Information Officer for Independent Purchase Cooperative, Inc., an independent Subway franchisee-owned and operated purchasing and services cooperative, from May 2005 to May 2012, and as President of its subsidiary, Value Pay Services LLC, from May 2005 to February 2011.

He was the founder and President of Stored Value Management, Inc., an independently owned program and consulting company, from January 2004 to May 2005 and the Vice President, Operations and Finance, as well as General Counsel of Ontain Corporation, a technology company focused on providing turn-key retail merchant solutions, from January 2000 to December 2004.

Mr. Wenkoff began his career in 1993 as an articled student, and then attorney with Douglas Symes & Brissenden and served in various legal positions, including General Counsel, with Pivotal Corporation from 1997 to 2000.

Prior to serving at Big

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 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.

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

He previously served as Senior Vice President, General Merchandise Manager, from May 2006 when he joined the Company until his departure in July 2012.

Following his departure from Dollar General, Mr. Thorpe provided on a limited 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.

Prior to Sears, he worked as a Marketing Program Manager for Zenith Data Systems, a personal computer development and sales company, from July 1990 to February 1991.

He began his career at The MAXIMA Corporation, an information technology services company, where he held various project administration and analyst positions.

Our common stock is traded on the New York Stock Exchange under the symbol “DG.” The high and low sales prices during each quarter in fiscal [removed: 2016] [added: 2017] and [removed: 2015] [added: 2016] were as follows:

On March [removed: 17, 2017,] [added: 16, 2018,] our stock price at the close of the market was [removed: $72.33] [added: $95.43] and there were approximately [removed: 2,148] [added: 2,383] shareholders of record of our common stock.

On March [removed: 15, 2017,] [added: 14, 2018,] our Board of Directors declared a quarterly cash dividend of [removed: $0.26] [added: $0.29] per share, which is payable on [added: or before] April [removed: 25, 2017] [added: 24, 2018] to shareholders of record of our common stock on April [removed: 11, 2017.][added: 10, 2018.]

We paid quarterly cash dividends of [removed: $0.25] [added: $0.26 per share] in [removed: 2016] [added: 2017] and [removed: $0.22] [added: $0.25] per share in [removed: 2015.][added: 2016.]

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

The following table contains information regarding purchases of our common stock made during the quarter ended February [removed: 3, 2017] [added: 2, 2018] by or on behalf of Dollar General or any “affiliated purchaser,” as defined by Rule 10b‑18(a)(3) of the Securities Exchange Act of 1934:

| | | Total Number [removed: of] | | Average | | | as Part of Publicly | | Yet Be Purchased | | |

| | | [added: of] Shares | | Price Paid | | | Announced Plans or | | Under the Plans | | |

| | (a) | | [removed: A $500 million share] [added: On September 5, 2012, the Company announced a program permitting the Company to] repurchase [added: a portion of its outstanding shares not to exceed a dollar maximum established by the Company’s Board of Directors. The] program was [removed: publicly announced] [added: most recently amended] on [removed: September 5, 2012, and increases in] [added: March 14, 2018 to increase] the [added: repurchase] authorization [added: by $1.0 billion, bringing the total value of authorized share repurchases] under [removed: such] [added: the] program [removed: were announced on March 25, 2013 ($500 million increase), December 5, 2013 ($1.0 billion increase), March 12, 2015 ($1.0 billion increase), December 3, 2015 ($1.0 billion increase) and August 25, 2016 ($1.0 billion increase).] [added: to $6.0 billion.] 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. |

| 2017 | | Quarter | | | Quarter | | | Quarter | | | Quarter | | |

| High | | $ | 79.35 | | $ | 79.28 | | $ | 85.07 | | $ | 105.82 | |

| Low | | $ | 67.94 | | $ | 65.97 | | $ | 70.30 | | $ | 79.79 | |

| 11/04/17-11/30/17 | | — | | $ | — | | — | | $ | 634,594,000 | |

| 12/01/17-12/31/17 | | 2,056,411 | | $ | 92.38 | | 2,056,411 | | $ | 444,616,000 | |

| 01/01/18-02/02/18 | | 954,934 | | $ | 95.29 | | 954,934 | | $ | 353,617,000 | |

| Total | | 3,011,345 | | $ | 93.31 | | 3,011,345 | | $ | 353,617,000 | |

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

| High | | $ | 76.99 | | $ | 81.42 | | $ | 81.15 | | $ | 75.14 | |

| Low | | $ | 65.86 | | $ | 71.44 | | $ | 64.66 | | $ | 59.75 | |

| 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 | |

The following table sets forth selected consolidated financial [added: and operating] information of Dollar General Corporation as of the dates and for the periods indicated.

The selected historical statement of income data and statement of cash flows data for the fiscal years ended February [added: 2, 2018, February] 3, 2017, [added: and] January 29, 2016, and [removed: January 30, 2015 and] balance sheet data as of February [removed: 3, 2017] [added: 2, 2018] and [removed: January 29, 2016,] [added: February 3, 2017,] have been derived from our historical audited consolidated financial statements included elsewhere in this report.

The selected historical statement of income data and statement of cash flows data for the fiscal years ended January [added: 30, 2015 and January] 31, 2014 and [removed: February 1, 2013 and] balance sheet data as of January [added: 29, 2016, January] 30, 2015, [added: and] January 31, [removed: 2014, and February 1, 2013] [added: 2014] presented in this table have been derived from audited consolidated financial statements not included in this report.

| number of stores, selling square feet, and net sales | | February [added: 2, | | | February] 3, | | | January 29, | | | January 30, | | | January 31, | | | [removed: February 1, | | |]

| per square foot) | | [added: 2018 | | |] 2017(1) | | | 2016 | | | 2015 | | | 2014 | | | [removed: 2013 | | |]

| Net sales | | $ | [removed: 21,986.6] [added: 23,471.0] | | $ | [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] | |

| Cost of goods sold | | | [added: 16,249.6 | | |] 15,204.0 | | | 14,062.5 | | | 13,107.1 | | | 12,068.4 | | [removed: | 10,936.7 | |]

| Gross profit | | | [added: 7,221.4 | | |] 6,782.6 | | | 6,306.1 | | | 5,802.5 | | | 5,435.7 | | [removed: | 5,085.4 | |]

| Selling, general and administrative expenses | | | [added: 5,213.5 | | |] 4,719.2 | | | 4,365.8 | | | 4,033.4 | | | 3,699.6 | | [removed: | 3,430.1 | |]

| Operating profit | | | [added: 2,007.8 | | |] 2,063.4 | | | 1,940.3 | | | 1,769.1 | | | 1,736.2 | | [removed: | 1,655.3 | |]

| Interest expense | | | [added: 97.0 | | |] 97.8 | | | 86.9 | | | 88.2 | | | 89.0 | | [removed: | 127.9 | |]

| Other (income) expense | | | [added: 3.5 | | |] — | | | 0.3 | | | — | | | 18.9 | | [removed: | 30.0 | |]

| Income before income taxes | | | [added: 1,907.3 | | |] 1,965.6 | | | 1,853.0 | | | 1,680.9 | | | 1,628.3 | | [removed: | 1,497.4 | |]

| Income tax expense | | | [added: 368.3 | | |] 714.5 | | | 687.9 | | | 615.5 | | | 603.2 | | [removed: | 544.7 | |]

| Net income | | $ | [removed: 1,251.1] [added: 1,539.0] | | $ | [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] | |

| Earnings per share—basic | | $ | [removed: 4.45] [added: 5.64] | | $ | [removed: 3.96] [added: 4.45] | | $ | [removed: 3.50] [added: 3.96] | | $ | [removed: 3.17] [added: 3.50] | | $ | [removed: 2.87] [added: 3.17] | |

| Earnings per share—diluted | | | [added: 5.63 | | |] 4.43 | | | 3.95 | | | 3.49 | | | 3.17 | | [removed: | 2.85 | |]

| Dividends per share | | | [removed: 1.00] [added: 1.04] | | | [removed: 0.88] [added: 1.00] | | | [removed: —] [added: 0.88] | | | — | | | — | |

| Operating activities | | $ | [removed: 1,605.0] [added: 1,802.1] | | $ | [removed: 1,391.7] [added: 1,605.0] | | $ | [removed: 1,326.9] [added: 1,391.7] | | $ | [removed: 1,244.1] [added: 1,326.9] | | $ | [removed: 1,219.1] [added: 1,244.1] | |

| Investing activities | | | [added: (645.0) | | |] (550.9) | | | (503.4) | | | (371.7) | | | (250.0) | | [removed: | (569.8) | |]

| Financing activities | | | [added: (1,077.6) | | |] (1,024.1) | | | (1,310.2) | | | (880.9) | | | (629.3) | | [removed: | (634.6) | |]

| Total capital expenditures | | | [added: (646.5) | | |] (560.3) | | | (504.8) | | | (374.0) | | | (538.4) | | [removed: | (571.6) | |]

| Same store sales growth(2) | | | [removed: 0.9] [added: 2.7] | % | | [removed: 2.8] [added: 0.9] | % | | 2.8 | % | | [removed: 3.3] [added: 2.8] | % | | [removed: 4.7] [added: 3.3] | % |

| Same store sales(2) | | $ | [removed: 20,348.1] [added: 21,871.6] | | $ | [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] | |

| Number of stores included in same store sales calculation | | | [added: 13,150 | | |] 12,383 | | | 11,706 | | | 11,052 | | | 10,387 | | [removed: | 9,783 | |]

| Number of stores (at period end) | | | [added: 14,534 | | |] 13,320 | | | 12,483 | | | 11,789 | | | 11,132 | | [removed: | 10,506 | |]

| Selling square feet (in thousands at period end) | | | [added: 107,821 | | |] 98,943 | | | 92,477 | | | 87,205 | | | 82,012 | | [removed: | 76,909 | |]

| Net sales per square foot(3) | | $ | [removed: 229] [added: 227] | | $ | [removed: 226] [added: 229] | | $ | [removed: 223] [added: 226] | | $ | [removed: 220] [added: 223] | | $ | [removed: 216] [added: 220] | |

| Consumables sales | | | [removed: 76.4] [added: 76.9] | % | | [removed: 75.9] [added: 76.4] | % | | [removed: 75.7] [added: 75.9] | % | | [removed: 75.2] [added: 75.7] | % | | [removed: 73.9] [added: 75.2] | % |

| Seasonal sales | | | [removed: 12.2] [added: 12.1] | % | | [removed: 12.4] [added: 12.2] | % | | 12.4 | % | | [removed: 12.9] [added: 12.4] | % | | [removed: 13.6] [added: 12.9] | % |

| Home products sales | | | [removed: 6.2] [added: 6.0] | % | | [removed: 6.3] [added: 6.2] | % | | [removed: 6.4] [added: 6.3] | % | | 6.4 | % | | [removed: 6.6] [added: 6.4] | % |

| Apparel sales | | | [removed: 5.2] [added: 5.0] | % | | [removed: 5.4] [added: 5.2] | % | | [removed: 5.5] [added: 5.4] | % | | 5.5 | % | | [removed: 5.9] [added: 5.5] | % |

| Rent expense | | $ | [removed: 942.4] [added: 1,081.5] | | $ | [removed: 856.9] [added: 942.4] | | $ | [removed: 785.2] [added: 856.9] | | $ | [removed: 686.9] [added: 785.2] | | $ | [removed: 614.3] [added: 686.9] | |

| Cash and cash equivalents and short-term investments | | $ | [removed: 187.9] [added: 267.4] | | $ | [removed: 157.9] [added: 187.9] | | $ | [removed: 579.8] [added: 157.9] | | $ | [removed: 505.6] [added: 579.8] | | $ | [removed: 140.8] [added: 505.6] | |

| Total assets | | | [added: 12,516.9 | | |] 11,672.3 | | | 11,257.9 | | | 11,208.6 | | | 10,848.2 | | [removed: | 10,340.8 | |]

| Long-term debt(4) | | | [added: 3,006.0 | | |] 3,211.5 | | | 2,970.6 | | | 2,725.1 | | | 2,799.5 | | [removed: | 2,745.3 | |]

| Total shareholders’ equity | | | [added: 6,125.8 | | |] 5,406.3 | | | 5,377.9 | | | 5,710.0 | | | 5,402.2 | | [removed: | 4,985.3 | |]

| | (2) | | [removed: Same‑store] [added: Same-store] sales are calculated based upon stores that were open at least 13 full fiscal months and remain open at the end of the reporting period. We include stores that have been remodeled, expanded or relocated in our [removed: same‑store] [added: same-store] sales calculation. Changes in same-store sales are calculated based on the comparable 52 calendar weeks in the current and prior years. |

| | | February [added: 2, | | February] 3, | | January 29, | | January 30, | | January 31, | | [removed: February 1, | |]

| | | [added: 2018 | |] 2017(1) | | 2016 | | 2015 | | 2014 | | [removed: 2013 | |]

[removed: The] [added: To the Shareholders and the] Board of Directors [removed: and Shareholders] of

We have audited the accompanying consolidated balance sheets of Dollar General Corporation and subsidiaries [added: (the Company)] as of February [removed: 3, 2017 and January 29, 2016,] [added: 2, 2018] and [added: February 3, 2017,] 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 February [removed: 3, 2017.][added: 2, 2018, and the related notes (collectively referred to as the “consolidated financial statements”).]

Our responsibility is to express an opinion on [removed: these] [added: the Company’s] financial statements based on our audits.

We conducted our audits in accordance with the standards of the [removed: Public Company Accounting Oversight Board (United States).][added: PCAOB.]

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material [removed: misstatement.][added: misstatement, whether due to error or fraud.]

[removed: An audit includes] [added: Such procedures included] examining, on a test basis, evidence [removed: supporting] [added: regarding] the amounts and disclosures in the financial statements.

[removed: An audit] [added: Our audits] also [removed: includes assessing] [added: included evaluating] the accounting principles used and significant estimates made by management, as well as evaluating the overall [added: presentation of the] financial [removed: statement presentation.][added: statements.]

In our opinion, the [added: consolidated] financial statements [removed: referred to above] present fairly, in all material respects, the [removed: consolidated] financial position of [removed: Dollar General Corporation and subsidiaries] [added: the Company] at February [removed: 3, 2017] [added: 2, 2018] and [removed: January 29, 2016,] [added: February 3, 2017,] and the [removed: consolidated] results of [removed: their] [added: its] operations and [removed: their] [added: its] cash flows for each of the three years in the period ended February [removed: 3, 2017,] [added: 2, 2018,] 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 [removed: States), Dollar General Corporation and subsidiaries’] [added: States) (PCAOB), the Company's] internal control over financial reporting as of February [removed: 3, 2017,] [added: 2, 2018,] based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 [removed: framework)] [added: framework),] and our report dated March [removed: 24, 2017] [added: 23, 2018,] expressed an unqualified opinion thereon.

[removed: March 24,] [added: | | |] 2017 [added: | | | | | | | |]

| | | [added: |] February [added: 2, | | | February] 3, | | | January 29, | | |

| | | [added: | 2018 | | |] 2017 | | | 2016 | | |

| Cash and cash [removed: equivalents] [added: equivalents, beginning of period] | | [removed: $] | 187,915 | | [removed: $] | 157,947 | | [added: | 579,823 | |]

| Merchandise inventories | | | [removed: 3,258,785] [added: 3,609,025] | | | [removed: 3,074,153] [added: 3,258,785] | |

| Income taxes receivable | | | [removed: 11,050] [added: 108,265] | | | [removed: 6,843] [added: 11,050] | |

| Prepaid expenses and other current assets | | | [removed: 220,021] [added: 263,121] | | | [removed: 193,467] [added: 220,021] | |

| Total current assets | | | [removed: 3,677,771] [added: 4,247,852] | | | [removed: 3,432,410] [added: 3,677,771] | |

| Net property and equipment | | | [removed: 2,434,456] [added: 2,701,282] | | | [removed: 2,264,062] [added: 2,434,456] | |

| Other intangible assets, net | | | [removed: 1,200,659] [added: 1,200,428] | | | [removed: 1,200,994] [added: 1,200,659] | |

| Other assets, net | | | [removed: 20,823] [added: 28,760] | | | [removed: 21,830] [added: 20,823] | |

| Total assets | | $ | [removed: 11,672,298] [added: 12,516,911] | | $ | [removed: 11,257,885] [added: 11,672,298] | |

| Current portion of long-term obligations | | $ | [removed: 500,950] [added: 401,345] | | $ | [removed: 1,379] [added: 500,950] | |

| Accounts payable | | | [removed: 1,557,596] [added: 2,009,771] | | | [removed: 1,494,225] [added: 1,557,596] | |

| Accrued expenses and other | | | [removed: 500,866] [added: 549,658] | | | [removed: 467,122] [added: 500,866] | |

| Income taxes payable | | | [removed: 63,393] [added: 4,104] | | | [removed: 32,870] [added: 63,393] | |

| Total current liabilities | | | [removed: 2,622,805] [added: 2,964,878] | | | [removed: 1,995,596] [added: 2,622,805] | |

| Long-term obligations | | | [removed: 2,710,576] [added: 2,604,613] | | | [removed: 2,969,175] [added: 2,710,576] | |

| Deferred income taxes | | | [removed: 652,841] [added: 515,702] | | | [removed: 639,955] [added: 652,841] | |

| Other liabilities | | | [removed: 279,782] [added: 305,944] | | | [removed: 275,283] [added: 279,782] | |

| Common stock; $0.875 par value, 1,000,000 shares authorized, [removed: 275,212] [added: 268,733] and [removed: 286,694] [added: 275,212] shares issued and outstanding at February [removed: 3, 2017] [added: 2, 2018] and [removed: January 29, 2016,] [added: February 3, 2017,] respectively | | | [removed: 240,811] [added: 235,141] | | | [removed: 250,855] [added: 240,811] | |

| Additional paid-in capital | | | [removed: 3,154,606] [added: 3,196,462] | | | [removed: 3,107,283] [added: 3,154,606] | |

| Retained earnings | | | [removed: 2,015,867] [added: 2,698,352] | | | [removed: 2,025,545] [added: 2,015,867] | |

| Accumulated other comprehensive loss | | | [removed: (4,990)] [added: (4,181)] | | | [removed: (5,807)] [added: (4,990)] | |

| Total shareholders’ equity | | | [removed: 5,406,294] [added: 6,125,774] | | | [removed: 5,377,876] [added: 5,406,294] | |

| Total liabilities and [removed: shareholders’] [added: shareholders'] equity | | $ | [removed: 11,672,298] [added: 12,516,911] | | $ | [removed: 11,257,885] [added: 11,672,298] | |

| | | [removed: |] February [removed: 3,] [added: 2,] | | | [removed: January 29,] [added: February 3,] | | | January [removed: 30,] [added: 29,] | | |

| [removed: |] [added: (In thousands)] | | 2017 | | | 2016 | | | 2015 | | |

| Net sales | | | $ | [removed: 21,986,598] [added: 23,470,967] | | $ | [removed: 20,368,562] [added: 21,986,598] | | $ | [removed: 18,909,588] [added: 20,368,562] | |

| Cost of goods sold | | | | [removed: 15,203,960] [added: 16,249,608] | | | [removed: 14,062,471] [added: 15,203,960] | | | [removed: 13,107,081] [added: 14,062,471] | |

| Gross profit | | | | [removed: 6,782,638] [added: 7,221,359] | | | [removed: 6,306,091] [added: 6,782,638] | | | [removed: 5,802,507] [added: 6,306,091] | |

Opinion on the Financial Statements

Basis for Opinion

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

We have served as the Company’s auditor since 2001.

March 23, 2018

| | | 2018 | | | 2017 | | |

| Cash and cash equivalents | | $ | 267,441 | | $ | 187,915 | |

| | | 2018 | | | 2017 | | | 2016 | | |

| Net income | | — | | | — | | | — | | | 1,538,960 | | | — | | | 1,538,960 | |

| Dividends paid, $1.04 per common share | | — | | | — | | | — | | | (282,941) | | | — | | | (282,941) | |

| Repurchases of common stock | | (7,060) | | | (6,178) | | | — | | | (573,534) | | | — | | | (579,712) | |

| Balances, February 2, 2018 | | 268,733 | | $ | 235,141 | | $ | 3,196,462 | | $ | 2,698,352 | | $ | (4,181) | | $ | 6,125,774 | |

| | | 2018 | | | 2017 | | | 2016 | | |

| Net income | | $ | 1,538,960 | | $ | 1,251,133 | | $ | 1,165,080 | |

| | | | | | | | 5,175,292 | | | 4,595,002 | |

| | | February 2, | | | February 3, | | |

| | | $ | 549,658 | | $ | 500,866 | |

| | | February 2, | | | February 3, | | |

| (In thousands) | | 2018 | | | 2017 | | |

| Lease liabilities for closed stores | | | 24,174 | | | 3,483 | |

| Other | | | 36,877 | | | 28,215 | |

| | | $ | 305,944 | | $ | 279,782 | |

Other comprehensive income

Estimated breakage revenue, a percentage of gift cards that will

A determination is first made as to whether it is more likely

The Company has assessed the impacts of the new standard and the related design of internal control over financial reporting.

The FASB has proposed guidance which would allow companies to record the cumulative effect of applying the new standard as an adjustment to the opening balance of retained earnings, although such guidance has not yet been formally issued.

The Company formed a project team to assess and implement the standard, which is evaluating existing contractual arrangements for embedded leases, and comparing the Company’s current accounting policies to the new standard.

As a result of the efforts of this project team, the Company has identified its store leases as the area in which it would most likely be affected by the new guidance.

These amendments require an entity to recognize the income tax

The Company adopted this guidance on February 3, 2018 which resulted in an increase in deferred income tax liabilities and a decrease in retained earnings of approximately $33.6 million.

In January 2017, the FASB issued amendments to existing guidance related to the subsequent measurement of goodwill.

These amendments modify the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its implied fair value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value.

Subsequent to adoption, an entity will perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value.

The amendments should be applied on a prospective basis.

An entity is required to disclose the nature of and reason for the change in accounting principle upon transition.

The Company’s other intangible assets primarily consist of trade names and trademarks of $1.2 billion which have an indefinite life.

| Basic earnings per share | | $ | 1,538,960 | | 272,751 | | $ | 5.64 | |

| Diluted earnings per share | | $ | 1,538,960 | | 273,362 | | $ | 5.63 | |

| Balances, January 31, 2014 | | 317,058 | | $ | 277,424 | | $ | 3,009,226 | | $ | 2,125,453 | | $ | (9,910) | | $ | 5,402,193 | |

| Net income | | — | | | — | | | — | | | 1,065,345 | | | — | | | 1,065,345 | |

| Repurchases of common stock | | (14,106) | | | (12,342) | | | — | | | (787,753) | | | — | | | (800,095) | |

| Tax benefit from stock option exercises | | — | | | — | | | 5,047 | | | — | | | — | | | 5,047 | |

| Cash and cash equivalents, beginning of period | | | 157,947 | | | 579,823 | | | 505,566 | |

At February 3, 2017, the Company maintained cash balances to meet a $20 million minimum threshold set by insurance regulators, as further described below under “Insurance liabilities.”

currently taken as a reduction of the retail value of inventories.

| | | | | | | | 4,595,002 | | | 4,170,486 | |

capitalized where applicable.

| | | $ | 500,866 | | $ | 467,122 | |

Certain increases in accrued expenses and other reflect the 53rd week in 2016.

| Other | | | 31,698 | | | 26,731 | |

| | | $ | 279,782 | | $ | 275,283 | |

The valuation of derivative financial instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative.

This analysis takes into account the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves.

The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash payments (or receipts) and the discounted expected variable cash receipts (or payments).

The variable cash receipts (or payments) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves.

The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements.

The Company considers the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees, to adjust the fair value of outstanding derivative contracts for the effect of nonperformance risk.

In connection with accounting standards for fair value measurement, the Company has made an accounting policy election to measure the credit risk of outstanding derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.

Derivative financial instruments

The Company accounts for derivative financial instruments in accordance with applicable accounting standards for such instruments and hedging activities, which require that all derivatives are recorded on the balance sheet at fair value.

The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting.

Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges.

Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges.

Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation.

Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge.

The Company may enter into derivative contracts that are intended to economically hedge a certain portion of its risk, even though hedge accounting does not apply or the Company elects not to apply the hedge accounting standards.

The liability for retail merchandise returns is based on the Company’s prior experience.

In March 2016, the FASB issued amendments to existing guidance related to accounting for employee share-based payment affecting the income tax consequences of awards, classification of awards as equity or liabilities, and classification on the statement of cash flows.

The Company early adopted this guidance in the first quarter of 2016.

The Company has elected to continue estimating forfeitures of share-based awards.

The amendments requiring recognition of excess tax benefits and tax deficiencies in the income statement were applied prospectively resulting in a benefit for the year ended February 3, 2017 of approximately $11.0 million, or $0.04 per diluted share.

The Company has elected to apply the amendments related to the presentation of excess tax benefits on the statement of cash flows using a retrospective transition method, and as a result, $13.7 million and $12.1 million of excess tax benefits related to share-based awards which were previously classified as cash flows from financing activities for the years ended January 29, 2016 and January 30, 2015, respectively, have been reclassified as cash flows from operating activities.

statements, but expects such adoption will result in an increase in deferred income tax liabilities and a decrease in retained earnings.

As of February 3, 2017 and January 29, 2016, the balances of the Company’s intangible assets were as follows:

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

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

| | | Remaining | | | | | Accumulated | | | | | |

| (In thousands) | | Life | | Amount | | | Amortization | | | Net | | |

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule [removed: 13a‑15(e)] [added: 13a-15(e)] or [removed: 15d‑15(e)] [added: 15d-15(e)] promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

This responsibility includes establishing and maintaining adequate internal control over financial reporting as defined in Rule [removed: 13a‑15(f)] [added: 13a-15(f)] or [removed: 15d‑15(f)] [added: 15d-15(f)] under the Exchange Act.

To comply with the requirements of Section 404 of the [removed: Sarbanes‑Oxley] [added: Sarbanes-Oxley] Act of 2002, management designed and implemented a structured and comprehensive assessment process to evaluate the effectiveness of its internal control over financial reporting.

Based on its assessment, management has concluded that our internal control over financial reporting is effective as of February [removed: 3, 2017.][added: 2, 2018.]

[removed: The] [added: To the Shareholders and the] Board of Directors [removed: and Shareholders] of

We have audited Dollar General Corporation and subsidiaries’ internal control over financial reporting as of February [removed: 3, 2017,] [added: 2, 2018,] based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

[removed: Dollar General Corporation and subsidiaries’] [added: The Company’s] management is responsible for maintaining effective internal control over financial [removed: reporting,] [added: reporting] and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting.

We conducted our audit in accordance with the standards of the [removed: Public Company Accounting Oversight Board (United States).][added: PCAOB.]

[removed: Also, projections of any evaluation of effectiveness to future periods are subject to the risk that] controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Dollar General Corporation and subsidiaries [added: (the Company)] maintained, in all material respects, effective internal control over financial reporting as of February [removed: 3, 2017,] [added: 2, 2018,] based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United [removed: States),] [added: States) (PCAOB),] the [removed: consolidated balance sheets of Dollar General Corporation and subsidiaries as of February 3,] 2017 [removed: and January 29, 2016, and the related] consolidated [added: financial] statements of [removed: income, comprehensive income, shareholders’ equity, and cash flows for each of] the [removed: three years in the period ended February 3, 2017, of Dollar General Corporation and subsidiaries] [added: Company] and our report dated March [removed: 24, 2017,] [added: 23, 2018,] expressed an unqualified opinion thereon.

There have been no changes during the quarter ended February [removed: 3, 2017] [added: 2, 2018] in our internal control over financial reporting (as defined in Exchange Act Rule [removed: 13a‑15(f)] [added: 13a-15(f)] or Rule 15d-15(f)) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Opinion on Internal Control over Financial Reporting

Basis for Opinion

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

Definition and Limitations of Internal Control over Financial Reporting

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that

March 23, 2018

March 24, 2017

On March [removed: 22, 2017,] [added: 21, 2018, a subcommittee of] the Company’s Compensation Committee (the “Committee”) awarded [removed: 161,512 non‑qualified] [added: 157,197 non-qualified] stock options (“Options”) and [removed: 40,290] [added: 40,924] performance share units (“PSUs”) to Mr. Vasos, [removed: 37,686] [added: 27,510] Options and [removed: 9,401] [added: 7,162] PSUs to [added: Mr. Garratt and Ms. Taylor and 29,475 Options and 7,673 PSUs to] Messrs.

[removed: Garratt,] Owen and [removed: Thorpe, and 39,032 Options and 9,737 PSUs to Ms. Taylor] [added: Ravener] on the terms and subject to the conditions set forth in the form of Option award agreement [added: (“Form Option Agreement”)] and form of PSU award agreement [added: (“Form PSU Agreement”)] attached hereto as Exhibit 10.7 and Exhibit [removed: 10.13,] [added: 10.15,] respectively (collectively, the “Form Award Agreements”), and subject to the terms and conditions of the previously filed Dollar General Corporation Amended and Restated 2007 Stock Incentive Plan.

The Options, which were granted on terms substantially similar to the prior year, have a term of ten years and, subject to earlier forfeiture or accelerated vesting under certain circumstances described in the [removed: form of] [added: Form] Option [removed: award agreement,] [added: Agreement,] generally will vest in four equal annual installments beginning on April 1, [removed: 2018.][added: 2019.]

Fifty percent of the target number of PSUs [removed: are] [added: is] subject to an adjusted EBITDA performance measure with a performance period of the Company’s fiscal year [removed: 2017.][added: 2018.]

The other fifty percent of the target number of PSUs [removed: are divided into three equal parts, each] [added: is] subject to [removed: a different] [added: an] adjusted ROIC performance measure [removed: with a different performance period: (i) adjusted ROIC for the Company’s fiscal year 2017, (ii)] [added: which is] the average of adjusted ROIC for the Company’s fiscal years [removed: 2017 and] 2018, [removed: and (iii) the average of adjusted ROIC for the Company’s fiscal years 2017, 2018] [added: 2019] and [removed: 2019.][added: 2020.]