Dollar General (DG) 10-K risk factor changes: FY2019 vs FY2018

You should carefully consider the risks described below and the other information [removed: contained] in this report and other filings that we make from time to time with the SEC, including our consolidated financial statements and accompanying notes.

[removed: We believe many] [added: Many] of our customers have fixed or low incomes and [removed: generally have] limited discretionary spending dollars.

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

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

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

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

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

[removed: General implementation also may be negatively affected by other] [added: Other] risk factors described [removed: herein.][added: herein also could negatively affect general implementation.]

[removed: Successful systemwide implementation relies] [added: The effectiveness of these initiatives is inherently uncertain, even when tested successfully, and is dependent] on consistency of [removed: training, stability of workforce,] [added: training and execution, workforce stability,] ease of execution, and the absence of offsetting factors that can influence results adversely.

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

The success of our merchandising initiatives, particularly [removed: those with respect to] [added: our] non-consumable [removed: merchandise] [added: initiatives] and [removed: store-specific] [added: efforts to increase sales of higher margin] products [removed: and allocations,] [added: within the consumables category, further] depends in part upon our ability to predict [removed: 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 [removed: preferences, expectations and needs.][added: preferences.]

[removed: If we are unable to select] products that are attractive to [removed: customers, to timely obtain such products] [added: customers and] at costs that allow us to sell them at an acceptable profit, or to effectively market such products, [removed: our sales, market share and profitability] [added: it] could [removed: be adversely affected.][added: result in materially decreased sales and profitability.]

Our ability to timely [removed: open] [added: open, relocate and remodel profitable] stores and [removed: to] expand into additional market areas [removed: depends] [added: is a key component of our planned future growth and may depend] in part [removed: on the following factors:] [added: on:] the availability of [removed: attractive] [added: suitable] store [removed: locations;] [added: locations and capital funding;] the absence of entitlement process or occupancy delays; the ability to negotiate acceptable lease and development [removed: terms; the ability] [added: terms,] to [added: cost-effectively] hire and train new personnel, especially store managers, [removed: in a cost effective manner; the ability] [added: and] to identify [added: and accurately assess sufficient] customer [removed: demand in different geographic areas;] [added: demand; and] general economic [removed: conditions; and the availability of capital funding for expansion.][added: conditions.]

[removed: Some new stores and future new store opportunities] [added: We also] may [removed: be located in areas, including but] not [removed: limited to] [added: anticipate or successfully address all of the challenges imposed by the expansion of our operations, including into] new states or metro [removed: urban areas,] [added: areas] where we have limited or no meaningful experience or brand recognition.

Those areas may have different competitive and market conditions, consumer tastes and discretionary spending patterns than our existing markets, as well as higher cost of [removed: entry.][added: entry and operating costs.]

These factors may cause our new stores to be [removed: initially] less [removed: successful] [added: profitable] than stores in our existing markets, which could slow future growth in these areas.

[removed: Although] [added: In addition, many new stores will be located in areas where] we have [removed: experience in these areas, increasing the number of locations in these markets] [added: existing stores, which] may result in inadvertent oversaturation and temporarily or permanently divert customers and sales from our existing stores, thereby adversely affecting our overall financial performance.

We face intense competition that could limit our growth opportunities and [added: materially] adversely [removed: impact] [added: affect] our [added: results of operations,] financial [removed: performance.][added: condition and liquidity.]

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

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

Certain of our competitors have greater financial, distribution, marketing and other [removed: resources than we do] [added: resources,] and may be able to secure better arrangements with [removed: suppliers] [added: suppliers,] than [removed: we can.][added: we.]

[added: If we fail to] respond effectively to competitive pressures and [removed: changes in the retail markets,] [added: industry changes,] it could [removed: adversely] [added: materially] affect our [added: results of operations,] financial [removed: performance.][added: condition and liquidity.]

Competition [removed: for customers] has [removed: intensified] [added: intensified, and is expected to continue to do so,] as competitors [removed: have moved into,] [added: enter] or [removed: increased] [added: increase] their presence [removed: in,] [added: in] our geographic and product markets and [removed: increased the] [added: expand] availability of mobile, web-based and other digital [removed: technology to facilitate a more convenient and competitive customer online and in-store shopping experience.][added: technologies.]

We remain vulnerable to the [removed: marketing power and high level of consumer recognition of larger competitors and to the] risk that [removed: these] [added: our] competitors or others could [removed: venture into] [added: enter] our industry in a significant way, including through the introduction of new store formats.

Further, consolidation [added: or other business combinations or alliances] within the retail industry could significantly alter the competitive dynamics of the retail [removed: marketplace.]

[removed: This consolidation may] [added: marketplace and] result in competitors with greatly improved [removed: financial resources, improved access to merchandise, greater market penetration and other improvements in their] competitive positions, as well as [removed: result in the provision of] [added: competitors providing] a wider variety of products and services at competitive [removed: prices by these consolidated companies,] [added: prices,] which could [removed: adversely] [added: materially] affect our financial performance.

Our cash flows from [removed: operations] [added: operations, profitability and financial condition] may be negatively affected if we are not successful in managing our inventory balances.

Our inventory balance represented approximately [removed: 52%] [added: 53%] of our total assets exclusive of goodwill and other intangible assets as of February [removed: 2, 2018.][added: 1, 2019.]

[removed: To be successful, we] [added: We] must maintain sufficient inventory levels and an appropriate product mix to meet our customers’ demands without allowing those levels to increase to such an extent that the costs to store and hold the goods unduly impacts our financial results or that [removed: subjects us to] [added: increases] the risk of [removed: increased] inventory shrinkage.

If [removed: our buying decisions] [added: we] do not accurately predict customer [removed: trends,] [added: trends or spending levels, or if] we inappropriately price [removed: products or our expectations about customer spending levels are inaccurate,] [added: products,] we may have to take unanticipated markdowns to dispose of the excess inventory, which also can adversely [removed: impact] [added: affect] our financial results.

If we are not successful in managing our inventory balances, our cash flows from operations [added: and financial condition] may be negatively affected.

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

In connection with sales, we transmit confidential credit and debit card [removed: information.][added: information which is encrypted using point-to-point encryption.]

We also have access to, collect or maintain certain private or confidential information regarding our customers, employees and [added: their dependents, and] vendors, as well as our business.

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

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

Moreover, employee error or malfeasance or other irregularities [removed: may] [added: could] result in a defeat of [removed: our or our third-party vendors’] security measures and [removed: breach] [added: compromise] our or our third-party vendors’ information systems.

If [removed: customer] [added: cyberattackers obtain customer, employee or partner] passwords [removed: are obtained] through unrelated third-party breaches, [removed: cyberattackers also] [added: these passwords] could [added: be used to] gain access to [removed: our customers’ accounts.][added: their information or accounts with us.]

Because we accept debit and credit cards for payment, we are subject to industry data protection standards and protocols, such as the Payment Card Industry Data Security [removed: Standards (“PCI DSS”),] [added: Standards,] issued by the Payment Card Industry Security Standards Council.

[removed: However, even as we comply with PCI DSS standards and offer EMV and point-to-point encryption technology in our stores,] [added: Nonetheless,] we may be vulnerable to, and unable to detect and appropriately respond to, data security breaches and data loss, including cybersecurity attacks or other [removed: breach] [added: breaches] of cardholder data.

Investment in our Company involves risks.

Economic factors may reduce our customers’ spending, impair our ability to execute our strategies and initiatives, and increase our costs and expenses, which could result in materially decreased sales or profitability.

Many of these factors are made even more challenging by the diverse geographic locations of our stores and distribution centers and our decentralized field management.

If we are unable to select and timely obtain

We are currently testing a cold chain self-distribution initiative, which we refer to as our DG Fresh initiative, and also testing an initiative we refer to as Fast Track, which is designed to enhance our in-store labor productivity, on-shelf availability, and customer convenience.

The success of our DG Fresh initiative further depends in part on our ability to effectively transition these distribution operations from our current service providers without business disruption, as well as on the availability of certain supply chain resources, including temperature-controlled distribution centers, refrigerated transportation equipment, and drivers.

The success of our Fast Track initiative further depends in part on vendor cooperation, successful implementation and maintenance of the necessary technology, customer interest and adoption, and our ability to gain cost efficiencies and control shrink levels from the initiative.

If we cannot timely and cost-effectively execute our real estate projects and meet our financial expectations, or if we do not anticipate or successfully address all of the challenges imposed by our expansion, including into new states or metro areas, it could materially impede our planned future growth and our profitability.

Delays in or failure to complete any of our real estate projects, or failure to meet our financial expectations for these projects, could materially adversely affect our growth and our profitability.

To maintain our competitive position, we may be required to lower prices, either temporarily or permanently, and may have limited ability to increase prices in response to increased costs, resulting in lower margins and reduced profitability.

Our ability to effectively compete will depend substantially upon our continued ability to develop and execute compelling and cost-effective strategies and initiatives.

Inventory shrinkage may negatively affect our results of operations and financial condition.

We experience significant inventory shrinkage.

There can be no assurance that we will be successful in our efforts to reduce inventory shrinkage.

Additionally, we may share information with select vendors that assist us in conducting our business.

An inability to obtain alternative sources could materially decrease our sales.

Further, failure of suppliers to meet our compliance protocols could prolong our procurement lead time, resulting in lost sales and adverse margin impact.

Changes to the prices and flow of these goods for any reason, such as political unrest, acts of war, currency fluctuations, disruptions in maritime lanes, port labor disputes, and economic conditions and instability in countries in which foreign suppliers are

A significant change in governmental regulations and requirements could materially increase our cost of doing business, and noncompliance with governmental regulations could materially adversely affect our financial performance.

The cost to defend litigation may be significant, and adverse publicity could harm our reputation, regardless of the validity of the allegations.

See also Note 6 to the consolidated financial statements.

We cannot give assurance that we will achieve or maintain our expected level of private brand sales.

In anticipation of this holiday, we purchase substantial amounts of seasonal inventory, and if sales fall below seasonal norms or expectations it could result in unanticipated markdowns.

many subjective assumptions, estimates and judgments by our management.

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

We have limited or no ability to control many of these factors.

These initiatives are inherently risky and uncertain, even when tested successfully, in their application to our business in general.

It is possible that successful testing can result partially from resources and attention that cannot be duplicated in broader implementation, particularly in light of the diverse geographic locations of our stores and the decentralized nature of our field management.

Failure to achieve successful

If our merchandising efforts in the 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.

If we cannot open, relocate or remodel stores profitably and on schedule, our planned future growth will be impeded, which would adversely affect sales.

Our ability to open, relocate and remodel profitable stores is a key component of our planned future growth.

Many of these factors also affect our ability to successfully relocate stores, and many of them are beyond our control.

Delays or failures in opening new stores or completing relocations or remodels, or achieving lower than expected sales in these projects, could materially adversely affect our growth and/or profitability.

We also may not anticipate all of the challenges imposed by the expansion of our operations and, as a result, may not meet our targets for opening new stores, remodeling or relocating stores or expanding profitably.

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

Many new stores will be located in areas where we have existing stores.

This competitive environment subjects us to the risk of adverse impact to our financial performance because of the lower prices, and thus the lower margins, that may be required to maintain our competitive position.

Also, as a discount retailer, due to customer demographics and other factors, we may have limited ability to increase prices in response to increased costs without losing competitive position.

This limitation may adversely affect our margins and financial performance.

If we fail to

We expect this competition to continue to increase.

Our profitability may be negatively affected by inventory shrinkage.

We are subject to the risk of inventory loss and theft.

We experience significant inventory shrinkage and cannot be sure that incidences of inventory loss and theft will decrease in the future or that the measures we are taking will effectively reduce the problem of inventory shrinkage.

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

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.

Additionally, we have implemented technology in our stores to allow for the acceptance of Europay, Mastercard and Visa (EMV) credit transactions and point-to-point encryption.

Complying with PCI DSS standards and implementing related procedures, technology and information security measures require significant resources and ongoing attention.

Deliveries to our stores occur from our distribution centers or directly from our vendors.

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

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 sources.

Our litigation expenses could increase as well, which also could have a materially negative impact on our results of operations even if a product liability claim is unsuccessful or is not fully pursued.

We have invested in our development and procurement resources and marketing efforts relating to these private brand offerings.

We may not achieve or maintain our expected sales for our private brands.

An increase in sales of our private brands may also adversely affect sales of our vendors’ products, which, in turn, could adversely affect our relationship with certain of our vendors.

We are subject to governmental regulations, procedures and requirements.

A significant change in, or noncompliance with, these regulations could have a material adverse effect on our financial performance.

Our business is subject to numerous and frequently changing federal, state and local laws and regulations.

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

The cost to defend future litigation may be significant.

There also may be adverse publicity associated with litigation that could negatively affect customer perception of our business, regardless of whether the allegations are valid or whether we are ultimately found liable.

See Note 7 to the consolidated financial statements for further details regarding certain of these pending matters.

We are continually improving our information processes and computer systems to better run our business.

We are among the largest discount retailers in the United States by number of stores, with [removed: 14,609] [added: 15,472] stores located in 44 states as of March [removed: 2, 2018,] [added: 1, 2019,] with the greatest concentration of stores in the southern, southwestern, midwestern and eastern United States.

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

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

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

The primary macroeconomic factors that affect our core customers include the unemployment [removed: rate, the] [added: and] underemployment [removed: rate,] [added: rates,] wage growth, fuel prices, [added: changes in U.S.] and [added: global trade policy (including price increases from tariffs), and] changes to certain government assistance programs, such as the Supplemental Nutrition Assistance Program.

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

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

Historically, our sales of consumables, which tend to have lower gross margins, have been the key drivers of net sales and customer traffic, while sales of non-consumables, which tend to have higher gross margins, have contributed to [added: more] profitable sales growth and an increase in average transaction amount.

[removed: In addition, throughout 2017,] [added: Throughout 2018,] our sales mix continued to shift slightly toward consumables, and, within consumables, slightly [added: toward lower margin departments such as perishables and tobacco.]

[removed: Certain] [added: While we expect some sales mix challenges to persist, certain] of our [removed: initiatives, including those related to the non-consumables categories,] [added: initiatives] are intended to address these trends, although there can be no assurance we will be successful in [removed: their reversal.][added: reversing them.]

[removed: Many of these initiatives support our plans to] [added: We] continue [removed: investing in] [added: to incorporate lessons learned from] our [added: various store formats and layouts into our] existing store [removed: base,] [added: base] with a goal [removed: to drive] [added: of driving] increased customer [removed: traffic and] [added: traffic,] average transaction [removed: amount and, as a result, our] [added: amount,] same-store [removed: sales.][added: sales and overall store productivity.]

[removed: Even as] [added: As] we work to provide everyday low prices and meet our customers’ affordability needs, we [removed: also] remain focused on enhancing our margins through effective category management, inventory shrink reduction initiatives, private brands penetration, distribution and transportation [removed: efficiencies,] [added: efficiencies (including a test to self-distribute fresh and frozen products, which we call “DG Fresh”),] global [removed: sourcing] [added: sourcing,] and pricing and markdown optimization.

For [removed: 2018,] [added: 2019,] we plan to open approximately [removed: 900] [added: 975] new stores, remodel approximately 1,000 [removed: mature store locations,] [added: stores,] and relocate approximately 100 stores for an approximate total of [removed: 2,000] [added: 2,075] real estate projects.

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 [removed: 2018.][added: 2019.]

We expect [removed: a significant number] [added: approximately 500] of the planned 1,000 remodels in [removed: 2018] [added: 2019] to [removed: include a greater cooler count for] [added: use the higher-cooler-count store format that enables us to offer an] increased selection of perishable items.

To support our new store growth and drive productivity, we continue to make investments in our [added: traditional] distribution center [removed: network.][added: network for non-refrigerated merchandise.]

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

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

Our employees are a competitive advantage, and we [removed: are always searching for] [added: proactively seek] ways to continue investing in them.

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

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

To further enhance shareholder return, we [removed: continued to repurchase] [added: repurchased] shares of our common stock and paid quarterly cash dividends throughout [removed: 2017.][added: 2018.]

In [removed: 2018,] [added: 2019,] we intend to continue our share repurchase activity, [removed: at a significantly greater dollar amount than in 2017,] and to pay quarterly cash dividends, subject to Board discretion and approval.

The [removed: Act reduced our] effective [added: income] tax rate [added: was higher] in [removed: 2017] [added: 2018] primarily [removed: as a result of] [added: due to] the one-time remeasurement of the [removed: federal portion of our] deferred tax assets and liabilities [removed: to a lower rate, accompanied] [added: at 21% in 2017, which was offset] by [removed: a] [added: the] reduction in the current [removed: year] federal [removed: corporate] tax rate [removed: to 33.7%, due] [added: from 33.7% in 2017] to [removed: our fiscal year ending approximately one month after the effective date of the Act.][added: 21% in 2018.]

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: 2017] [added: 2018] as compared to [removed: 2016,] [added: 2017,] as set forth below.

| | · | | Net sales in [removed: 2017] [added: 2018] increased [removed: 6.8%] [added: 9.2%] over [removed: 2016.] [added: 2017.] Sales in same-stores increased [removed: 2.7%,] [added: 3.2%, primarily] due to an increase in average transaction [removed: amount and increased customer traffic.] [added: amount.] Average sales per square foot in [removed: 2017] [added: 2018] were [removed: $227] [added: $231] compared to [removed: $229, including a $4 contribution from the 53rd week,] [added: $227] in [removed: 2016.] [added: 2017.] |

| | · | | Our gross profit rate decreased by [removed: 8] [added: 32] basis points due primarily to [added: higher markdowns,] a greater proportion of sales of consumables compared to non-consumables, [removed: higher markdowns,] and increased transportation costs. |

| | · | | We generated approximately [removed: $1.8] [added: $2.14] billion of cash flows from operating activities in [removed: 2017,] [added: 2018,] an increase of [removed: 12.3%] [added: 18.9%] compared to [removed: 2016.] [added: 2017 as described in detail below.] 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 [removed: 4.7] [added: 4.6] times on a rolling four-quarter basis. Inventories increased [removed: 1.5%] [added: 7.3%] on a per store basis compared to [removed: 2016.] [added: 2017.] |

| | · | | We repurchased approximately [removed: 7.1] [added: 9.9] million shares of our outstanding common stock for [removed: $580 million.] [added: $1.0 billion.] |

The following text contains references to years [added: 2018,] 2017, [removed: 2016,] and [removed: 2015,] [added: 2016,] which represent fiscal years ended February [added: 1, 2019, February] 2, 2018, [added: and] February 3, 2017, [removed: and January 29, 2016,] respectively.

Fiscal [added: years 2018 and 2017 were 52-week accounting periods and fiscal] year 2016 was a 53-week accounting [removed: period and fiscal years 2017 and 2015 were 52-week accounting periods.][added: period.]

The following table contains results of operations data for fiscal years [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015,] [added: 2016,] and the dollar and percentage variances among those years.

| | | | | | | | | | | | [removed: 2017] [added: 2018] vs. [removed: 2016] [added: 2017] | | | | | [removed: 2016] [added: 2017] vs. [removed: 2015] [added: 2016] | | | | |

| per share amounts) | | [removed: 2017] [added: 2018] | | | [removed: 2016] [added: 2017] | | | [removed: 2015] [added: 2016] | | | Change | | | Change | | Change | | | Change | |

| Consumables | | $ | [removed: 18,054.8] [added: 19,865.1] | | $ | [removed: 16,798.9] [added: 18,054.8] | | $ | [removed: 15,457.6] [added: 16,798.9] | | $ | [removed: 1,255.9] [added: 1,810.3] | | [removed: 7.5] [added: 10.0] | % | $ | [removed: 1,341.3] [added: 1,255.9] | | [removed: 8.7] [added: 7.5] | % |

| % of net sales | | | [removed: 76.92] [added: 77.52] | % | | [removed: 76.41] [added: 76.92] | % | | [removed: 75.89] [added: 76.41] | % | | | | | | | | | | |

| Seasonal | | | [removed: 2,837.3] [added: 3,050.3] | | | [removed: 2,674.3] [added: 2,837.3] | | | [removed: 2,522.7] [added: 2,674.3] | | | [removed: 163.0] [added: 213.0] | | [removed: 6.1] [added: 7.5] | | | [removed: 151.6] [added: 163.0] | | [removed: 6.0] [added: 6.1] | |

| % of net sales | | | [removed: 12.09] [added: 11.90] | % | | [removed: 12.16] [added: 12.09] | % | | [removed: 12.39] [added: 12.16] | % | | | | | | | | | | |

| Home products | | | [removed: 1,400.6] [added: 1,506.1] | | | [removed: 1,373.4] [added: 1,400.6] | | | [removed: 1,289.4] [added: 1,373.4] | | | [removed: 27.2] [added: 105.4] | | [removed: 2.0] [added: 7.5] | | | [removed: 84.0] [added: 27.2] | | [removed: 6.5] [added: 2.0] | |

We are mindful that the majority of our customers are value-conscious, and many have low and/or fixed incomes.

Finally, significant unseasonable or unusual weather patterns can impact customer shopping behaviors.

Several of our sales-driving initiatives are also designed to capture growth opportunities and are discussed in more detail below.

We continue to make progress on and invest in certain strategic initiatives that we believe will help drive profitable sales growth and capture long-term growth opportunities.

Following an in-depth analysis, in 2018 we began testing a refreshed approach to our non-consumable product offerings.

This non-consumables initiative is a merchandising strategy that offers a new, differentiated and limited assortment that will change throughout the year.

As we look to roll out this initiative more broadly in 2019, our goal for this initiative is to continue to improve the shopping experience while delivering exceptional value within key areas of our non-consumable categories.

In 2019, we also are testing two initiatives aimed at driving sales and enhancing our position as a low-cost operator, as discussed further below.

Tariffs currently in effect on products from China, as applied to both our direct imports and domestic purchases, did not have a material impact on our financial results in fiscal 2018.

The recently postponed increase in tariff rates applicable to products from China, if ultimately implemented, as well as any other future increase in tariff rates or the expansion of products subject to tariffs, may have a more significant impact on our business and on our customers’ budgets.

We continue to work to minimize price increases to our customers and to mitigate the potential sales and margin impact of current and potential future tariffs through various merchandising efforts.

There can be no assurance we will be successful in our efforts to mitigate these impacts in whole or in part.

In 2018, we opened 900 new stores, remodeled 1,050 stores, and relocated 115 stores.

Most recently, we began shipping from our distribution center in Longview, Texas in January 2019.

In addition, our distribution center in Amsterdam, New York is currently under construction, and we expect to begin shipping from this facility later in 2019.

Nonetheless, we seek to maintain flexibility to invest in the business as necessary to enhance our long-term profitability.

In 2019, we will be testing “DG Fresh”, a self-distribution model for fresh and frozen products that is designed to enhance sales, reduce product costs, improve our in-stock position and enhance item assortment; and Fast Track, an initiative aimed at further enhancing our convenience proposition and in-stock position as well as increasing labor productivity within our stores.

These and certain other strategic initiatives will require us to incur upfront expenses for which there may not be an immediate return in terms of sales or enhanced profitability.

Certain operating expenses such as wage rates and occupancy costs have continued to increase in recent years.

While we expect these increases to persist, certain of our initiatives and plans are intended to help offset these challenges, although there can be no assurance we will be successful in mitigating them.

| | · | | SG&A decreased by 1 basis point and was impacted by reduced repairs and maintenance expenses offset by increases in occupancy costs and depreciation expenses. |

| | · | | Operating profit increased 5.4% to $2.12 billion in 2018 compared to $2.01 billion in 2017. |

| | · | | The increase in the effective income tax rate to 21.1% in 2018 from 19.3% in 2017 was due primarily to the remeasurement of deferred tax assets and liabilities in 2017 related to tax reform. |

| | · | | We reported net income of $1.59 billion, or $5.97 per diluted share, for 2018 compared to net income of $1.54 billion, or $5.63 per diluted share, for 2017. |

The net sales increase in 2018 reflects a same-store sales increase of 3.2% compared to 2017.

In 2018, our 14,283 same-stores accounted for sales of $23.9 billion.

relative to 2017.

The increase in average transaction amount was driven by higher average item retail prices and to a lesser extent, an increase in average items per transaction, while customer traffic was essentially unchanged.

Same-store sales results in 2018 for the three non-consumables categories, when aggregated, were positive.

Higher markdowns, a greater proportion of sales of consumables, which generally have a lower gross profit rate than our other product categories, and sales of lower margin products comprising a higher proportion of consumables sales, as well as increases in transportation costs and an increased LIFO provision reduced the gross profit rate.

These factors were partially offset by an improved rate of inventory shrinkage and higher initial markups on inventory purchases.

SG&A as a percentage of sales decreased by 1 basis point, rounding to 22.2% in both 2018 and 2017.

The 2018 amounts reflect a reduction in repairs and maintenance expenses which were offset by occupancy costs and depreciation expenses, each of which increased at a rate greater than the increase in net sales.

The 2017 amounts include costs related to the closure of 35 underperforming stores discussed above.

Interest expense increased $2.8 million to $99.9 million in 2018 compared to 2017 primarily due to higher average interest rates which was partially offset by a decrease in average debt outstanding.

We concluded our analysis of the accounting impact of the Act pursuant to SAB 118 and recorded immaterial adjustments related to our 2017 provision for income taxes in 2018.

In 2018, we experienced increases in certain product costs due in part to tariffs on certain items imported from China.

Revolving Credit Facility

An additional $186.0 million of outstanding CP Notes were held by a wholly-owned subsidiary and are therefore not reflected on the consolidated balance sheet.

In April 2018 we issued $500.0 million aggregate principal amount of 4.125% senior notes due 2028 (the “2028 Senior Notes”) at a discount of $0.5 million, which are scheduled to mature on May 1, 2028.

Like other retailers, we have been operating for several years in an environment with ongoing macroeconomic challenges and uncertainties.

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.

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

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.

We believe same-store sales growth is key to achieving our financial objectives.

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

We made significant progress in 2017 on many of these initiatives, which included the continued expansion of coolers, the rollout of additional strategies across many of our merchandise departments, including a redesign of our Health and Beauty department to drive further product awareness and market share, a continued focus on improving our in-stock position and the addition of a queue line containing items intended to drive impulse purchases in a portion of our existing store base.

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 demonstrate our commitment to the affordability needs of our core customer as more than 80% of our stock-keeping units were priced at $5 or less at the end of 2017.

With respect to category management, we strive to maintain an appropriate mix of consumables and non-consumables sales because, as noted above, the mix of sales affects profitability due to the varying gross margins between, and even within, the consumables and non-consumables categories.

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.

However, we continue to seek to reduce our stem miles and optimize shipment loads to improve distribution and transportation efficiencies.

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

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.

Our fifteenth distribution center in Jackson, Georgia began shipping in October 2017.

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.

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.

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

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

| | · | | The increase in SG&A, as a percentage of sales, was due primarily to increases in retail labor costs, occupancy costs and store closures and related costs. |

| | · | | 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. |

| | · | | We reported net income of $1.54 billion, or $5.63 per diluted share, for 2017 compared to net income of $1.25 billion, or $4.43 per diluted share, for 2016. Reduced income tax expense in 2017 due to the Act contributed to the increase in diluted earnings per share. |

For 2016, there were 12,383 same-stores, which accounted for sales of $20.3 billion.

The gross profit rate decrease in 2016 as compared to 2015 primarily reflects increased markdowns which were driven by promotional and inventory clearance activity, sales of lower-margin consumables comprising a greater proportion of net sales, and increased inventory shrink, partially offset by higher initial inventory markups and lower transportation costs.

SG&A was 21.5% as a percentage of net sales in 2016, increasing by 3 basis points over 2015.

The 2016 results reflect increases in retail labor costs, which increased at a rate greater than the increase in net sales, partially offset by reductions in administrative payroll costs, incentive compensation expenses, and advertising costs.

Interest expense increased $10.9 million to $97.8 million in 2016 compared to 2015 primarily due to an increase in average debt outstanding and higher average interest rates.

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

As of February [removed: 2, 2018,] [added: 1, 2019,] we had [removed: variable rate borrowings of $175 million under our Term Facility,] consolidated borrowings of [removed: $430.2] [added: $366.9] million under our commercial paper [removed: program,] [added: program] and no borrowings outstanding under our Revolving Facility.

As of February [removed: 2, 2018,] [added: 1, 2019,] no such interest rate swaps were outstanding and, as a result, we are exposed to fluctuations in variable interest rates under the [removed: credit facilities] [added: Revolving Facility] and our commercial paper program.

For a detailed discussion of our [removed: credit facilities] [added: Revolving Facility] and our commercial paper program, see Note [removed: 5] [added: 4] to the consolidated financial statements.

Based on our variable rate borrowing levels as of February [removed: 2, 2018] [added: 1, 2019] and February [removed: 3, 2017,] [added: 2, 2018,] the annualized effect of a one percentage point increase in variable interest rates would have resulted in a pretax reduction of our earnings and cash flows of approximately [removed: $6.1] [added: $3.7] million in [removed: 2017] [added: 2018] and [removed: $9.2] [added: $6.1] million in [removed: 2016.][added: 2017.]

We are among the largest discount retailers in the United States by number of stores, with [removed: 14,609] [added: 15,472] stores located in 44 states as of March [removed: 2, 2018,] [added: 1, 2019,] with the greatest concentration of stores in the southern, southwestern, midwestern and eastern United States.

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

In [removed: fiscal year 2017,] [added: 2018,] we achieved our [removed: 28th] [added: 29th] consecutive year of positive same-store sales growth.

| | · | | Convenient Locations. Our stores are conveniently located in a variety of rural, suburban and urban communities. We seek to locate our stores in close proximity to our customers, which [added: helps drive customer loyalty and trip frequency and makes us an attractive alternative to large discount and other large-box retail and grocery stores.] |

| | · | | Time-Saving Shopping Experience. We strive to provide customers with a highly convenient, easy to navigate shopping experience. Our small-box stores make it easier to get in and out 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, [added: tobacco products,] greeting 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 [removed: routine shopping] requirements [added: for basic goods] and minimize their need to shop elsewhere. |

| [removed: | · | | 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 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 nationally advertised brands at these everyday low prices in addition to offering our own private brands at substantially lower prices. |

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 over-the-counter medicines and personal care products including soap, body wash, shampoo, [added: cosmetics,] dental hygiene and foot care products); pet (such as pet supplies and pet food); and tobacco products.

| | | [removed: 2017] [added: 2018] | | [removed: 2016] [added: 2017] | | [removed: 2015] [added: 2016] | |

| Consumables | | [removed: 76.9] [added: 77.5] | % | [removed: 76.4] [added: 76.9] | % | [removed: 75.9] [added: 76.4] | % |

| Seasonal | | [removed: 12.1] [added: 11.9] | % | [removed: 12.2] [added: 12.1] | % | [removed: 12.4] [added: 12.2] | % |

| Home products | | [removed: 6.0] [added: 5.9] | % | [removed: 6.2] [added: 6.0] | % | [removed: 6.3] [added: 6.2] | % |

| Apparel | | [removed: 5.0] [added: 4.7] | % | [removed: 5.2] [added: 5.0] | % | [removed: 5.4] [added: 5.2] | % |

At the same time, however, [removed: loyal] Dollar General shoppers from a wide range of income brackets and life stages appreciate our quality merchandise as well as our attractive value and convenience proposition.

Our [removed: largest and second] [added: three] largest suppliers each accounted for approximately 8% of our purchases in [removed: 2017.][added: 2018.]

We directly imported approximately [removed: 5%] [added: 6%] of our purchases at cost in [removed: 2017.][added: 2018.]

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 [removed: 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: fifteen] distribution centers [added: for non-refrigerated merchandise] located strategically throughout our geographic footprint.

We [added: also have purchased a cold storage facility, and we are testing the self-distribution of fresh and frozen products, an initiative which we call “DG Fresh.” We] continually analyze and rebalance the network to ensure that it remains efficient and provides the service levels our stores require.

We also own [removed: 79] [added: approximately 200] semi-trailer trucks with which we transport our merchandise.

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

In addition, our quarterly results can be affected by the timing of certain holidays, [added: and] the timing of new store openings and store closings, and the amount of sales contributed by new and existing stores.

We typically purchase substantial amounts of inventory [removed: in the third quarter] and incur higher shipping and payroll costs in the third quarter in anticipation of increased sales activity during the fourth quarter.

See Note [removed: 12] [added: 11] to the consolidated financial statements for additional information.

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

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

Certain of our competitors have greater financial, distribution, marketing and other resources than we [removed: do.][added: do and may be able to secure better arrangements from suppliers than we can.]

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

As of March [removed: 2, 2018,] [added: 1, 2019,] we employed approximately [removed: 129,000] [added: 135,000] full-time and part-time employees, including divisional and regional managers, district managers, store managers, other store personnel and distribution center and administrative personnel.

We also hold an exclusive license to the Rexall brand through [added: at least] March 5, [removed: 2020.][added: 2026.]

| | · | | 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 |

| 2018 | | 14,534 | | 900 | | 64 | | 836 | | 15,370 | |

sources; however, such alternative sources could increase our merchandise costs and supply chain lead time, result in a temporary reduction in store inventory levels, reduce our selection, or reduce the quality of our merchandise, and an inability to obtain alternative sources could adversely affect our sales.

We also have a distribution center in Amsterdam, New York under construction which is expected to be completed in 2019.

We own marks that are registered with the United States Patent and Trademark Office and are protected under applicable intellectual property laws.

Save money.

| helps drive customer loyalty and trip frequency and makes us an attractive alternative to large discount and other large-box retail and grocery stores. |

| 2015 | | 11,789 | | 730 | | 36 | | 694 | | 12,483 | |

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 own marks that are registered with the United States Patent and Trademark Office and are protected under applicable intellectual property laws, including, without limitation, the trademarks Dollar General®, Dollar General Market®, Clover Valley®, DG®, DG Deals®, DGX®, Forever Pals®, I*Magine®, OT Sport®, OT Revolution®, Smart & Simple®, trueliving®, Sweet Smiles®, Open Trails®, Beauty Cents®, Bobbie Brooks®, Comfort Bay®, Holiday Style®, Swiggles®, More Deals For Your Dollar.

Every Day!®, The Fast Way To Save®, Zone Pro®, Operation Storm Force®, Ultimate Caffeine® and Save Time.

Every Day!®, along with variations and formatives of these trademarks as well as certain other trademarks including Ever Pet™ , DG GO!

™, Perfect Harvest™, In.Out.Save.

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

In addition, the public may read and copy any of the materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington DC 20549.

The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.

The information contained in Note [removed: 7] [added: 6] to the consolidated financial statements under the heading “Legal proceedings” contained in Part II, Item 8 of this report is incorporated herein by this reference.

For the fiscal year ended February [removed: 2, 2018][added: 1, 2019]

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

| [removed: (Do not check if a smaller reporting company)] | Emerging growth company ☐ |

The aggregate fair market value of the registrant’s common stock outstanding and held by non-affiliates as of August [removed: 4, 2017] [added: 3, 2018] was [removed: $18.1] [added: $23.2] billion calculated using the closing market price of our common stock as reported on the NYSE on such date [removed: ($74.86).][added: ($98.23).]

The registrant had [removed: 268,741,400] [added: 259,518,801] shares of common stock outstanding as of March [removed: 16, 2018.][added: 18, 2019.]

Certain of the information required in Part III of this Form 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: 30, 2018.][added: 29, 2019.]

| | [ITEM 1A. RISK [removed: FACTORS](#ITEM1ARISKFACTORS_549373)] [added: FACTORS](#RISKFACTORS)] | 9 |

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

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

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

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

| | [ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES](#ITEM5MARKETFORREGISTRANTSCOMMONEQUITY_76) | [removed: 23] [added: 22] |

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

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

| | [ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](#ITEM7AQUANTITATIVEANDQUALITATIVEDISCLOSU) | [removed: 43] [added: 40] |

| | [ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA](#ITEM8FINANCIALSTATEMENTSANDSUPPLEMENTARY) | [removed: 44] [added: 41] |

| [Report of Independent Registered Public Accounting Firm](#ReportofIndependentRegisteredPublicAccou) | | [removed: 44] [added: 41] |

| [DOLLAR GENERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS](#BALANCESHEETS_88009) | | [removed: 45] [added: 42] |

| [DOLLAR GENERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME](#STATEMENTSOFINCOME_317344) | | [removed: 46] [added: 43] |

| [DOLLAR GENERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME](#COMPREHENSIVEINCOME_803563) | | [removed: 47] [added: 44] |

| [DOLLAR GENERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY](#SHAREHOLDERSEQUITY_636150) | | [removed: 48] [added: 45] |

| [DOLLAR GENERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS](#CASHFLOWS_532721) | | [removed: 49] [added: 46] |

| [DOLLAR GENERAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS](#NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS_6) | | [removed: 50] [added: 47] |

| | [ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE](#ITEM9CHANGESINANDDISAGREEMENTSWITHACCOUN) | [removed: 74] [added: 69] |

| | [ITEM 9A. CONTROLS AND PROCEDURES](#ITEM9ACONTROLSANDPROCEDURES_424309) | [removed: 74] [added: 69] |

| [Report of Independent Registered Public Accounting Firm](#ReportofIndependent1_574395) | | [removed: 75] [added: 70] |

| | [ITEM 9B. OTHER INFORMATION](#ITEM9BOTHERINFORMATION_957047) | [removed: 76] [added: 71] |

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

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

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

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

| | [ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES](#ITEM14PRINCIPALACCOUNTINGFEESANDSERVICES) | [removed: 79] [added: 74] |

| | [ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES](#ITEM15EXHIBITSANDFINANCIALSTATEMENTSCHED) | [removed: 80] [added: 75] |

| | [ITEM 16 FORM 10-K SUMMARY](#ITEM16) | [removed: 87] [added: 81] |

| [SIGNATURES](#SIGNATURES_950127) | | [removed: 88] [added: 82] |

This report contains references to years [added: 2019,] 2018, 2017, 2016, 2015, [removed: 2014,] and [removed: 2013,] [added: 2014,] which represent fiscal years ending or ended [added: January 31, 2020,] February 1, 2019, February 2, 2018, February 3, 2017, January 29, 2016, [added: and] January 30, 2015, [removed: and January 31, 2014,] respectively.

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

We include “forward-looking statements” within the meaning of the federal securities laws throughout this report, particularly under the headings “Business,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Note [removed: 7] [added: 6] – Commitments and Contingencies,” among others.

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

For example, all statements relating to, among others, our estimated and projected expenditures, cash flows, results of operations, financial condition and liquidity; our plans and objectives for, and expectations regarding future operations, economic and competitive market conditions, growth or [removed: initiatives] [added: initiatives,] including but not limited to the number of planned store openings, remodels and [removed: relocations and planned opening dates for new distribution centers,] [added: relocations, store formats,] progress of merchandising and other initiatives, trends in sales of consumable and non-consumable products, and [removed: the] level of future costs and expenses; potential future stock repurchases and cash dividends; anticipated borrowing under our [added: unsecured revolving] credit [removed: facilities] [added: agreement] and commercial paper program; [removed: or the expected outcome or effect] [added: potential impact] of [removed: legislative] [added: legal] or regulatory changes [removed: or initiatives,] and our responses thereto, [added: including the potential impact of tariffs by the U.S. government; anticipated impact of new accounting standards; efforts to improve distribution and transportation efficiencies, including self-distribution, and anticipated timing of distribution center openings;] or [added: expected outcome or effect] of pending or threatened litigation or audits are forward-looking statements.

10-K 1 dg-20190201x10k.htm 10-K

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

As of March [removed: 2, 2018,] [added: 1, 2019,] we operated [removed: 14,609] [added: 15,472] retail stores located in 44 states as follows:

| Arizona | | [removed: 109] [added: 118] | | Nevada | | 22 | |

| Arkansas | | [removed: 414] [added: 433] | | New Hampshire | | [removed: 30] [added: 36] | |

| California | | [removed: 202] [added: 220] | | New Jersey | | [removed: 121] [added: 133] | |

| Colorado | | [removed: 42] [added: 47] | | New Mexico | | [removed: 97] [added: 100] | |

| Connecticut | | [removed: 47] [added: 56] | | New York | | [removed: 439] [added: 464] | |

| Delaware | | [removed: 44] [added: 45] | | North Carolina | | [removed: 787] [added: 817] | |

| Florida | | [removed: 825] [added: 856] | | North Dakota | | [removed: 15] [added: 26] | |

| Indiana | | [removed: 494] [added: 525] | | Oregon | | [removed: 38] [added: 52] | |

| Kansas | | [removed: 230] [added: 235] | | Rhode Island | | [removed: 13] [added: 16] | |

| Kentucky | | [removed: 500] [added: 530] | | South Carolina | | [removed: 518] [added: 542] | |

| Louisiana | | [removed: 536] [added: 559] | | South Dakota | | [removed: 47] [added: 52] | |

| Maine | | [removed: 46] [added: 55] | | Tennessee | | [removed: 733] [added: 780] | |

| Massachusetts | | [removed: 41] [added: 45] | | Utah | | 11 | |

| Michigan | | [removed: 468] [added: 519] | | Vermont | | [removed: 35] [added: 36] | |

| Mississippi | | [removed: 483] [added: 512] | | West Virginia | | [removed: 234] [added: 242] | |

As of March [removed: 2, 2018,] [added: 1, 2019,] we operated [removed: fifteen distribution centers, as described in] the following [removed: table:][added: distribution centers for non-refrigerated merchandise:]

| Scottsville, KY | | 1959 | | 720,000 | | [removed: 695] [added: 776] | |

| Ardmore, OK | | 1994 | | 1,310,000 | | [removed: 1,242] [added: 1,070] | |

| South Boston, VA | | 1997 | | 1,250,000 | | [removed: 1,055] [added: 1,065] | |

| Indianola, MS | | 1998 | | 820,000 | | [removed: 787] [added: 907] | |

| Fulton, MO | | 1999 | | 1,150,000 | | [removed: 1,204] [added: 1,272] | |

| Alachua, FL | | 2000 | | 980,000 | | [removed: 977] [added: 991] | |

| Zanesville, OH | | 2001 | | 1,170,000 | | [removed: 1,223] [added: 1,189] | |

| Jonesville, SC | | 2005 | | 1,120,000 | | [removed: 1,085] [added: 1,019] | |

| Marion, IN | | 2006 | | 1,110,000 | | [removed: 1,191] [added: 1,194] | |

| Bessemer, AL | | 2012 | | 940,000 | | [removed: 1,137] [added: 1,138] | |

| Lebec, CA | | 2012 | | 600,000 | | [removed: 385] [added: 444] | |

| Bethel, PA | | 2014 | | 1,000,000 | | [removed: 1,004] [added: 1,115] | |

| San Antonio, TX | | 2016 | | 920,000 | | [removed: 993] [added: 995] | |

| Janesville, WI | | 2016 | | 1,000,000 | | [removed: 895] [added: 883] | |

| Jackson, GA | | 2017 | | 1,000,000 | | [removed: 736] [added: 905] | |

As of February [removed: 2, 2018,] [added: 1, 2019,] we [added: owned a cold storage and distribution facility of approximately 148,000 square feet and] leased approximately [removed: 1,082,000] [added: 1,070,000] square feet of additional [removed: temporary warehouse] space to support our distribution needs.

| Alabama | | 760 | | Nebraska | | 123 | |

| Georgia | | 872 | | Ohio | | 798 | |

| Illinois | | 547 | | Oklahoma | | 442 | |

| Iowa | | 242 | | Pennsylvania | | 738 | |

| Maryland | | 137 | | Texas | | 1,485 | |

| Minnesota | | 136 | | Virginia | | 419 | |

| Missouri | | 518 | | Wisconsin | | 171 | |

| Longview, TX | | 2018 | | 1,020,000 | | 509 | |

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

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

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

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

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

| Minnesota | | 119 | | Virginia | | 395 | |

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

Information regarding our current executive officers as of March [removed: 23, 2018] [added: 21, 2019] is set forth below.

| Todd J. Vasos | | [removed: 56] [added: 57] | | Chief Executive Officer and Director |

| John W. Garratt | | [removed: 49] [added: 50] | | Executive Vice President and Chief Financial Officer |

| Jeffery C. Owen | | [removed: 48] [added: 49] | | Executive Vice President, Store Operations |

| Robert D. Ravener | | [removed: 59] [added: 60] | | Executive Vice President and Chief People Officer |

| Jason S. Reiser | | [removed: 49] [added: 50] | | Executive Vice President and Chief Merchandising Officer |

| Rhonda M. Taylor | | [removed: 50] [added: 51] | | Executive Vice President and General Counsel |

| Carman R. Wenkoff | | [removed: 50] [added: 51] | | Executive Vice President and Chief Information Officer |

| Anita C. Elliott | | [removed: 53] [added: 54] | | Senior Vice President and Chief Accounting Officer |

| Michael J. Kindy | | [removed: 52] [added: 53] | | [removed: Senior] [added: Executive] Vice President, Global Supply Chain |

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

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

Prior to serving at Starbucks, Mr. Ravener held Vice President of Human Resources roles for The Home Depot [removed: Inc., a home improvement retailer,] [added: Inc.] at its Store Support Center and a domestic field division from April 2003 to September 2005.

Mr. Reiser has served as Executive Vice President and Chief Merchandising Officer since July [removed: 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 [removed: June] [added: July] 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 [added: discount retailer] Dollar Tree, Inc. (successor to Family Dollar Stores, Inc.).

Prior to joining Dollar General, she practiced law with Ogletree, Deakins, Nash, Smoak & Stewart, P.C., where [removed: she specialized in] [added: her practice was focused on] labor law and employment litigation.

Mr. Wenkoff has served as Executive Vice President and Chief Information Officer since July [removed: 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”), [added: the largest string of sandwich shops in the world,] where he was responsible for global technology and digital strategy, execution and operations for the Subway brand and all of its restaurants.

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, [removed: Value Pay Services LLC, from May 2005 to February 2011.]

Prior to joining Dollar General, she served as Vice President and Controller of Big Lots, [removed: Inc., a closeout retailer,] [added: Inc.] from May 2001 to August 2005, where she was responsible for accounting operations, financial reporting and internal audit.

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

He [added: joined Dollar General as Vice President, Distribution Centers in December 2008,] became Vice President, Transportation in May [removed: 2013] [added: 2013,] and was promoted to Senior Vice President, Global Supply Chain in June 2015.

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

| 8 | | | | |

Mr. Kindy has served as Executive Vice President, Global Supply Chain since August 2018.

As previously announced, Mr. Ravener plans to retire from Dollar General effective May 27, 2019.

Value Pay Services LLC, from May 2005 to February 2011.

Prior to joining Dollar General, he served in

Prior to serving at Big

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

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

The following table contains information regarding purchases of our common stock made during the quarter ended February [removed: 2, 2018] [added: 1, 2019] 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:

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

| Period | | Purchased | | per Share | | | [added: or] Programs(a) | | or Programs(a) | | |

| | (a) | | On September 5, 2012, the Company announced a program permitting the Company to repurchase a portion of its outstanding shares not to exceed a dollar maximum established by the Company’s Board of Directors. The program was most recently amended on March [removed: 14, 2018] [added: 13, 2019] to increase the repurchase authorization by $1.0 billion, bringing the total value of authorized share repurchases under the program to [removed: $6.0] [added: $7.0] 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. |

Our common stock is traded on the New York Stock Exchange under the symbol “DG.” On March 18, 2019, there were approximately 2,556 shareholders of record of our common stock.

We resumed the payment of quarterly cash dividends in 2015.

Our Board of Directors most recently increased the amount of the quarterly cash dividend to $0.32 beginning with the dividend payable on April 23, 2019.

| 11/03/18-11/30/18 | | — | | $ | — | | — | | $ | 706,116,000 | |

| 12/01/18-12/31/18 | | 3,027,556 | | $ | 104.04 | | 3,027,556 | | $ | 391,132,000 | |

| 01/01/19-02/01/19 | | 407,492 | | $ | 110.45 | | 407,492 | | $ | 346,124,000 | |

| Total | | 3,435,048 | | $ | 104.80 | | 3,435,048 | | $ | 346,124,000 | |

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 2017 and 2016 were as follows:

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

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

| | | First | | | Second | | | Third | | | Fourth | | |

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

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

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

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

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

| | | First | | | Second | | | Third | | | Fourth | | |

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

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

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

On March 16, 2018, our stock price at the close of the market was $95.43 and there were approximately 2,383 shareholders of record of our common stock.

On March 14, 2018, our Board of Directors declared a quarterly cash dividend of $0.29 per share, which is payable on or before April 24, 2018 to shareholders of record of our common stock on April 10, 2018.

We paid quarterly cash dividends of $0.26 per share in 2017 and $0.25 per share in 2016.

Prior to March 2015, we had not declared or paid recurring dividends since March 2007.

| 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 | |

The selected historical statement of income data and statement of cash flows data for the fiscal years ended February [added: 1, 2019, February] 2, 2018, [added: and] February 3, 2017, and [removed: January 29, 2016, and] balance sheet data as of February [removed: 2, 2018] [added: 1, 2019] and February [removed: 3, 2017,] [added: 2, 2018,] 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 [removed: 30, 2015] [added: 29, 2016] and January [removed: 31, 2014] [added: 30, 2015] and balance sheet data as of [added: February 3, 2017,] January 29, 2016, [removed: January 30, 2015,] and January [removed: 31, 2014] [added: 30, 2015] presented in this table have been derived from audited consolidated financial statements not included in this report.

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

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

| per square foot) | | [added: 2019 | | |] 2018 | | | 2017(1) | | | 2016 | | | 2015 | | | [removed: 2014 | | |]

| Net sales | | $ | [removed: 23,471.0] [added: 25,625.0] | | $ | [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] | |

| Cost of goods sold | | | [added: 17,821.2 | | |] 16,249.6 | | | 15,204.0 | | | 14,062.5 | | | 13,107.1 | | [removed: | 12,068.4 | |]

| Gross profit | | | [added: 7,803.9 | | |] 7,221.4 | | | 6,782.6 | | | 6,306.1 | | | 5,802.5 | | [removed: | 5,435.7 | |]

| Selling, general and administrative expenses | | | [added: 5,687.6 | | |] 5,213.5 | | | 4,719.2 | | | 4,365.8 | | | 4,033.4 | | [removed: | 3,699.6 | |]

| Operating profit | | | [added: 2,116.3 | | |] 2,007.8 | | | 2,063.4 | | | 1,940.3 | | | 1,769.1 | | [removed: | 1,736.2 | |]

| Interest expense | | | [added: 99.9 | | |] 97.0 | | | 97.8 | | | 86.9 | | | 88.2 | | [removed: | 89.0 | |]

| Other (income) expense | | | [added: 1.0 | | |] 3.5 | | | — | | | 0.3 | | | — | | [removed: | 18.9 | |]

| Income before income taxes | | | [added: 2,015.4 | | |] 1,907.3 | | | 1,965.6 | | | 1,853.0 | | | 1,680.9 | | [removed: | 1,628.3 | |]

| Income tax expense | | | [added: 425.9 | | |] 368.3 | | | 714.5 | | | 687.9 | | | 615.5 | | [removed: | 603.2 | |]

| Net income | | $ | [removed: 1,539.0] [added: 1,589.5] | | $ | [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] | |

| Earnings per share—basic | | $ | [removed: 5.64] [added: 5.99] | | $ | [removed: 4.45] [added: 5.64] | | $ | [removed: 3.96] [added: 4.45] | | $ | [removed: 3.50] [added: 3.96] | | $ | [removed: 3.17] [added: 3.50] | |

| Earnings per share—diluted | | | [added: 5.97 | | |] 5.63 | | | 4.43 | | | 3.95 | | | 3.49 | | [removed: | 3.17 | |]

| Dividends per share | | | [removed: 1.04] [added: 1.16] | | | [removed: 1.00] [added: 1.04] | | | [removed: 0.88] [added: 1.00] | | | [removed: —] [added: 0.88] | | | — | |

| Operating activities | | $ | [removed: 1,802.1] [added: 2,143.6] | | $ | [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] | |

| Investing activities | | | [added: (731.6) | | |] (645.0) | | | (550.9) | | | (503.4) | | | (371.7) | | [removed: | (250.0) | |]

| Financing activities | | | [added: (1,443.9) | | |] (1,077.6) | | | (1,024.1) | | | (1,310.2) | | | (880.9) | | [removed: | (629.3) | |]

| Total capital expenditures | | | [added: (734.4) | | |] (646.5) | | | (560.3) | | | (504.8) | | | (374.0) | | [removed: | (538.4) | |]

| Same store sales growth(2) | | | [removed: 2.7] [added: 3.2] | % | | [removed: 0.9] [added: 2.7] | % | | [removed: 2.8] [added: 0.9] | % | | 2.8 | % | | [removed: 3.3] [added: 2.8] | % |

| Same store sales(2) | | $ | [removed: 21,871.6] [added: 23,854.0] | | $ | [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] | |

| Number of stores included in same store sales calculation | | | [added: 14,283 | | |] 13,150 | | | 12,383 | | | 11,706 | | | 11,052 | | [removed: | 10,387 | |]

| Number of stores (at period end) | | | [added: 15,370 | | |] 14,534 | | | 13,320 | | | 12,483 | | | 11,789 | | [removed: | 11,132 | |]

| Selling square feet (in thousands at period end) | | | [added: 113,755 | | |] 107,821 | | | 98,943 | | | 92,477 | | | 87,205 | | [removed: | 82,012 | |]

| Net sales per square foot(3) | | $ | [removed: 227] [added: 231] | | $ | [removed: 229] [added: 227] | | $ | [removed: 226] [added: 229] | | $ | [removed: 223] [added: 226] | | $ | [removed: 220] [added: 223] | |

| Consumables sales | | | [removed: 76.9] [added: 77.5] | % | | [removed: 76.4] [added: 76.9] | % | | [removed: 75.9] [added: 76.4] | % | | [removed: 75.7] [added: 75.9] | % | | [removed: 75.2] [added: 75.7] | % |

| Seasonal sales | | | [removed: 12.1] [added: 11.9] | % | | [removed: 12.2] [added: 12.1] | % | | [removed: 12.4] [added: 12.2] | % | | 12.4 | % | | [removed: 12.9] [added: 12.4] | % |

| Home products sales | | | [removed: 6.0] [added: 5.9] | % | | [removed: 6.2] [added: 6.0] | % | | [removed: 6.3] [added: 6.2] | % | | [removed: 6.4] [added: 6.3] | % | | 6.4 | % |

| Apparel sales | | | [removed: 5.0] [added: 4.7] | % | | [removed: 5.2] [added: 5.0] | % | | [removed: 5.4] [added: 5.2] | % | | [removed: 5.5] [added: 5.4] | % | | 5.5 | % |

| Rent expense | | $ | [removed: 1,081.5] [added: 1,159.1] | | $ | [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] | |

| Cash and cash equivalents and short-term investments | | $ | [removed: 267.4] [added: 235.5] | | $ | [removed: 187.9] [added: 267.4] | | $ | [removed: 157.9] [added: 187.9] | | $ | [removed: 579.8] [added: 157.9] | | $ | [removed: 505.6] [added: 579.8] | |

| Total assets | | | [added: 13,204.0 | | |] 12,516.9 | | | 11,672.3 | | | 11,257.9 | | | 11,208.6 | | [removed: | 10,848.2 | |]

| Long-term debt(4) | | | [added: 2,864.7 | | |] 3,006.0 | | | 3,211.5 | | | 2,970.6 | | | 2,725.1 | | [removed: | 2,799.5 | |]

| Total shareholders’ equity | | | [added: 6,417.4 | | |] 6,125.8 | | | 5,406.3 | | | 5,377.9 | | | 5,710.0 | | [removed: | 5,402.2 | |]

Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Part II, Item 7 of this report.

Item 7 of this report.

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

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

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

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

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

| | | Year Ended | | | | | | | | | |

| | | February 2, | | February 3, | | January 29, | | January 30, | | January 31, | |

| | | 2018 | | 2017(1) | | 2016 | | 2015 | | 2014 | |

| Ratio of earnings to fixed charges(2): | | 3.9 | x | 4.3 | x | 4.5 | x | 4.4 | x | 4.7 | x |

| | (2) | | For purposes of computing the ratio of earnings to fixed charges, (a) earnings consist of income (loss) before income taxes, plus fixed charges less capitalized expenses related to indebtedness (amortization expense for capitalized interest is not significant) and (b) fixed charges consist of interest expense (whether expensed or capitalized), the amortization of debt issuance costs and discounts related to indebtedness, and the interest portion of rent expense. |

We have audited the accompanying consolidated balance sheets of Dollar General Corporation and subsidiaries (the Company) as of February [removed: 2, 2018] [added: 1, 2019] and February [removed: 3, 2017,] [added: 2, 2018,] the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended February [removed: 2, 2018,] [added: 1, 2019,] and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at February [removed: 2, 2018] [added: 1, 2019] and February [removed: 3, 2017,] [added: 2, 2018,] and the results of its operations and its cash flows for each of the three years in the period ended February [removed: 2, 2018,] [added: 1, 2019,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of February [removed: 2, 2018,] [added: 1, 2019,] based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March [removed: 23, 2018,] [added: 22, 2019,] expressed an unqualified opinion thereon.

These [added: consolidated] financial statements are the responsibility of the Company's management.

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

[removed: March 23,] [added: | | |] 2018 [added: | | | | | | | |]

| | | February [removed: 2,] [added: 1,] | | | February [removed: 3,] [added: 2,] | | |

| | | [added: | 2019 | | |] 2018 | | | 2017 | | |

| Cash and cash [removed: equivalents] [added: equivalents, beginning of period] | | [removed: $] | 267,441 | | [removed: $] | 187,915 | | [added: | 157,947 | |]

| Merchandise inventories | | | [removed: 3,609,025] [added: 4,097,004] | | | [removed: 3,258,785] [added: 3,609,025] | |

| Income taxes receivable | | | [removed: 108,265] [added: 57,804] | | | [removed: 11,050] [added: 108,265] | |

| Prepaid expenses and other current assets | | | [removed: 263,121] [added: 272,725] | | | [removed: 220,021] [added: 263,121] | |

| Total current assets | | | [removed: 4,247,852] [added: 4,663,020] | | | [removed: 3,677,771] [added: 4,247,852] | |

| Net property and equipment | | | [removed: 2,701,282] [added: 2,970,806] | | | [removed: 2,434,456] [added: 2,701,282] | |

| Other intangible assets, net | | | [removed: 1,200,428] [added: 1,200,217] | | | [removed: 1,200,659] [added: 1,200,428] | |

| Other assets, net | | | [removed: 28,760] [added: 31,406] | | | [removed: 20,823] [added: 28,760] | |

| Total assets | | $ | [removed: 12,516,911] [added: 13,204,038] | | $ | [removed: 11,672,298] [added: 12,516,911] | |

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

| Accounts payable | | | [removed: 2,009,771] [added: 2,385,469] | | | [removed: 1,557,596] [added: 2,009,771] | |

| Accrued expenses and other | | | [removed: 549,658] [added: 618,405] | | | [removed: 500,866] [added: 549,658] | |

| Income taxes payable | | | [removed: 4,104] [added: 10,033] | | | [removed: 63,393] [added: 4,104] | |

| Total current liabilities | | | [removed: 2,964,878] [added: 3,015,857] | | | [removed: 2,622,805] [added: 2,964,878] | |

| Long-term obligations | | | [removed: 2,604,613] [added: 2,862,740] | | | [removed: 2,710,576] [added: 2,604,613] | |

| Deferred income taxes | | | [removed: 515,702] [added: 609,687] | | | [removed: 652,841] [added: 515,702] | |

| Other liabilities | | | [removed: 305,944] [added: 298,361] | | | [removed: 279,782] [added: 305,944] | |

| Preferred [removed: stock, 1,000 shares authorized] [added: stock] | | | — | | | — | |

| Common stock; $0.875 par value, 1,000,000 shares authorized, [removed: 268,733] [added: 259,511] and [removed: 275,212] [added: 268,733] shares issued and outstanding at February [removed: 2, 2018] [added: 1, 2019] and February [removed: 3, 2017,] [added: 2, 2018,] respectively | | | [removed: 235,141] [added: 227,072] | | | [removed: 240,811] [added: 235,141] | |

| Additional paid-in capital | | | [removed: 3,196,462] [added: 3,252,421] | | | [removed: 3,154,606] [added: 3,196,462] | |

| Retained earnings | | | [removed: 2,698,352] [added: 2,941,107] | | | [removed: 2,015,867] [added: 2,698,352] | |

| Accumulated other comprehensive loss | | | [removed: (4,181)] [added: (3,207)] | | | [removed: (4,990)] [added: (4,181)] | |

| Total shareholders’ equity | | | [removed: 6,125,774] [added: 6,417,393] | | | [removed: 5,406,294] [added: 6,125,774] | |

| Total liabilities and shareholders' equity | | $ | [removed: 12,516,911] [added: 13,204,038] | | $ | [removed: 11,672,298] [added: 12,516,911] | |

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

| [removed: |] [added: (In thousands)] | | 2018 | | | 2017 | | | 2016 | | |

| Net sales | | | $ | [removed: 23,470,967] [added: 25,625,043] | | $ | [removed: 21,986,598] [added: 23,470,967] | | $ | [removed: 20,368,562] [added: 21,986,598] | |

| Cost of goods sold | | | | [removed: 16,249,608] [added: 17,821,173] | | | [removed: 15,203,960] [added: 16,249,608] | | | [removed: 14,062,471] [added: 15,203,960] | |

| Gross profit | | | | [removed: 7,221,359] [added: 7,803,870] | | | [removed: 6,782,638] [added: 7,221,359] | | | [removed: 6,306,091] [added: 6,782,638] | |

| Selling, general and administrative expenses | | | | [removed: 5,213,541] [added: 5,687,564] | | | [removed: 4,719,189] [added: 5,213,541] | | | [removed: 4,365,797] [added: 4,719,189] | |

| Operating profit | | | | [removed: 2,007,818] [added: 2,116,306] | | | [removed: 2,063,449] [added: 2,007,818] | | | [removed: 1,940,294] [added: 2,063,449] | |

| Interest expense | | | | [removed: 97,036] [added: 99,871] | | | [removed: 97,821] [added: 97,036] | | | [removed: 86,944] [added: 97,821] | |

March 22, 2019

| | | 2019 | | | 2018 | | |

| Cash and cash equivalents | | $ | 235,487 | | $ | 267,441 | |

| Net income | | — | | | — | | | — | | | 1,589,472 | | | — | | | 1,589,472 | |

| Repurchases of common stock | | (9,891) | | | (8,655) | | | — | | | (998,839) | | | — | | | (1,007,494) | |

| Transition adjustment upon adoption of accounting standard (see Note 1) | | — | | | — | | | — | | | (41,316) | | | — | | | (41,316) | |

| Balances, February 1, 2019 | | 259,511 | | $ | 227,072 | | $ | 3,252,421 | | $ | 2,941,107 | | $ | (3,207) | | $ | 6,417,393 | |

| | | 2019 | | | 2018 | | | 2017 | | |

The Company also owns a cold storage and distribution facility in Pottsville, Pennsylvania.

| | | | | | | | 5,518,977 | | | 5,175,292 | |

| Self-insurance reserves | | | 107,380 | | | 96,277 | |

| Other | | | 205,709 | | | 170,175 | |

| | | $ | 618,405 | | $ | 549,658 | |

| Self-insurance reserves | | $ | 130,022 | | $ | 134,256 | |

| Other | | | 57,897 | | | 61,051 | |

| | | $ | 298,361 | | $ | 305,944 | |

redemptions.

authorities.

The Company adopted this guidance using the modified retrospective approach effective February 3, 2018, and such adoption had no effect on the Company’s consolidated results of operations, financial position or cash flows.

The Company will adopt the new standard effective February 2, 2019.

The Company formed a project team to assess and implement the standard and an executive steering committee to provide oversight.

The project team has completed its internal evaluation of existing contractual arrangements for embedded leases, has successfully tested computations in the Company’s lease administration system, and has developed a process to compute the rates to discount the lease liabilities as required by the standard.

In addition, the project team has identified and implemented new processes and controls to ensure compliance with the new standard, and has evaluated and documented the Company’s accounting conclusions related to the new standard.

The Company will utilize transition practical expedients under which the Company will not be required to reassess (i) whether expired or existing contracts are or contain leases as defined by the new standard, (ii) the classification of such leases, and (iii) whether previously capitalized initial direct costs would qualify for capitalization under the new standard.

The Company has identified its store leases as the area in which it will be most affected by the new guidance, and the most significant impact that adoption will have on the Company’s consolidated financial statements is to its consolidated balance sheet.

The Company expects to record consolidated right of use assets and consolidated lease liabilities of approximately $8.0 billion each upon transition to the new guidance.

| Basic earnings per share | | $ | 1,589,472 | | 265,155 | | $ | 5.99 | |

| Diluted earnings per share | | $ | 1,589,472 | | 266,105 | | $ | 5.97 | |

Share-based awards that were outstanding at the end of the respective periods, but were not included in

The Company concluded its analysis of the

accounting impact of the Act pursuant to SAB 118 and recorded immaterial adjustments related to its 2017 provision for income taxes in 2018.

The effective income tax rate for 2018 was 21.1% compared to a rate of 19.3% for 2017 which represents a net increase of 1.8 percentage points.

The effective income tax rate was higher in 2018 primarily due to the one-time remeasurement of the deferred tax assets and liabilities at 21% in 2017, which was offset by the reduction in the current federal tax rate from 33.7% in 2017 to 21% in 2018.

| | | | 96,564 | | | 89,559 | |

| (In thousands) | | 2019 | | | 2018 | | |