10q10k10q10k.net

What changed in Dollar General's 10-K — 2024 vs 2025

vs

Paragraph-level year-over-year comparison of Dollar General's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+270 added−300 removedSource: 10-K (2024-03-25) vs 10-K (2023-03-24)

Top changes in Dollar General's 2025 10-K

270 paragraphs added · 300 removed · 224 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

28 edited+1 added−8 removed32 unchanged
Biggest changeIn addition, we have opportunities to relocate or remodel locations within our existing store base to better serve our customers. Our pOpshelf concept represents an important growth opportunity as a unique small-box retail concept that focuses on categories such as seasonal and home décor, health and beauty, home cleaning supplies, and party and entertainment goods.
Biggest changeOur pOpshelf concept, which we continue to evaluate and evolve, represents an additional growth opportunity as a unique small-box retail concept that focuses on categories such as seasonal and home décor, health and beauty, home cleaning supplies, and party and entertainment goods. We have also identified international expansion, with an initial focus on Mexico, as an opportunity for growth.
Our product offering includes most necessities, such as basic packaged and refrigerated or frozen food and dairy products, cleaning supplies, paper products, health and beauty care items, greeting cards and other stationery items, basic apparel, housewares, hardware and automotive supplies, among others.
Our product offering includes most necessities, such as basic packaged and refrigerated or frozen food products, dairy products, cleaning supplies, paper products, health and beauty care items, greeting cards and other stationery items, basic apparel, housewares, hardware and automotive supplies, among others.
Although eligibility for and the level of benefits vary depending on the employee’s full-time or part-time status, compensation level, date of hire, and/or length of service, the broad range of benefits we provide or make available may include: medical, prescription, telemedicine, dental and vision plans; flexible spending accounts; disability insurance; 401(k) plan; paid vacation; employee assistance program with access to legal assistance and counseling; healthy lifestyle and disease management programs; education assistance benefits; parental leave; adoption assistance; service award recognition; and a broad range of discounts for other products and services.
Although eligibility for and the level of benefits vary depending on the employee’s full-time or part-time status, compensation level, date of hire, and/or length of service, the broad range of benefits we provide or make available may include: medical, prescription, telemedicine, dental and vision plans; flexible spending accounts; disability insurance; 401(k) plan; paid vacation; employee assistance programs with access to legal assistance and counseling; healthy lifestyle and disease management programs; education assistance benefits; parental leave; adoption assistance; service award recognition; and a broad range of discounts for other products and services.
We offer nationally advertised brands at these everyday low prices in addition to offering our own private brands at substantially lower prices. ​ ● Convenient Locations. Our stores are conveniently located in a variety of rural, suburban and urban communities.
We offer nationally advertised brands at these everyday low prices in addition to offering our own private brands, often at substantially lower prices. ​ ● Convenient Locations. Our stores are conveniently located in a variety of rural, suburban and urban communities.
Additionally, our private brand products offer even greater value with options to purchase both products that are of comparable quality to national brands as well as opening price point items, each at substantial discounts to the national brands. ​ Consumables is our largest merchandise category and includes paper and cleaning products (such as paper towels, bath tissue, paper dinnerware, trash and storage bags, disinfectants, and laundry); packaged food (such as cereals, pasta, canned soups, fruits and vegetables, condiments, spices, sugar and flour); perishables (such as milk, eggs, bread, refrigerated and frozen food, beer, wine and produce); 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, cosmetics, dental hygiene and foot care products); pet (such as pet supplies and pet food); and tobacco products. ​ 6 Table of Contents Seasonal products include holiday items, toys, batteries, small electronics, greeting cards, stationery, prepaid phones and accessories, gardening supplies, hardware, automotive and home office supplies. ​ Home products include kitchen supplies, cookware, small appliances, light bulbs, storage containers, frames, candles, craft supplies and kitchen, bed and bath soft goods. ​ Apparel includes casual everyday apparel for infants, toddlers, girls, boys, women and men, as well as socks, underwear, disposable diapers, shoes and accessories. ​ The percentage of net sales of each of our four categories of merchandise for the fiscal years indicated below was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 Consumables 79.7 % 76.7 % 76.8 % Seasonal 11.0 % 12.2 % 12.1 % Home products 6.2 % 6.8 % 6.5 % Apparel 3.1 % 4.3 % 4.6 % ​ Our seasonal and home products categories typically account for the highest gross profit margins, and the consumables category typically accounts for the lowest gross profit margin. ​ The Dollar General Store ​ The typical Dollar General store is operated by a store manager, one or more assistant store managers, and three or more sales associates.
Additionally, our private brand products offer even greater value with options to purchase both products that are of comparable quality to national brands as well as opening price point items, each often at substantial discounts to the national brands. ​ Consumables is our largest merchandise category and includes paper and cleaning products (such as paper towels, bath tissue, paper dinnerware, trash and storage bags, disinfectants, and laundry); packaged food (such as cereals, pasta, canned soups, canned meats, fruits and vegetables, condiments, spices, sugar and flour); perishables (such as milk, eggs, bread, refrigerated and frozen food, beer, wine and produce); 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, cosmetics, dental hygiene and foot care products); pet (such as pet supplies and pet food); and tobacco products. ​ Seasonal products include holiday items, toys, batteries, small electronics, greeting cards, stationery, prepaid phones and accessories, gardening supplies, hardware, automotive and home office supplies. ​ Home products include kitchen supplies, cookware, small appliances, light bulbs, storage containers, frames, candles, craft supplies and kitchen, bed and bath soft goods. 6 Table of Contents ​ Apparel includes basic items for infants, toddlers, girls, boys, women and men, as well as socks, underwear, disposable diapers, shoes and accessories. ​ The percentage of net sales of each of our four categories of merchandise for the fiscal years indicated below was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 2021 Consumables 81.0 % 79.7 % 76.7 % Seasonal 10.6 % 11.0 % 12.2 % Home products 5.6 % 6.2 % 6.8 % Apparel 2.8 % 3.1 % 4.3 % ​ Our seasonal and home products categories typically account for the highest gross profit margins, and the consumables category typically accounts for the lowest gross profit margin. ​ The Dollar General Store ​ The typical Dollar General store is operated by a store manager, one or more assistant store managers, and three or more sales associates.
Despite our broad offering, we maintain only a limited number of items per category, allowing us to keep our average costs low. Our two largest suppliers accounted for approximately 10% and 8%, respectively, of our purchases in 2022. Our private brands come from a wide variety of suppliers.
Despite our broad offering, we maintain only a limited number of items per category, allowing us to keep our average costs low. Our two largest suppliers accounted for approximately 10% and 8%, respectively, of our purchases in 2023. Our private brands come from a wide variety of suppliers.
As of the end of 2022, more than 70% of store managers and thousands of additional employees, including several members of our senior leadership, have been promoted from within our organization. ​ Retain ​ We strive to create an environment where our employees feel respected, safe, empowered, and valued.
As of the end of 2023, more than 70% of store managers and thousands of additional employees, including several members of our senior leadership, have been promoted from within our organization. ​ Retain ​ We strive to create an environment where our employees feel respected, safe, empowered, and valued.
We believe our ability to effectively deliver both value and convenience allows us to succeed in small markets with 5 Table of Contents limited shopping alternatives, as well as in larger and more competitive markets. Our value and convenience proposition is evidenced by the following attributes of our business model: ​ ● Everyday Low Prices on Quality Merchandise.
We believe our ability to effectively deliver both value and convenience allows us to succeed in small markets with limited shopping alternatives, as well as in larger and more competitive markets. Our value and convenience proposition is evidenced by the following attributes of our business model: ​ ● Everyday Low Prices on Quality Merchandise.
At the same time, however, 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. ​ 7 Table of Contents Our Suppliers ​ We purchase merchandise from a wide variety of suppliers and maintain direct buying relationships with many producers of national brand merchandise.
At the same time, however, 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 Suppliers ​ We purchase merchandise from a wide variety of suppliers and maintain direct buying relationships with many producers of national brand merchandise.
Our small-box stores make it easier to get in and out quickly, and our digital tools and offerings help drive even greater convenience and additional access points.
Our small-box stores are designed to make it easier to get in and out quickly, and our digital tools and offerings help drive even greater convenience and additional access points.
We also hold an exclusive license to the Rexall brand through at least March 5, 2029 and the Believe Beauty brand through at least March 18, 2025. ​ Human Capital Resources ​ At Dollar General, a foundational element in how we operate is exemplified in our fourth operating priority – Investing in our diverse teams through development, empowerment and inclusion.
We also hold an exclusive license to the Rexall brand through at least March 5, 2029 and the Believe Beauty brand through at least March 18, 2025. ​ 8 Table of Contents Human Capital Resources ​ At Dollar General, a foundational element in how we operate is exemplified in our fourth operating priority – Investing in our diverse teams through development, empowerment and inclusion.
Risk Factors” for further discussion of our competitive situation. ​ Our Intellectual Property ​ 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, Dollar General®, DG®, Clover Valley®, trueliving®, and p Opshelf® along with variations and formatives of these trademarks.
Risk Factors” for further discussion of our competitive situation. ​ Our Intellectual Property ​ 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, Dollar General®, DG®, Clover Valley®, trueliving®, pOpshelf®, and Mi Super Dollar General® along with variations and formatives of these trademarks.
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 research indicates that we offer a price advantage over most food and drug retailers and that our prices are competitive with even the 5 Table of Contents largest discount retailers.
In 2022, we estimate we invested over four million training hours in our employees to promote their education and development. ​ 9 Table of Contents We enhance our development programs each year based on the current needs of our employees and the business.
In 2023, we estimate we invested over four million training hours in our employees to promote their education and development. ​ We enhance our development programs each year based on the current needs of our employees and the business.
Our stores currently average approximately 7,500 square feet of selling space, and over 80% of our stores are located in towns of 20,000 or fewer people. Our primary new store format currently averages approximately 8,500 square feet of selling space.
Our stores currently average approximately 7,500 square feet of selling space, and approximately 80% of our stores are located in towns of 20,000 or fewer people. Our primary new store formats currently average selling space of approximately 8,500 square feet and 9,500 square feet.
In addition, we believe we have significant opportunities available for our relocation and remodel programs. ​ Our store growth over the past three years is summarized in the following table: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stores at ​ ​ Net ​ ​ ​ Beginning ​ Stores ​ Stores ​ Store ​ Stores at Year ​ of Year ​ Opened ​ Closed ​ Increase ​ End of Year 2020 16,278 1,000 101 899 17,177 ​ 2021 17,177 1,050 97 953 18,130 ​ 2022 18,130 1,039 65 974 19,104 ​ ​ Our Customers ​ Our customers seek value and convenience.
In addition, we believe we have significant opportunities available for our relocation and remodel programs. ​ Our store growth over the past three years is summarized in the following table: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stores at ​ ​ Net ​ ​ ​ Beginning ​ Stores ​ Stores ​ Store ​ Stores at Year ​ of Year ​ Opened ​ Closed ​ Increase ​ End of Year 2021 17,177 1,050 97 953 18,130 ​ 2022 18,130 1,039 65 974 19,104 ​ 2023 19,104 987 105 882 19,986 ​ ​ Our Customers ​ Our customers seek value and convenience.
These laws, rules and regulations relate to, among other things, the sale of products, including without limitation product and food safety, marketing and labeling; information security and privacy; labor and employment; employee wages and benefits; health and safety; real property; public accommodations; anti-bribery; financial reporting and disclosure; pricing; antitrust and fair competition; anti-money laundering; transportation; imports and customs; intellectual property; taxes; and environmental compliance. ​ We routinely incur significant compliance related costs, both direct and indirect, including investments in store standards and labor such as our approximately $100 million investment planned for 2023, which we believe to be material.
These laws, rules and regulations relate to, among other things, the sale of products, including without limitation, product and food safety, marketing and labeling; information security and privacy; labor and employment; employee wages and benefits; health and safety; real property; public accommodations; anti-bribery; financial reporting and disclosure, including disclosures related to ​ 9 Table of Contents environmental, social and governance (“ESG”) matters; pricing; antitrust and fair competition; anti-money laundering; transportation; imports and customs; intellectual property; taxes; and environmental compliance. ​ We routinely incur significant compliance-related costs, both direct and indirect, including investments in store standards and labor, such as our approximately $150 million labor investment in 2023.
Notwithstanding the unusual circumstances of 2020 and 2021 resulting from the COVID pandemic, we believe that this consistent growth over many years, which has taken place in a variety of economic conditions, is a result of our compelling value and convenience proposition, although no assurances can be given that we will achieve positive same-store sales growth in any given year. ​ Compelling Value and Convenience Proposition.
We believe that this consistent growth over many years, which has taken place in a variety of economic conditions, is a result of our compelling value and convenience proposition, although no assurances can be given that we will achieve positive same-store sales growth in any given year. ​ Compelling Value and Convenience Proposition.
ITEM 1. BUSINESS ​ General ​ We are the largest discount retailer in the United States by number of stores, with 19,147 stores located in 47 U.S. states and Mexico as of March 3, 2023, with the greatest concentration of stores in the southern, southwestern, midwestern and eastern United States. Our first store in Mexico opened in February of 2023.
ITEM 1. BUSINESS ​ General ​ We are the largest discount retailer in the United States by number of stores, with 20,022 stores located in 48 U.S. states and Mexico as of March 1, 2024, with the greatest concentration of stores in the southern, southwestern, midwestern and eastern United States. Our first stores in Mexico opened in 2023.
We file with or furnish to the Securities and Exchange Commission (the “SEC”) annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports, proxy statements and annual reports to shareholders, and, from time to time, registration statements and other documents.
We file with or furnish to the Securities and Exchange Commission (the “SEC”) annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports, proxy statements and annual reports to shareholders, and, from time to time, registration statements and other documents pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Although we can make no guarantees that other future such costs will not be material, to date, other than the investment referenced above, compliance with these laws, rules and regulations has not had a material effect on our capital expenditures, earnings or competitive position.
Although we may incur additional material compliance-related costs in the future, to date, other than the investments referenced above, compliance with these laws, rules and regulations has not had a material effect on our capital expenditures, earnings or competitive position.
For more information on these operating priorities, see the “Executive Overview” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in Part II, Item 7 of this report. ​ From 1990 through 2020, we achieved 31 consecutive years of positive same-store sales growth.
For more information on these operating priorities, see the “Executive Overview” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in Part II, Item 7 of this report. ​ We have achieved positive same-store sales growth each year since 1990, with the exception of 2021 which followed unusually high sales results in 2020 during the height of the COVID pandemic.
As of March 3, 2023, we employed more than 170,000 full-time and part-time employees, including divisional and regional managers, district managers, store managers, other store personnel, and distribution center, fleet and administrative personnel.
As of March 1, 2024, we employed approximately 185,800 full-time and part-time employees, including divisional and regional managers, district managers, store managers, other store employees, and distribution center, fleet and administrative employees.
Our direct competitors include Family Dollar, Dollar Tree, Big Lots, 99 Cents Only and various local, independent operators, as well as Walmart, Target, Kroger, Aldi, Walgreens, CVS, and Rite Aid, among others.
Our direct competitors include Family Dollar, Dollar Tree, Big Lots, 99 Cents Only and various local, independent operators, as well as Walmart, Target, Kroger, Aldi, Walgreens, CVS, and Rite Aid, among others. Certain of our competitors have greater financial, distribution, marketing and other resources than we do and may be able to secure better arrangements from suppliers than we can.
We have also identified international expansion as an important growth opportunity, with an initial focus on opening and operating stores in Mexico. We opened our first Mi Súper Dollar General store in Mexico in February of 2023, and believe there is additional growth potential in Mexico in the years ahead.
We opened our first Mi Súper Dollar General stores in Mexico in 2023 and believe there is additional growth potential in Mexico in the years ahead.
An inability to obtain alternative sources could adversely affect our sales. ​ Distribution and Transportation ​ Our stores are currently supported by distribution centers for both refrigerated and non-refrigerated merchandise located strategically throughout our geographic footprint. We lease additional temporary warehouse space as necessary to support our distribution needs.
We directly imported approximately 4% of our purchases at cost in 2023. ​ 7 Table of Contents Distribution and Transportation ​ Our stores are currently supported by distribution centers for frozen, refrigerated and non-refrigerated merchandise located strategically throughout our geographic footprint. We lease additional temporary warehouse space as necessary to support our distribution needs.
We regularly analyze and rebalance the network with a goal of ensuring that it remains efficient and provides the service levels our stores require.
In addition to our traditional distribution centers, we operate multiple temperature-controlled distribution facilities in support of our self-distribution of frozen and refrigerated goods, such as dairy, deli and frozen products. We regularly analyze and rebalance the distribution network with a goal of ensuring that it remains efficient and provides the service levels our stores require.
In addition, vendors or third-party distributors deliver or ship certain food items and other merchandise directly to our stores. ​ In the second half of 2022, we experienced a temporary shortage of available warehouse capacity, primarily due to delays in opening temporary warehouse space.
In addition, vendors or third-party distributors deliver or ship certain food items and other merchandise directly to our stores. ​ Seasonality ​ The nature of our business is somewhat seasonal.
Removed
Following unusually high sales results in 2020 during the height of the COVID pandemic, we did not achieve positive same-store sales growth in 2021. However, we achieved positive same-store sales growth once again in 2022.
Added
In addition, we have opportunities to relocate, remodel or convert locations within our existing store base to better serve our customers.
Removed
We directly imported approximately 9% of our purchases at cost in 2022. ​ In 2020 and 2021, COVID-19 and its impacts caused disruptions in our supply chain, at times making it more difficult to obtain certain products in sufficient quantities to meet customer demand and increasing distribution and transportation costs.
Removed
We began to see normalization in the global supply chain during 2022 and anticipate continuing improvement moving forward. In situations where it becomes necessary to secure alternative sources, we may experience increased merchandise costs and supply chain lead time and expenses, a temporary reduction in store inventory levels, and reduced product selection or quality.
Removed
In addition to our traditional distribution centers, we now operate multiple temperature-controlled distribution facilities in support of “DG Fresh”, our strategic, multi-phased shift to self-distribution of frozen and refrigerated goods, such as dairy, deli and frozen products.
Removed
This shortage resulted in a significant impact to our operating results due to increased costs associated with delays in unloading inventory into warehouse space, as well as inefficiencies in moving goods throughout our internal supply chain.
Removed
With the opening of three permanent distribution facilities in the fourth quarter of 2022, significant warehouse capacity is now available and has relieved the vast majority of these constraints. ​ Seasonality ​ The nature of our business is somewhat seasonal.
Removed
Certain of our competitors have greater financial, distribution, 8 Table of Contents marketing and other resources than we do and may be able to secure better arrangements from suppliers than we can.
Removed
See “—Our Business Model” above and “Item 1A.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

78 edited+12 added−7 removed60 unchanged
Biggest changeIn 2022, we experienced increased fuel costs; inventory receipt and delivery delays; earlier than expected receipt of seasonal inventory leading to capacity constraints that were exacerbated by unexpected delays in acquiring additional temporary warehouse space sufficient for our inventory needs; and increases in transportation costs (including increased import freight costs and carrier and driver wages) as a result of capacity rightsizing, port congestion, and labor shortages.
Biggest changeAny disruption, unanticipated or unusual expense or operational failure related to this process (including, without limitation, inventory receipt and delivery delays; increases in fuel costs; increases in transportation costs, including increased import freight costs, carrier or driver wages (as a result of driver shortages or otherwise); earlier than expected receipt of seasonal inventory leading to capacity constraints which can be exacerbated by unexpected delays in acquiring additional temporary warehouse space sufficient for our inventory needs; a decrease in transportation capacity for overseas shipments or port closures; labor shortages; or work stoppages or slowdowns) could negatively impact sales and profits.
We also may not anticipate or successfully address all of the challenges imposed by the expansion of our operations (including our new pOpshelf store concept), including into new countries or domestic markets, states or urban or suburban areas where we have limited or no meaningful experience or brand recognition.
We also may not anticipate or successfully address all of the challenges imposed by the expansion of our operations (including our pOpshelf store concept), including into new countries or domestic markets, states or urban or suburban areas where we have limited or no meaningful experience or brand recognition.
We rely on the positive cash flow we generate from our operating activities and our access to the credit and capital markets to fund our operations, growth strategy, and return of cash to our shareholders through share repurchases and dividends.
We rely on the positive cash flow we generate from our operating activities and our access to the credit and capital markets to fund our operations, growth strategy, and return of cash to our shareholders through dividends and share repurchases.
Our ability to meet our labor needs, while controlling our labor costs, is subject to many external factors, including competition for and availability of qualified personnel, unemployment levels, wage rates and salary levels (including the heightened possibility of increased federal, state and/or local minimum wage rates/salary levels), health and other insurance costs, changes in employment and labor laws or other workplace regulations (including those relating to employee benefit programs such as health insurance and paid leave programs), employee activism, employee safety issues, employee expectations and productivity, and our reputation and relevance within the labor market.
Our ability to meet our labor needs, while controlling our labor costs, is subject to many external factors, including competition for and availability of qualified personnel, unemployment levels, wage rates and salary levels (including the heightened possibility of increased federal and further increased state and/or local minimum wage rates/salary levels), health and other insurance costs, changes in employment and labor laws or other workplace regulations (including those relating to employee benefit programs such as health insurance and paid leave programs), employee activism, employee safety issues, employee expectations and productivity, and our reputation and relevance within the labor market.
The success of DG Media Network, which is our platform for connecting brand partners with our customers to drive even greater value for each, further depends on our ability to successfully gather target customer audiences that deliver consistent, predictable and beneficial returns on advertising spending so as to generate interest and demand from our brand partners, as well as to properly handle and secure all sensitive customer data.
The success of DG Media Network, which is our platform for connecting brand partners with our customers to drive even greater value for each, further depends on our ability to successfully gather target customer audiences that deliver consistent, predictable and beneficial returns on advertising spending to generate interest and demand from our brand partners, as well as to properly handle and secure all sensitive customer data.
Additionally, such systems are subject to damage or interruption from power surges and outages, facility damage, physical theft, computer and telecommunications failures, inadequate or ineffective redundancy, malicious code (including malware, ransomware, or similar), successful attacks (e.g., account compromise; phishing; denial of service; and application, network or system vulnerability exploitation), software upgrade failures or code defects, natural disasters and human error.
Such systems are subject to damage or interruption from power surges and outages, facility damage, physical theft, computer and telecommunications failures, inadequate or ineffective redundancy, malicious code (including malware, ransomware, or similar), successful attacks (e.g., account compromise; phishing; denial of service; and application, network or system vulnerability exploitation), software upgrade failures or code defects, natural disasters and human error.
Our business is subject to the risk of litigation or other legal proceedings by employees, consumers, suppliers, competitors, shareholders, government agencies and others through private actions, class actions, multi-district litigation, arbitrations, derivative actions, administrative proceedings, regulatory actions or other litigation. For example, we are involved in certain legal proceedings as discussed in Note 7 to the consolidated financial statements.
Our business is subject to the risk of litigation or other legal proceedings by employees, consumers, suppliers, competitors, shareholders, unions, government agencies and others through private actions, class actions, multi-district litigation, arbitrations, derivative actions, administrative proceedings, regulatory actions or other litigation. For example, we are involved in certain legal proceedings as discussed in Note 7 to the consolidated financial statements.
Over time, these changes, as well as regulatory efforts related thereto, could affect, for example, the availability and cost of products, commodities and energy (including utilities), which in turn may impact our ability to procure goods and services required for the operation of our businesses at the quantities and levels we require.
Over time, these changes, as well as regulatory efforts related thereto, could affect, for example, the availability and cost of products, commodities and energy (including utilities), which in turn may impact our ability to procure goods and services required for the operation of our businesses at the quantities and levels and at the costs we require.
We also use natural gas, diesel fuel and gasoline and electricity in our operations, all of which could face increased regulation relating to climate change or other environmental concerns. Regulations limiting greenhouse gas emissions and energy inputs may also increase in coming years, which may increase our costs associated with compliance and merchandise.
We also use natural gas, diesel fuel, gasoline and electricity in our operations, all of which could face increased regulation relating to climate change or other environmental concerns. Regulations limiting greenhouse gas emissions and energy inputs may also increase in coming years, which may increase our costs associated with compliance and merchandise purchases.
If our competitors or others were to enter our industry in a significant way, including through alliances or other business combinations, it could significantly alter the competitive dynamics of the retail marketplace and result in competitors with greatly improved competitive positions, which could materially affect our financial performance.
In addition, if our competitors or others were to enter our industry in a significant way, including through alliances or other business combinations, it could significantly alter the competitive dynamics of the retail marketplace and result in competitors with greatly improved competitive positions, which could materially affect our financial performance.
We experience significant inventory shrinkage and damages. Although some level of inventory shrinkage and damages is an unavoidable cost of doing business, higher rates of inventory shrinkage and damages or increased security or other costs to combat inventory theft could adversely affect our results of operations and financial condition.
We experience significant inventory shrinkage and damages. Although some level of inventory shrinkage and damages is an unavoidable cost of doing business, higher rates of inventory shrinkage and damages or increased security measures or other costs to combat inventory theft could adversely affect our results of operations and financial condition.
Furthermore, significant and/or rapid increases to federal, state and/or local minimum wage rates/salary levels could adversely affect our earnings if we are not able to otherwise offset these increased labor costs elsewhere in our business.
Furthermore, significant and/or rapid increases to federal and further increases to state and/or local minimum wage rates/salary levels could adversely affect our earnings if we are not able to otherwise offset these increased labor costs elsewhere in our business.
Changes to the prices and flow of these goods often are for reasons beyond our control, such as political or civil unrest, acts of war, disruptive global political events (for example, political tensions involving China and the current conflict between Russia and Ukraine), currency fluctuations, disruptions in maritime lanes, port labor disputes, economic conditions and instability in countries in which foreign suppliers are located, the financial instability of suppliers, suppliers’ failure to meet our terms and conditions or our standards, issues with our suppliers’ labor practices or labor problems they may experience (such as strikes, stoppages or slowdowns, which could also increase labor costs during and following the disruption), the availability and cost of raw materials, pandemic outbreaks, merchandise quality or safety issues, transport availability and cost, increases in wage rates and taxes, transport security, inflation, and other factors relating to suppliers and the countries in which they are located or from which they import.
Changes to the prices and flow of these goods often are for reasons beyond our control, such as political or civil unrest, acts of war, disruptive global political events (for example, political tensions involving China, the conflict between Russia and Ukraine and the conflict in the Middle East), currency fluctuations, disruptions in maritime lanes, port labor disputes, economic conditions and instability in countries in which foreign suppliers are located, the financial instability of suppliers, suppliers’ failure to meet our terms and conditions or our standards, issues with our suppliers’ labor practices or labor problems they may experience (such as strikes, stoppages or slowdowns, which could also increase labor costs during and following the disruption), the availability and cost of raw materials, pandemic outbreaks, merchandise quality or safety issues, transport availability and cost, increases in wage rates and taxes, transport security, inflation, and other factors relating to suppliers and the countries in which they are located or from which they import.
A significant security breach of any kind experienced by us or one of our vendors, which could be undetected for a period of time, or a significant failure by us or one of our vendors to comply with applicable privacy and information security laws, regulations and standards could expose us to risks of data loss, litigation, government enforcement actions, fines or penalties, credit card brand assessments, negative publicity and reputational harm, business disruption and costly response measures (e.g., providing notification to, and credit monitoring services for, affected individuals, as well as further upgrades to our security measures; procuring a replacement vendor if one of our current vendors is unable to fulfill its obligations to us due to a cyberattack or incident) which may not be covered by or may exceed the coverage limits of our insurance policies, and could materially disrupt our operations.
A significant security breach of any kind experienced by us or one of our vendors, which could be undetected for a period of time, or a significant failure by us or one of our vendors to comply with applicable privacy and information security laws, regulations and standards could expose us to risks of data loss, litigation, government enforcement actions, fines or penalties, credit card brand assessments, negative publicity and reputational harm, business disruption and costly response measures (e.g., providing notification to, and credit monitoring services for, affected individuals, as well as further upgrades to our security measures; procuring a replacement vendor if one of our current vendors is unable to fulfill its obligations to us due to a cyberattack or incident) which may not be covered by or may exceed the coverage limits of our insurance policies, and could 14 Table of Contents materially disrupt our operations.
We have short-term and long-term strategies, initiatives and investments (such as those relating to merchandising, real estate and new store development, international expansion, store formats and concepts, digital, marketing, health services, shrink, damages, sourcing, private brand, inventory management, supply chain, private fleet, store operations, expense reduction, and technology) in various stages of testing, evaluation, and implementation, which are designed to continue to improve our results of operations and financial condition.
We have short-term and long-term strategies, initiatives and investments (such as those relating to merchandising, real estate and new store development, international expansion, store formats and concepts, digital, marketing, shrink, damages, sourcing, private brand, inventory management, supply chain, private fleet, store operations, expense reduction, and technology) in various stages of testing, evaluation, and implementation, which are designed to continue to improve our results of operations and financial condition.
If attackers obtain customer, employee or vendor passwords through unrelated third-party breaches, and if impacted customers, employees, or vendors do not employ good online security practices (e.g., use the same password across different sites or do not use multifactor authentication), these passwords could be used to gain access to their information or accounts with us in certain situations.
If attackers obtain customer, employee or vendor passwords through unrelated third-party breaches, and if impacted customers, employees, or vendors do not employ good online security practices (e.g., use the same password across different sites or do not use available multifactor authentication options), these passwords could be used to gain access to their information or accounts with us in certain situations.
Like other retailers, we and our vendors have experienced threats to, and incidents involving, data and systems, including by perpetrators of attempted random or targeted malicious attacks; computer malware, ransomware, bots, or other destructive or disruptive software; and attempts to misappropriate our information and cause system failures and disruptions, although to date none have been material to our business.
Like other retailers, we and our vendors have experienced threats to, and incidents involving, data and systems, including by perpetrators of attempted random or targeted malicious attacks; computer malware, ransomware, bots, or other destructive or disruptive hardware and/or software; and attempts to misappropriate our and our customers’ information and cause system failures and disruptions, although to date none have been material to our business.
To offset negative insurance market trends, we may elect to self-insure, accept higher deductibles or reduce the amount of coverage. In addition, we self-insure a significant portion of expected losses under our workers’ compensation, automobile liability, general liability (including claims made against certain of our landlords), property loss, and group health insurance programs.
To offset negative insurance market trends, we may elect to self-insure, accept higher deductibles or reduce the amount of coverage. In addition, we self-insure a significant portion of expected losses under our workers’ compensation, auto liability, general liability (including claims made against certain of our landlords), property loss, and group health insurance programs.
We seek but may not be successful in obtaining contractual indemnification and insurance coverage for product-related claims and issues from our vendors. If we do not have adequate contractual indemnification or insurance available, or our vendors fails to adhere to their obligations to us, such claims could materially and adversely affect our business, financial condition and results of operations.
We seek but may not be successful in obtaining contractual indemnification and insurance coverage for product-related claims and issues from our vendors. If we do not have adequate contractual indemnification or insurance available, or our vendors fail to adhere to their obligations to us, such claims could materially and adversely affect our business, financial condition and results of operations.
However, if the levels which we have experienced escalate for an extended period of time, we expect that they could have a material adverse effect on our ability to complete our future planned real estate projects or growth, and in turn, a material adverse effect on our financial performance.
However, if the levels which we have experienced escalate or remain elevated for an extended period of time, we expect that they could have a material adverse effect on our ability to complete our future planned real estate projects or growth, and in turn, a material adverse effect on our financial performance.
While we continued to experience certain of these factors at heightened levels in 2022, to date, they have not materially impaired our ability to complete our planned real estate projects or growth, and thus, have not had a material adverse effect on our financial performance.
While we continued to experience certain of these factors at heightened levels in 2023, to date, they have not materially impaired our ability to complete our planned real estate projects or growth, and thus, have not had a material adverse effect on our financial performance.
We source our merchandise from a wide variety of domestic and international suppliers, and we depend on them to supply merchandise in a timely and efficient manner and in the large volumes that we may require. In 2022, our two largest suppliers accounted for approximately 10% and 8% respectively, of our purchases.
We source our merchandise from a wide variety of domestic and international suppliers, and we depend on them to supply merchandise in a timely and efficient manner and in the large volumes that we may require. In 2023, our two largest suppliers accounted for approximately 10% and 8% respectively, of our purchases.
In addition, our position or perceived lack of position on certain issues (e.g., public policy, social, or environmental issues), and any perceived lack of transparency about such matters, could harm our reputation and potentially lead to adverse consumer, shareholder or NGO actions, including negative public statements.
In addition, our responses to crises and our position or perceived lack of position on certain issues (e.g., public policy, social, or environmental issues), and any perceived lack of transparency about such matters, could harm our reputation and potentially lead to adverse consumer, shareholder or NGO actions, including negative public statements.
We can make no assurances that our ability to obtain additional financing through the debt markets will not be adversely affected by economic conditions or that we will be able to maintain or improve our current credit ratings. ​ ​ ITEM 1B. UNRESOLVED STAFF COMMENTS ​ None. ​
We can make no assurances that our ability to obtain additional financing through the debt markets will not be adversely affected by economic conditions or that we will be able to maintain or improve our current credit ratings. ​ ITEM 1B. UNRESOLVED STAFF COMMENTS ​ Not applicable. ​
In connection with sales, we transmit confidential credit and debit card 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 their dependents, and vendors, as well as our business.
In connection with sales, we transmit confidential credit and debit card 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 their dependents, vendors and business.
The effectiveness of these initiatives is inherently uncertain, even when tested successfully, and is dependent on consistency of training and execution, workforce stability, ease of execution and scalability, and the absence of 11 Table of Contents offsetting factors that can influence results adversely.
The effectiveness of these initiatives is inherently uncertain, even when tested successfully, and is dependent on consistency of training and 11 Table of Contents execution, workforce stability, ease of execution and scalability, customer adoption, and the absence of offsetting factors that can influence results adversely.
The occurrence of one or more natural disasters, such as hurricanes, fires, floods, tornadoes and earthquakes, unusual or extreme weather conditions, pandemic outbreaks or other health crises (for example, the COVID-19 pandemic), political or civil unrest, acts of war, violence or terrorism (including within our stores, distribution centers or other Company property), or disruptive global political events (for example, the political tensions involving China and the current conflict between Russia and Ukraine) or similar disruptions could adversely affect our reputation, business and financial performance.
The occurrence of one or more natural disasters, such as hurricanes, fires, floods, tornadoes and earthquakes, unusual or extreme weather conditions, pandemic outbreaks or other health crises (for example, the COVID-19 pandemic), political or civil unrest, acts of war, violence or terrorism (including within our stores, distribution centers or other Company property), or disruptive global political events (for example, the political tensions involving China, the conflict between Russia and Ukraine and the conflict in the Middle East) or similar disruptions could adversely affect our business, financial performance and reputation.
Due to the political tensions involving China and the conflict between Russia and Ukraine, there is an increased likelihood that escalation of tensions could result in cyberattacks that could either directly or indirectly impact our operations.
Due to the political tensions involving China, the conflict between Russia and Ukraine and the conflict in the Middle East, there is an increased likelihood that escalation of tensions could result in cyberattacks that could either directly or indirectly impact our operations.
Due to the political tensions involving China and the conflict between Russia and Ukraine, there is an increased likelihood that escalation of tensions could result in cyberattacks that could directly or indirectly impact our operations.
Due to the political tensions involving China, the conflict between Russia and Ukraine and the conflict in the Middle East, there is an increased likelihood that escalation of tensions could result in cyberattacks that could directly or indirectly impact our operations.
Failure to comply or accusation of failure to comply, even if unfounded, with ethical, social, product, labor, data privacy, consumer protection, safety, environmental and other applicable standards could jeopardize our reputation and potentially lead to various adverse consumer, shareholder or non-governmental organization (NGO) actions, litigation and governmental investigations and/or require a costly response.
Failure to comply or accusation of failure to comply, even if unfounded, with ethical, social, product, labor, data privacy, consumer protection, safety, environmental and other applicable standards could jeopardize our reputation and potentially lead to various adverse consumer, shareholder or non-governmental organization (NGO) actions, workforce unrest or walkouts, litigation and governmental investigations and/or require a costly response.
However, there are types of losses we may incur but against which we cannot be insured or which we believe are not economically reasonable to insure, such as losses due to acts of war, certain crimes (including employee crime), certain wage and hour and other employment-related claims and litigation, actions based on certain consumer protection laws, and some natural and other disasters or similar events.
However, there are types of losses we may incur but against which we cannot be insured or which we believe are not economically reasonable to insure, such as losses due to acts of war, certain crimes (including employee crime), certain wage and hour and other employment-related claims and litigation, actions based on certain consumer protection laws, and some natural and other disasters (including, without limitation, fires and floods) or similar events.
In addition, certain of these matters, if decided adversely to us or settled by us, may result in liability material to our financial statements as a whole or may negatively affect our operating results if changes to our business operations are required, and sometimes these developments are unanticipated.
In addition, certain of these matters, if decided adversely to us or settled by us and not covered by insurance, may result in liability material to our financial statements as a whole or may negatively affect our operating results if changes to our business operations are required, and sometimes these developments are unanticipated.
Our future growth and performance, positive customer experience and legal and regulatory compliance depends on our ability to attract, develop, retain and motivate qualified employees while operating in an industry challenged by historically high rates of employee turnover.
Our future growth and performance, positive customer experience and legal and regulatory compliance depends on our ability to attract, develop, retain and motivate qualified employees while operating in an industry that has historically been challenged by high rates of employee turnover.
These laws and regulations may include, but are not limited to, requirements relating to hazardous waste materials, recycling, single-use plastics, extended producer responsibility, use of refrigerants, carbon pricing or carbon taxes, product energy efficiency standards and product labeling.
These laws and regulations may include, but are not limited to, requirements relating to hazardous waste materials, recycling and recycled/recyclable product content, single-use plastics, extended producer responsibility, use of refrigerants, carbon pricing or carbon taxes, product energy efficiency standards and product labeling.
The success of our merchandising initiatives, particularly our non-consumable initiatives (including our new pOpshelf concept) and efforts to increase sales of higher margin products within the consumables category, further depends in part upon our ability to predict the products that our customers will demand and to identify and timely respond to evolving trends in consumer preferences and demographic mixes in our markets.
The success of our merchandising initiatives, particularly those related to non-consumable products (including our pOpshelf concept) and efforts to increase sales of higher margin products within the consumables category, further depends in part upon our ability to accurately predict the products that our customers will demand and to accurately identify and timely respond to evolving trends in consumer preferences and demographic mixes in our markets.
The inability or failure of these vendors, developers or us to continue to maintain and upgrade these systems and software programs could disrupt or reduce the efficiency of our operations or retain vulnerability exploitation risk if we were unable to convert to alternate systems in an efficient and timely manner and could expose us to greater risk of a successful attack.
The inability or failure of these vendors, developers or us to continue to maintain and upgrade these systems and software programs or efficiently implement and integrate new systems could disrupt or reduce the efficiency of our operations or retain vulnerability exploitation risk if we were unable to convert to alternate systems in an efficient and timely manner and could expose us to greater risk of a successful attack.
Any failure, or perceived failure, to meet any of our published ESG-related aspirations or goals, which is often outside of our control, could adversely affect public perception of our business, employee morale or customer or shareholder support.
Any failure, or perceived failure, to meet any of our published ESG-related aspirations or goals, which often may be outside of our control, could adversely affect public perception of our business, employee morale or customer or shareholder support.
If we incur material uninsured losses, our financial performance could suffer. Certain material events have resulted, and may result again in the future, in sizable losses for the insurance industry and adversely affect the availability of adequate insurance coverage or result in excessive premium increases.
If we incur material uninsured losses, our financial performance could be negatively impacted. Certain material events have resulted, and may result again in the future, in sizable losses for the insurance industry and adversely affect the availability of adequate insurance coverage or result in excessive premium increases.
Legal proceedings in general, and class actions, derivative actions, multi-district litigation, and governmental investigations and actions in particular, can be expensive and disruptive, and adverse publicity could harm our reputation, regardless of the validity of the allegations. As a result, legal proceedings may adversely affect our business, results of operations and financial condition.
Legal proceedings in general, and class actions, derivative actions, mass arbitrations, multi-district litigation, and governmental investigations and actions in particular, can be expensive and disruptive, and adverse 20 Table of Contents publicity could harm our reputation, regardless of the validity of the allegations. As a result, legal proceedings may adversely affect our business, results of operations and financial condition.
Labor shortages or work stoppages or slowdowns in the transportation industry or disruptions to the national and international transportation infrastructure that necessitate our securing alternative labor or shipping suppliers could also increase our costs or otherwise negatively affect our business.
Labor shortages or work stoppages or slowdowns in the transportation industry or disruptions to the national and 15 Table of Contents international transportation infrastructure that necessitate our securing alternative labor or shipping suppliers could also increase our costs or otherwise negatively affect our business.
In addition, to the extent a significant portion of our employee base unionizes, or attempts to unionize, our labor and other related costs could increase, and it is possible that federal agencies may adopt or impose regulatory or other changes to existing law that could facilitate union organizing.
In addition, to the extent a significant portion of our employee base unionizes, or attempts to unionize, our labor and other costs could increase, and it is possible that federal agencies may adopt or impose regulatory or other changes to existing law that could facilitate union organizing or otherwise restrict employer actions.
Factors that could reduce our customers’ disposable income include but are not limited to high unemployment or underemployment levels or decline in real wages; inflation; pandemics (such as the COVID-19 pandemic); higher fuel, energy, healthcare and housing costs; higher interest rates, consumer debt levels, and tax rates; lack of available credit; tax law changes that negatively affect credits and refunds; and decreases in, or elimination of, government assistance programs or subsidies such as unemployment, food/nutrition assistance programs, and economic stimulus payments.
Factors that could reduce, and in many cases have reduced, our customers’ disposable income include but are not limited to high unemployment or underemployment levels or decline in real wages; inflation; pandemics (such as the COVID-19 pandemic); higher fuel, energy, healthcare, housing and product costs; higher interest rates, consumer debt levels, and tax rates; lack of available credit; tax law changes that negatively affect credits and refunds; and decreases in, or elimination of, government assistance programs or subsidies such as unemployment and food/nutrition assistance programs, student loan repayment forgiveness and economic stimulus payments.
In addition, the United States’ foreign trade policies, duties, tariffs and other impositions on imported goods, trade sanctions imposed on certain countries (particularly China) and entities, import limitations on certain types of goods or of goods containing certain materials from other countries and other factors relating to foreign trade and port labor agreements are beyond our control.
In addition, the United States’ foreign trade policies, duties (which increased on certain products imported from China and Southeast Asian countries in 2023), tariffs and other impositions on imported goods, trade sanctions imposed on certain countries (particularly China) and entities, import limitations on certain types of goods or of goods containing certain materials from other countries and other factors relating to foreign trade and port labor agreements are beyond our control.
In addition, costs and delays associated with the implementation of new or upgraded systems and technology, including the migration of applications to the cloud or our current implementation of our new point of sale system, or with maintenance or adequate support of existing systems also could disrupt or reduce the efficiency of our operations, fail to operate as designed, result in the potential loss or corruption of data or information, disrupt operation, inhibit our ability to innovate, and affect our ability to meet business and reporting requirements and adversely affect our profitability.
In addition, costs and delays for any reason associated with the implementation of new or upgraded systems and technology, including the migration of applications to the cloud, modernizing of legacy systems or our current implementation of our new point of sale system, or with maintenance or adequate support of existing systems also could disrupt or reduce the efficiency of our operations, fail to operate as designed, result in the potential loss or corruption of data or information or lost sales, cause business interruptions, inhibit our ability to innovate, and affect our ability to meet business and reporting requirements and adversely affect our profitability.
We directly imported approximately 9% of our purchases (measured at cost) in 2022, but many of our domestic vendors directly import their products or components of their products.
We directly imported approximately 4% of our purchases (measured at cost) in 2023, but many of our domestic vendors directly import their products or components of their products.
Delays in opening such facilities could adversely affect our financial performance by slowing store 15 Table of Contents growth (including accelerated pOpshelf store growth plans) or the rollout/development of certain strategic initiatives, which may in turn reduce revenue growth and/or profitability, or by increasing transportation and product costs.
Delays in opening such facilities could adversely affect our financial performance by slowing store growth or the rollout/development of certain strategic initiatives, which may in turn reduce revenue growth and/or profitability, or by increasing transportation and product costs.
New or revised laws, regulations, orders, policies and related interpretations and enforcement practices, particularly those dealing with the sale of products, including without limitation, product and food safety, 19 Table of Contents marketing, labeling or pricing; information security and privacy; labor and employment; employee wages and benefits; health and safety; imports and customs; taxes; bribery; climate change; and environmental compliance, may significantly increase our expenses or require extensive system and operating changes that could materially increase our cost of doing business.
New or revised laws, regulations, orders, policies and related interpretations and enforcement practices, particularly those dealing with the sale of products, including without limitation, product and food safety, marketing, labeling or pricing; information security and privacy; labor and employment; employee wages, salary levels and benefits; health and safety; real property; public accommodations; imports and customs; transportation; intellectual property; taxes; bribery and anti-corruption; climate change; and environmental compliance, may significantly increase our expenses or require extensive system and operating changes that could materially increase our cost of doing business.
The retail business is highly competitive with respect to price, customers, store location, merchandise quality, product assortment and presentation, service offerings, product sourcing and supply chain capacity, in-stock consistency, customer service, ease of shopping experience, promotional activity, employees, and market share.
The retail business is highly competitive with respect to price, customers, store location, merchandise quality, product assortment and presentation, service offerings, product sourcing and supply chain capacity, in-stock consistency, customer service, ease of shopping experience (including but not limited to various modes of shopping, including online alternatives), promotional activity, employees, and market share.
Many of the economic factors listed above, as well as commodity rates; transportation, lease and insurance costs; wage rates (including the heightened possibility of increased federal, state and/or local minimum wage rates); foreign exchange rate fluctuations; measures that create barriers to or increase the costs of international trade (including increased import duties or tariffs); changes in applicable laws and regulations (including tax laws related to the corporate tax rate); and other economic factors, also could impair our ability to successfully execute our strategies and initiatives, as well as increase our cost of goods sold and selling, general and administrative expenses (including real estate costs), and may have other adverse consequences that we are unable to fully anticipate or control, all of which may materially decrease our sales or profitability. ​ Inflation in the United States rose significantly in 2022, primarily believed to be the result of the economic impacts from the COVID-19 pandemic, including the global supply chain disruptions, strong economic recovery and associated widespread demand for goods, and government stimulus packages, among other factors.
Many of the economic factors listed above, as well as commodity rates; transportation, lease and insurance costs; wage rates (including the heightened possibility of increased federal and further increased state and/or local minimum wage rates); foreign exchange rate fluctuations; measures that create barriers to or increase the costs of international trade (including increased import duties or tariffs); changes in applicable laws and regulations (including tax laws related to the corporate tax rate); and other economic factors, also could impair our ability to successfully execute our strategies and initiatives, as well as increase our cost of goods sold and selling, general and administrative expenses (including real estate costs), and may have other adverse consequences that we are unable to fully anticipate or control, all of which may materially decrease our sales or profitability. ​ Inflation in the United States rose significantly in 2022, primarily believed to be the result of the economic impacts from the COVID-19 pandemic, and although it moderated in 2023, it remains elevated in certain areas, including food.
Nonetheless, we may be vulnerable to, and unable to detect and appropriately respond to, cardholder data security breaches and data loss, including successful attacks on applications, systems, or networks.
Nonetheless, we or our applicable payment processing partner(s), may be vulnerable to, and unable to detect and appropriately respond to, cardholder data security breaches and data loss, including successful attacks on applications, systems, or networks.
Additionally, changes in tax laws (including those related to the federal, state or foreign corporate tax rate), the interpretation of existing laws, or our failure to sustain our reporting positions on examination could adversely affect our overall effective tax rate, or in the case of the recently enacted stock buyback excise tax, our cash flows.
Additionally, changes in tax laws (including those related to the federal, state or foreign corporate tax rate), the interpretation of existing laws, or our failure to sustain our reporting positions on examination could adversely affect our overall effective tax rate.
Even with adequate insurance and indemnification, such claims could significantly harm our reputation 17 Table of Contents and consumer confidence in our products and we could incur significant litigation expenses, which also could materially affect our results of operations even if a product liability claim is unsuccessful or not fully pursued.
Even with adequate insurance and indemnification, such claims could significantly harm our reputation and consumer confidence in our products, and we could incur significant litigation expenses, which also could 17 Table of Contents materially affect our results of operations even if a product liability claim is unsuccessful or not fully pursued, as well as lost sales during the period of time between recall and backfilling the recalled product.
Moreover, the adoption of new environmental laws and regulations in connection with climate change and the transition to a low carbon economy, including any federal or state laws enacted to regulate greenhouse gas emissions, could significantly increase our operating or merchandise costs or reduce the demand for our products.
Moreover, the adoption of new environmental laws and regulations in connection with climate change and the transition to a low carbon economy, including any federal or state laws enacted to regulate greenhouse gas emissions or require public disclosures related thereto (including the recently adopted SEC rules requiring certain disclosures relating to climate change), could significantly increase our operating or merchandise costs or reduce the demand for our products.
We continue to focus on ways to reduce these risks, but we cannot make assurances that we will be successful in our inventory 13 Table of Contents management. If we are not successful in managing our inventory balances, our cash flows from operations and financial condition may be negatively affected.
We continue to focus on ways to reduce these risks and ensure the right products are on the shelves for our customers, but we cannot make assurances that we will be successful in our inventory management. If we are not successful in managing our inventory balances, our cash flows from operations and financial condition may be negatively affected.
If we fail to anticipate or respond effectively to competitive pressures and industry changes, it could materially affect our results of operations and financial condition. 12 Table of Contents Operational Risks 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 the challenges imposed by our expansion, including into new countries or domestic markets, states, or urban or suburban areas, it could materially impede our planned future growth and our profitability.
Operational Risks 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 the challenges imposed by our expansion, including into new countries or domestic markets, states, or urban or suburban areas, it could materially impede our planned future growth and our profitability.
Efficient inventory management is a key component of our business success and profitability. We must maintain sufficient inventory levels and an appropriate product mix to meet our customers’ demands without allowing those levels to increase such that the costs to store and hold the goods unduly impacts our financial results or increases the risk of inventory shrinkage or damages.
We must maintain sufficient inventory levels and an appropriate product 13 Table of Contents mix to meet our customers’ demands without allowing those levels to increase such that the costs to store and hold the goods unduly impacts our financial results, increases the risk of inventory shrinkage or damages or impacts store standards.
Changes in the credit and capital markets, including market disruptions, limited liquidity and interest rate increases, may increase the cost of financing or restrict our access to these potential sources of future liquidity. In 2022, as interest rates rose, our interest expense rose as well.
Changes in the credit and capital markets, including market disruptions, limited liquidity and interest rate increases, may increase the cost of financing or restrict our access to these potential sources of future liquidity. There continues to be market uncertainty, which could result in further increases in our cost of borrowing.
The success of our Fast Track initiative, which is designed to enhance our in-store labor productivity, on-shelf availability and customer convenience, further depends in part on successful acquisition, implementation and maintenance of the necessary hardware and new point of sale software, continued customer interest in and adoption of self-checkout, our ability to gain cost efficiencies and control shrink levels from the initiative, and vendor cooperation.
The success of our self-checkout option in our stores depends in part on successful acquisition, implementation and maintenance of the necessary hardware and new point of sale software, continued customer interest in and adoption of self-checkout and our ability to gain cost efficiencies and control shrink levels from self-checkout.
Adverse events, such as deteriorating economic conditions, high unemployment rates, high gas or energy prices, transportation disruptions, or unusual or unanticipated adverse weather could result in lower-than-planned sales during the Christmas selling season, which in turn could reduce our profitability and otherwise adversely affect our financial performance and operating results.
Adverse events, such as deteriorating or challenging economic conditions, high unemployment rates, high gas or energy prices, transportation disruptions, or unusual or unanticipated adverse weather could result in lower-than-planned sales during the Christmas selling season, which in turn could reduce our profitability and otherwise adversely affect our financial performance and operating results. 19 Table of Contents ​ Regulatory, Legal, Compliance and Accounting Risks A significant change in governmental regulations and requirements could materially increase our cost of doing business, and noncompliance with governmental laws or regulations could materially and adversely affect our financial performance.
If we do not accurately predict customer trends, spending levels, or price sensitivity, we may have to take unanticipated markdowns to dispose of the excess inventory, which also can adversely affect our financial results.
If we do not accurately predict customer trends, spending levels, or price sensitivity, we may have to take unanticipated markdowns to dispose of the excess inventory, which also can adversely affect our financial results. Our pOpshelf concept is particularly susceptible to this risk as it is reliant upon accurate customer trend prediction and the level of customers’ disposable income.
While we believe the growth rate of inflation is beginning to moderate, if inflation continues to increase, we may not be able to adjust prices sufficiently to offset the effect without negatively impacting customer demand or our gross margin.
If food (and in particular, “food at home”) inflation continues to increase, we may not be able to adjust prices sufficiently to offset the effect without negatively impacting customer demand or our gross margin.
We also rely heavily on our information technology staff. Failure to meet these staffing needs may negatively affect our ability to fulfill our technology initiatives while continuing to provide maintenance on existing systems. We rely on third parties to maintain and periodically upgrade many of these systems so that they can continue to support our business.
We rely heavily on our information technology staff to fulfill our technology initiatives while continuing to provide maintenance on existing systems, as well as on third parties to maintain and periodically upgrade many of these systems so that they can continue to support our business. Further, we license the software programs supporting many of our systems from independent software developers.
Any resulting negative publicity could significantly harm our reputation which could cause us to lose market share as a result of customers discontinuing the use of our e-commerce and mobile applications or debit or credit cards in our stores or not shopping in our stores altogether and could materially and adversely affect our business and financial performance. 14 Table of Contents Material damage or interruptions to our information systems as a result of external factors, staffing shortages or challenges in maintaining or updating our existing technology or developing or implementing new technology could materially and adversely affect our business and results of operations.
Any resulting negative publicity could significantly harm our reputation which could cause us to lose market share because of customers discontinuing the use of our e-commerce and mobile applications or debit or credit cards in our stores or not shopping in our stores altogether and could materially and adversely affect our business and financial performance.
Additionally, to the extent that these inflationary pressures result in a recessionary environment, we may experience material adverse effects on our business, results of operations and cash flows.
Additionally, to the extent that these inflationary pressures result in a recessionary environment, we may experience material adverse effects on our business, results of operations and cash flows. For more information, see the “Executive Overview” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in Part II, Item 7 of this report.
The outcome of such changes could include litigation or regulatory actions which could adversely affect our financial condition and results of operations. 20 Table of Contents Financial and Capital Market Risks Deterioration in market conditions or changes in our credit profile could adversely affect our business operations and financial condition.
Financial and Capital Market Risks Deterioration in market conditions or changes in our credit profile could adversely affect our business operations and financial condition.
Changes in these rules or their interpretation or in underlying management assumptions, estimates or judgments could significantly change our reported or expected financial performance.
Changes in these rules or their interpretation or in underlying management assumptions, estimates or judgments could significantly change our reported or expected financial performance. The outcome of such changes could include litigation or regulatory actions which could adversely affect our financial condition and results of operations.
For example, in 2022, Winter Storm Elliott had a significant impact on our fourth quarter results because of lost sales, increased damages and increased markdowns. These events may also increase the costs of insurance if they result in significant loss of property or other insurable damage by us or in the market more generally.
These events may also increase the costs of insurance if they result in significant loss of property or other insurable damage or loss by us or in the market more generally.
Our success depends in part on the protection of the reputation of Dollar General and the products and services we sell, including our private brands.
Failure to appropriately address these risks could materially and adversely affect our private brand initiatives, reputation, results of operations and financial condition. Failure to protect our reputation could adversely affect our business. Our success depends in part on the protection of the reputation of Dollar General and the products and services we sell, including our private brands.
Competition for skilled and experienced management personnel is intense, and a failure to attract and retain new qualified personnel or our inability to enforce non-compete agreements that we have in place with our management personnel could adversely affect our operations. 18 Table of Contents Our private brands may not be successful in improving our gross profit rate at our expected levels and may increase certain of the risks we face.
In addition, our executive succession planning, retention and hiring efforts, and ability to successfully execute management transitions within our senior leadership are critical to our business success. 18 Table of Contents Competition for skilled and experienced management personnel is intense, and a failure to attract and retain new qualified personnel or our inability to enforce non-compete agreements that we have in place with our management personnel could adversely affect our operations.
The sale of private brand items is an important component of our sales growth and gross profit rate enhancement plans. Broad market acceptance of our private brands depends on many factors, including pricing, quality, customer perception, and timely development and introduction of new products.
Broad market acceptance of our private brands depends on many factors, including pricing, quality, customer perception, and timely development and introduction of new products. We cannot give assurance that we will achieve or maintain our expected level of private brand sales.
In 2023, we plan to invest approximately $100 million, which we believe to be material, in our stores, primarily in the form of labor, to enhance store standards, our compliance efforts and the employee and customer experience.
In 2023, we invested approximately $150 million in retail labor, primarily through labor hours, to further enhance our store standards, including on-shelf availability, and our compliance efforts as well as the customer and employee experience in our stores.
During 2022, our inventory shrink levels returned to pre-COVID-19 levels, and higher damages also impacted our results. There can be no assurance that we will be successful in our efforts to contain or reduce inventory shrinkage and damages.
During 2023, our inventory shrink and damages results remained significantly elevated and materially impacted our results. There can be no assurance that we will be successful in our efforts to contain or reduce inventory shrinkage and damages. Our cash flows from operations, profitability and financial condition may be negatively affected if we are not successful in managing our inventory balances.
Negative reputational incidents could adversely affect our business through lost sales, loss of new store and development opportunities, or employee retention and recruiting difficulties. Regulatory, Legal, Compliance and Accounting Risks A significant change in governmental regulations and requirements could materially increase our cost of doing business, and noncompliance with governmental regulations could materially and adversely affect our financial performance.
Negative reputational incidents could adversely affect our business through declines in customer loyalty, lost sales, loss of new store and development opportunities, or employee retention and recruiting difficulties. Because our business is somewhat seasonal, adverse events during the fourth quarter could materially affect our financial statements as a whole.
There continues to be market uncertainty, which could result in further increases in our cost of borrowing. Our continued access to liquidity sources on favorable terms depends on multiple factors, including our operating performance and credit ratings.
Our continued access to liquidity sources on favorable terms depends on multiple factors, including our operating performance and credit ratings. Standard & Poor’s recently changed our outlook from stable to negative.
Using various transportation modes, including ocean, rail, and truck, we and our vendors move goods from vendor locations to our distribution centers and our stores. Any disruption, unanticipated or unusual expense or operational failure related to this process could negatively impact sales and profits.
Using various transportation modes, including ocean, rail, and truck, we and our vendors move goods from vendor locations to our distribution centers and our stores, and we also lease additional temporary warehouse space as necessary to support our distribution needs.
Similar incidents or factors involving vendors and other third parties with whom we conduct business also may affect our reputation. Public comments on social media, whether or not they are accurate, have the potential to quickly influence negative perceptions of Dollar General or our goods and services, including our private brands.
Similar incidents or factors involving vendors, partners and other third parties with whom we conduct business also may affect our reputation.
Our ability to effectively compete will depend substantially upon our continued ability to develop and execute compelling and cost-effective strategies and initiatives.
Our ability to effectively compete will depend substantially upon our continued ability to develop and execute compelling and cost-effective strategies and initiatives. If we fail to anticipate or respond 12 Table of Contents effectively to competitive pressures, industry changes and customer preferences and shopping habits, it could materially affect our results of operations and financial condition.
Our cash flows from operations, profitability and financial condition may be negatively affected if we are not successful in managing our inventory balances. Our inventory balance represented approximately 53% of our total assets exclusive of goodwill, operating lease assets, and other intangible assets as of February 3, 2023.
Our inventory balance represented approximately 49% of our total assets exclusive of goodwill, operating lease assets, and other intangible assets as of February 2, 2024. Efficient inventory management is a key component of our business success and profitability.
Removed
Despite these initiatives, since the first quarter of 2022, we have experienced a sales mix trend reversion from non-consumables to consumables exceeding pre-pandemic levels.
Added
Despite these initiatives, our sales mix continued to shift from non-consumables toward consumables in 2023, and our consumables sales as a percentage of total sales is currently at historical highs.

… 17 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

4 edited+1 added−0 removed1 unchanged
Biggest changePROPERTIES ​ As of March 3, 2023, we operated 19,147 retail stores, including those located in 47 U.S. states as listed in the table below, and one store in Mexico. ​ ​ ​ ​ ​ ​ ​ ​ ​ State Number of Stores State Number of Stores Alabama 907 Nevada 21 ​ Arizona 137 New Hampshire 45 ​ Arkansas 528 New Jersey 186 ​ California 259 New Mexico 119 ​ Colorado 72 New York 575 ​ Connecticut 86 North Carolina 1,035 ​ Delaware 51 North Dakota 66 ​ Florida 1,030 Ohio 977 ​ Georgia 1,059 Oklahoma 527 ​ Idaho ​ 6 ​ Oregon 85 ​ Illinois 659 Pennsylvania 914 ​ Indiana 669 Rhode Island 25 ​ Iowa 310 South Carolina 644 ​ Kansas 268 South Dakota 77 ​ Kentucky 702 Tennessee 953 ​ Louisiana 643 Texas 1,802 ​ Maine 67 Utah 11 ​ Maryland 166 Vermont 39 ​ Massachusetts 55 Virginia 470 ​ Michigan 696 Washington ​ 38 ​ Minnesota 206 West Virginia 285 ​ Mississippi 621 Wisconsin 260 ​ Missouri 634 ​ Wyoming ​ 15 ​ Nebraska 146 ​ ​ ​ ​ ​ ​ 21 Table of Contents Most of our stores are located in leased premises.
Biggest changePROPERTIES ​ As of March 1, 2024, we operated 20,022 retail stores, including those located in 48 U.S. states as listed in the table below, and three stores in Mexico. ​ ​ ​ ​ ​ ​ ​ ​ ​ State Number of Stores State Number of Stores Alabama 941 Nebraska 152 ​ Arizona 138 Nevada 22 ​ Arkansas 556 New Hampshire 45 ​ California 260 New Jersey 193 ​ Colorado 76 New Mexico 133 ​ Connecticut 95 New York 597 ​ Delaware 51 North Carolina 1,076 ​ Florida 1,061 North Dakota 71 ​ Georgia 1,098 Ohio 1,007 ​ Idaho ​ 7 ​ Oklahoma 550 ​ Illinois 698 Oregon 86 ​ Indiana 695 Pennsylvania 957 ​ Iowa 328 Rhode Island 24 ​ Kansas 275 South Carolina 666 ​ Kentucky 751 South Dakota 78 ​ Louisiana 671 Tennessee 998 ​ Maine 71 Texas 1,889 ​ Maryland 177 Utah 11 ​ Massachusetts 56 Vermont 41 ​ Michigan 736 Virginia ​ 492 ​ Minnesota 211 Washington 42 ​ Mississippi 657 West Virginia 303 ​ Missouri 670 ​ Wisconsin ​ 283 ​ Montana 4 ​ Wyoming ​ 20 ​ ​ Most of our stores are located in leased premises.
We also leased approximately 4.8 million square feet of additional warehouse space in support of our distribution network for non-refrigerated merchandise. ​ Our executive offices are located in approximately 302,000 square feet of owned buildings in Goodlettsville, Tennessee. ​
We also leased approximately 4.2 million square feet of additional warehouse space in support of our distribution network for non-refrigerated merchandise. ​ Our executive offices are located in approximately 302,000 square feet of owned buildings in Goodlettsville, Tennessee.
We have a total of 20.5 million square feet of non-refrigerated space and a total of 2.6 million square feet of cold storage space. Approximately 7.25 acres of the land for one of the distribution centers is subject to a ground lease.
We have a total of 20.9 million square feet of non-refrigerated space and a total of 2.8 million square feet of cold storage space. Approximately 7.25 acres of the land for one of the distribution centers is subject to a ground lease.
We also have stores subject to shorter-term leases, and many of these leases have renewal options. ​ As of March 3, 2023, we operated 19 distribution centers for non-refrigerated products, 10 cold storage distribution centers, and two combination distribution centers which have both refrigerated and non-refrigerated products. We lease 14 of these facilities and the remainder are owned.
We also have stores subject to shorter-term leases, and many of these leases have renewal options. ​ As of March 1, 2024, we operated 19 distribution centers for non-refrigerated products, ten cold storage distribution centers, and three combination distribution centers which have both refrigerated and non-refrigerated products. We lease 15 of these facilities and the remainder are owned.
Added
As of March 1, 2024, we also leased approximately 186,000 square feet of additional space in Goodlettsville, Tennessee to support merchandising initiatives and 85,000 square feet of additional office space outside the United States. ​

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

14 edited+6 added−9 removed10 unchanged
Biggest changeHe returned to Dollar General in June 2015 as Executive Vice President of Store Operations, with over 21 years of previous employment experience with the Company, including Senior Vice President, Store Operations (August 2011 to July 2014); Vice President, Division Manager (March 2007 to July 2011); Retail Division Manager (November 2006 to March 2007); and various other operations roles of increasing importance and responsibility.
Biggest changeHe has over 18 years of employment experience with Dollar General, including Executive Vice President, Growth and Emerging Markets (June 2023 to January 2024); Senior Vice President, Emerging Markets (March 2021 to May 2023); Senior Vice President, Store Operations (March 2015 to March 2021); Vice President, Store Operations (October 2012 to March 2015); Vice President, Financial Planning and Shrink Improvement (March 2012 to October 2012); Vice President, Loss Prevention and Shrink Improvement (November 2010 to March 2012); Senior Director, Store Operations (October 2007 to November 2010); Director, Store Operations (February 2007 to October 2007); and Regional Director (February 2006 to February 2007).
Prior to joining Dollar General, she practiced law 23 Table of Contents with Ogletree, Deakins, Nash, Smoak & Stewart, P.C., where her practice was focused on labor law and employment litigation. She has also held attorney positions with Ford & Harrison LLP. ​ Mr. Wenkoff has served as Executive Vice President and Chief Information Officer since July 2017.
Prior to joining Dollar General, she practiced law with Ogletree, Deakins, Nash, Smoak & Stewart, P.C., where her practice was focused on labor law and employment litigation. She has also held attorney positions with Ford & Harrison LLP. ​ Mr. Wenkoff has served as Executive Vice President and Chief Information Officer since July 2017.
Each of our executive officers serves at the discretion of our Board of Directors and is elected annually by the Board to serve until a successor is duly elected or their earlier resignation or termination. There are no familial relationships between any of our directors or executive officers. ​ 8 Name Age Position Jeffery C.
Each of our executive officers serves at the discretion of our Board of Directors and is elected annually by the Board to serve until a successor is duly elected or their earlier resignation or termination. There are no familial relationships between any of our directors or executive officers. ​ 8 Name Age Position Todd J.
Wenkoff began his career in 1993 as an articled student, and then attorney with Douglas Symes & Brissenden and served in various legal positions, including General Counsel, with Pivotal Corporation from 1997 to 2000. ​ Mr. Zuazo has served as Executive Vice President, Global Supply Chain since April 2021.
Wenkoff began his career in 1993 as an articled student, and then attorney with Douglas Symes & Brissenden and served in various legal positions, including General Counsel, with Pivotal Corporation from 1997 to 2000. ​ Mr. West has served as Executive Vice President, Global Supply Chain, since September 2023.
Reardon also held various roles with Carrier Corporation, including Manager of Human Resources from August 2003 until August 2005, and was also a Career Consultant at the Darden Graduate School of Business Administration, University of Virginia, from August 2001 until August 2003. ​ Mr. Sunderland has served as Executive Vice President, Store Operations, since August 2019.
Reardon also held various roles with Carrier Corporation, including Manager of Human Resources from August 2003 until August 2005, and was also a Career Consultant at the Darden Graduate School of Business Administration, University of Virginia, from August 2001 until August 2003. ​ Ms. E. Taylor has served as Executive Vice President and Chief Merchandising Officer since September 2020.
Taylor ​ 47 ​ Executive Vice President and Chief Merchandising Officer Rhonda M. Taylor ​ 55 ​ Executive Vice President and General Counsel Carman R. Wenkoff ​ 55 ​ Executive Vice President and Chief Information Officer Antonio Zuazo ​ 51 ​ Executive Vice President, Global Supply Chain Anita C.
Taylor ​ 48 ​ Executive Vice President and Chief Merchandising Officer Rhonda M. Taylor ​ 56 ​ Executive Vice President and General Counsel Carman R. Wenkoff ​ 56 ​ Executive Vice President and Chief Information Officer Roderick J. West ​ 52 ​ Executive Vice President, Global Supply Chain Anita C.
ITEM 4. MINE SAFETY DISCLOSURES ​ None. ​ INFORMATION ABOUT OUR EXECUTIVE OFFICERS ​ Information regarding our current executive officers as of March 24, 2023 is set forth below.
ITEM 4. MINE SAFETY DISCLOSURE S ​ Not applicable. ​ INFORMATION ABOUT OUR EXECUTIVE OFFICERS ​ Information regarding our current executive officers as of March 25, 2024 is set forth below.
He joined Dollar General in December 2008 as Executive Vice President, Division President and Chief Merchandising Officer and was 22 Table of Contents promoted to Chief Operating Officer in November 2013 and to Chief Executive Officer in June 2015. As previously announced, Mr. Vasos plans to retire from Dollar General effective April 2, 2023, but will remain on our Board.
He previously served as our Chief Executive Officer from June 2015 to November 2022, when he transitioned to Senior Advisor prior to retiring in April 2023. Mr. Vasos joined Dollar General in December 2008 as Executive Vice President, Division President and Chief Merchandising Officer and was promoted to Chief Operating Officer in November 2013.
Elliott ​ 58 ​ Senior Vice President and Chief Accounting Officer ​ Mr. Owen has served as our Chief Executive Officer and as a member of our Board of Directors since November 2022. He previously served as our Chief Operating Officer from August 2019 to November 2022.
Elliott ​ 59 ​ Senior Vice President and Chief Accounting Officer ​ Mr. Vasos has served as our Chief Executive Officer since October 2023 and as a member of our Board of Directors since June 2015.
Zuazo began his career in January 1988 with Lucky Stores and served as a pricing analyst for its Northern California division from October 1995 to August 1998. ​ Ms. Elliott has served as Senior Vice President and Chief Accounting Officer since December 2015. She joined Dollar General as Senior Vice President and Controller in August 2005.
West was a consultant with Kurt Salmon Associates from July 1994 to August 2005. ​ Ms. Elliott has served as Senior Vice President and Chief Accounting Officer since December 2015. She joined Dollar General as Senior Vice President and Controller in August 2005.
He also previously served in leadership positions at Phar-Mor Food and Drug Inc. and Eckerd Corporation. Mr. Vasos has served as a director of KeyCorp since July 2020. ​ Mr. Garratt has served as President and Chief Financial Officer since September 2022. As previously announced, Mr. Garratt plans to retire from Dollar General effective June 2, 2023.
He was named Chief Executive Officer and joined the Company’s Board of Directors in June 2015. Prior to joining Dollar General, Mr. Vasos served in leadership positions with Longs Drug Stores Corporation, Phar-Mor Food and Drug Inc. and Eckerd Corporation. Mr. Vasos has served as a director of KeyCorp since July 2020. ​ Ms.
Prior to serving at Jitney-Jungle, she practiced public accounting for 12 years, 6 of which were with Ernst & Young LLP. ​ ​ ​ 24 Table of Contents PART II ​
Prior to serving at Jitney-Jungle, she practiced public accounting for 12 years, 6 of which were with Ernst & Young LLP. ​ 25 Table of Contents Involvement in Legal Proceedings . Ms. Dilts served as Executive Vice President and Chief Financial Officer at Francesca’s Holdings Corporation until July 2019.
Owen ​ 53 ​ Chief Executive Officer and Director Todd J. Vasos ​ 61 ​ Senior Advisor and Director John W. Garratt ​ 54 ​ President and Chief Financial Officer Kathleen A. Reardon ​ 51 ​ Executive Vice President and Chief People Officer Steven G. Sunderland ​ 59 ​ Executive Vice President, Store Operations Emily C.
Vasos ​ 62 ​ Chief Executive Officer and Director Kelly M. Dilts ​ 55 ​ Executive Vice President and Chief Financial Officer Steven R. Deckard ​ 55 ​ Executive Vice President, Store Operations and Development Kathleen A. Reardon ​ 52 ​ Executive Vice President and Chief People Officer Emily C.
He previously held financial management positions at Alcoa Inc. (April 2002 to May 2004) and General Electric (March 1999 to April 2002), after beginning his career with Alcoa in May 1990. Mr. Garratt has served as a director of Humana Inc. since February 2020. ​ Ms. Reardon has served as Executive Vice President and Chief People Officer since August 2020.
Prior to joining Dollar General, Mr. Deckard held various store operations positions with Walmart Inc. from November 1990 to April 2005. 24 Table of Contents ​ Ms. Reardon has served as Executive Vice President and Chief People Officer since August 2020.
Removed
He began his employment at Dollar General in December 1992. Mr. Owen served as a director of Kirkland’s Inc. from March 2015 to September 2022. ​ Mr. Vasos served as our Chief Executive Officer from June 2015 to November 2022 when he transitioned to Senior Advisor. He has served as a member of our Board of Directors since June 2015.
Added
Dilts has served as Executive Vice President and Chief Financial Officer since May 2023. She joined Dollar General in July 2019 as Senior Vice President, Finance, overseeing financial planning and analysis; procurement; margin planning and analytics; decision science and analytics; and investor relations. Prior to joining the Company, Ms.
Removed
Vasos served in executive positions with Longs Drug Stores Corporation for seven years, including Executive Vice President and Chief Operating Officer (February 2008 to November 2008) and Senior Vice President and Chief Merchandising Officer (2001 to 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
Dilts served as Executive Vice President and Chief Financial Officer at Francesca’s Holdings Corporation, a specialty retailer operating a nationwide chain of boutiques, from April 2016 until July 2019.
Removed
He joined Dollar General in October 2014 as Senior Vice President, Finance & Strategy, and subsequently served as Interim Chief Financial Officer from July 2015 to December 2015, and as Executive Vice President and Chief Financial Officer from December 2015 to September 2022. Mr. Garratt previously held various positions of increasing responsibility in corporate strategy and financial planning with Yum!
Added
Between February 1998 and April 2016, she held various positions of increasing responsibility in finance and investor relations with Tailored Brands, Inc., including Senior Vice President, Finance and Investor Relations (June 2014 to April 2016); Senior Vice President and Chief Accounting Officer (July 2012 to June 2014); Vice President, Finance (April 2003 to July 2012); Associate Vice President, Finance (April 2002 to April 2003); Financial Planning and Analysis Manager (March 2000 to April 2002); and Assistant Controller (February 1998 to March 2000).
Removed
Brands, Inc., one of the world’s largest restaurant companies, between May 2004 and October 2014, including Vice President, Finance and Division Controller for the KFC division and earlier for the Pizza Hut division and for Yum Restaurants International (October 2013 to October 2014); Senior Director, Yum Corporate Strategy (March 2010 to October 2013), reporting directly to the corporate Chief Financial Officer and leading corporate strategy as well as driving key cross-divisional initiatives; and various other financial positions.
Added
She also served as the Controller for Olympia Enterprises from April 1993 to February 1998, after beginning her career with Deloitte & Touche in January 1990 . ​ Mr. Deckard has served as Executive Vice President, Store Operations and Development, since January 2024.
Removed
He joined Dollar General as Senior Vice President, Store Operations, in September 2014. Mr. Sunderland previously served as Senior Vice President, Retail Operations, of Office Depot, Inc.
Added
He has approximately 18 years of employment experience with Dollar General, including Senior Vice President, Distribution (March 2021 to August 2023); Vice President, Perishable Growth and Development (January 2018 to March 2021); and Vice President, Process Improvement (August 2005 to January 2018). Prior to joining Dollar General, Mr.
Removed
(November 2013 to January 2014); Senior Vice President, Retail Operations, of OfficeMax Incorporated (May 2012 to November 2013); Chief Operating Officer of Bally Total Fitness Holding Corporation (2011 to April 2012); and World Kitchen, LLC’s President of Retail (2009 to 2011). Mr.
Added
On December 3, 2020, Francesca’s Holdings Corporation filed voluntary petitions for relief under Chapter 11 of Title 11 of the Bankruptcy Code. The Chapter 11 Plan of Liquidation was confirmed on July 20, 2021. ​ ​ PART II ​
Removed
Sunderland began his career with Sears in 1987, holding various positions of increasing responsibility, including Vice President of Strategic Operations for Sears Holdings Corporation from 2007 until 2009. ​ Ms. E. Taylor has served as Executive Vice President and Chief Merchandising Officer since September 2020.
Removed
He joined Dollar General as Senior Director, Inventory and Planning Systems in May 2010, became Vice President, Inventory and Demand Management in February 2013, and was promoted to Senior Vice President, Inventory and Transportation in August 2018. Prior to joining Dollar General, Mr.
Removed
Zuazo served as Director of Pricing Strategy for Dreyer’s Grand Ice Cream from January 2009 to May 2010 and Director of Procurement for Longs Drug Stores Corporation from January 2006 to December 2008, and prior thereto, held various roles of increasing responsibility with Safeway Inc., primarily in its corporate business processes department, from August 1998 to December 2005. Mr.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

1 edited+2 added−5 removed0 unchanged
Biggest changeMARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES ​ Market Information ​ Our common stock is traded on the New York Stock Exchange under the symbol “DG.” On March 22, 2023, there were approximately 2,747 shareholders of record of our common stock. ​ Dividends ​ We have paid quarterly cash dividends since 2015.
Biggest changeMARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES ​ Market Information ​ Our common stock is traded on the New York Stock Exchange under the symbol “DG.” On March 21, 2024, there were approximately 2,708 shareholders of record of our common stock. ​ Dividends ​ We have paid quarterly cash dividends since 2015.
Removed
Our Board of Directors most recently increased the amount of the quarterly cash dividend from $0.55 to $0.59 beginning with the dividend payable on April 25, 2023.
Added
Our current quarterly cash dividend is $0.59 per share.
Removed
While our Board 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. ​ Issuer Purchases of Equity Securities ​ The following table contains information regarding purchases of our common stock made during the quarter ended February 3, 2023 by or on behalf of Dollar General or any “affiliated purchaser,” as defined by Rule 10b-18(a)(3) of the Securities Exchange Act of 1934: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number Approximate ​ ​ ​ ​ ​ ​ ​ of Shares ​ Dollar Value ​ ​ ​ ​ ​ ​ ​ Purchased ​ of Shares that May ​ ​ Total Number ​ Average ​ as Part of Publicly ​ Yet Be Purchased ​ ​ of Shares ​ Price Paid ​ Announced Plans ​ Under the Plans Period ​ Purchased ​ per Share ​ or Programs(a) ​ or Programs(a) 10/29/22-11/30/22 — ​ $ — — ​ $ 2,487,795,000 ​ 12/01/22-12/31/22 3,200,346 ​ $ 245.64 3,200,346 ​ $ 1,701,653,000 ​ 01/01/23-02/03/23 1,301,273 ​ $ 245.93 1,301,273 ​ $ 1,381,631,000 ​ Total 4,501,619 ​ $ 245.73 4,501,619 ​ $ 1,381,631,000 ​ ​ (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.
Added
While our Board 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, excess debt capacity, and other factors that the Board may deem relevant in its sole discretion. ​
Removed
The program was most recently amended on August 24, 2022 to increase the repurchase authorization by $2.0 billion, bringing the cumulative total value of authorized share repurchases under the program since its inception to $16.0 billion.
Removed
Under the authorization, repurchases may be made from time to time in open market transactions, including pursuant to trading plans adopted in accordance with Rule 10b5-1 of the Exchange Act, or in privately negotiated transactions.
Removed
The timing, manner and number of shares repurchased will depend on a variety of factors, including price, market conditions, compliance with the covenants and restrictions under the Company’s debt agreements and other factors. This repurchase authorization has no expiration date. ​ ​ ​

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

92 edited+24 added−46 removed45 unchanged
Biggest changeFurthermore, the seasonal nature of our business may affect comparisons between periods. ​ 30 Table of Contents The following table contains results of operations data for fiscal years 2022, 2021 and 2020, and the dollar and percentage variances among those years. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 vs. 2021 2021 vs. 2020 ​ (amounts in millions, except ​ ​ ​ ​ ​ ​ Amount % Amount % ​ per share amounts) ​ 2022 ​ 2021 ​ 2020 ​ Change ​ Change Change ​ Change ​ Net sales by category: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumables ​ $ 30,155.2 ​ $ 26,258.6 ​ $ 25,906.7 ​ $ 3,896.6 ​ 14.8 % $ 351.9 ​ 1.4 % % of net sales ​ 79.68 % 76.73 % 76.77 % ​ ​ ​ ​ ​ ​ ​ ​ ​ Seasonal ​ 4,182.8 ​ 4,182.2 ​ 4,083.7 ​ 0.6 ​ 0.0 ​ 98.5 ​ 2.4 ​ % of net sales ​ 11.05 % 12.22 % 12.10 % ​ ​ ​ ​ ​ ​ ​ ​ ​ Home products ​ 2,332.4 ​ 2,322.4 ​ 2,210.0 ​ 10.0 ​ 0.4 ​ 112.4 ​ 5.1 ​ % of net sales ​ 6.16 % 6.79 % 6.55 % ​ ​ ​ ​ ​ ​ ​ ​ ​ Apparel ​ 1,174.4 ​ 1,457.3 ​ 1,546.6 ​ (282.9) ​ (19.4) ​ (89.2) ​ (5.8) ​ % of net sales ​ 3.10 % 4.26 % 4.58 % ​ ​ ​ ​ ​ ​ ​ ​ ​ Net sales ​ $ 37,844.9 ​ $ 34,220.4 ​ $ 33,746.8 ​ $ 3,624.4 ​ 10.6 % $ 473.6 ​ 1.4 % Cost of goods sold ​ 26,024.8 ​ 23,407.4 ​ 23,028.0 ​ 2,617.3 ​ 11.2 ​ 379.5 ​ 1.6 ​ % of net sales ​ 68.77 % 68.40 % 68.24 % ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross profit ​ 11,820.1 ​ 10,813.0 ​ 10,718.9 ​ 1,007.1 ​ 9.3 ​ 94.1 ​ 0.9 ​ % of net sales ​ 31.23 % 31.60 % 31.76 % ​ ​ ​ ​ ​ ​ ​ ​ ​ Selling, general and administrative expenses ​ 8,491.8 ​ 7,592.3 ​ 7,164.1 ​ 899.5 ​ 11.8 ​ 428.2 ​ 6.0 ​ % of net sales ​ 22.44 % 22.19 % 21.23 % ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating profit ​ 3,328.3 ​ 3,220.7 ​ 3,554.8 ​ 107.6 ​ 3.3 ​ (334.1) ​ (9.4) ​ % of net sales ​ 8.79 % 9.41 % 10.53 % ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense ​ 211.3 ​ 157.5 ​ 150.4 ​ 53.7 ​ 34.1 ​ 7.1 ​ 4.7 ​ % of net sales ​ 0.56 % 0.46 % 0.45 % ​ ​ ​ ​ ​ ​ ​ ​ ​ Other (income) expense ​ 0.4 ​ — ​ — ​ 0.4 ​ — ​ — ​ — ​ % of net sales ​ 0.00 % 0.00 % 0.00 % ​ ​ ​ ​ ​ ​ ​ ​ ​ Income before income taxes ​ 3,116.6 ​ 3,063.1 ​ 3,404.4 ​ 53.5 ​ 1.7 ​ (341.2) ​ (10.0) ​ % of net sales ​ 8.24 % 8.95 % 10.09 % ​ ​ ​ ​ ​ ​ ​ ​ ​ Income tax expense ​ 700.6 ​ 663.9 ​ 749.3 ​ 36.7 ​ 5.5 ​ (85.4) ​ (11.4) ​ % of net sales ​ 1.85 % 1.94 % 2.22 % ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 2,416.0 ​ $ 2,399.2 ​ $ 2,655.1 ​ $ 16.8 ​ 0.7 % $ (255.8) ​ (9.6) % % of net sales ​ 6.38 % 7.01 % 7.87 % ​ ​ ​ ​ ​ ​ ​ ​ ​ Diluted earnings per share ​ $ 10.68 ​ $ 10.17 ​ $ 10.62 ​ $ 0.51 ​ 5.0 % $ (0.45) ​ (4.2) % ​ Net Sales .
Biggest changeFurthermore, the seasonal nature of our business may affect comparisons between periods. ​ The following table contains results of operations data for fiscal years 2023, 2022, and 2021, and the dollar and percentage variances among those years. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 vs. 2022 2022 vs. 2021 ​ (amounts in millions, except ​ ​ ​ ​ ​ ​ Amount % Amount % ​ per share amounts) ​ 2023 ​ 2022 ​ 2021 ​ Change ​ Change Change ​ Change ​ Net sales by category: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumables ​ $ 31,342.6 ​ $ 30,155.2 ​ $ 26,258.6 ​ $ 1,187.4 ​ 3.9 % $ 3,896.6 ​ 14.8 % % of net sales ​ 81.01 % 79.68 % 76.73 % ​ ​ ​ ​ ​ ​ ​ ​ ​ Seasonal ​ 4,083.8 ​ 4,182.8 ​ 4,182.2 ​ (99.0) ​ (2.4) ​ 0.6 ​ 0.0 ​ % of net sales ​ 10.55 % 11.05 % 12.22 % ​ ​ ​ ​ ​ ​ ​ ​ ​ Home products ​ 2,163.8 ​ 2,332.4 ​ 2,322.4 ​ (168.6) ​ (7.2) ​ 10.0 ​ 0.4 ​ % of net sales ​ 5.59 % 6.16 % 6.79 % ​ ​ ​ ​ ​ ​ ​ ​ ​ Apparel ​ 1,101.4 ​ 1,174.4 ​ 1,457.3 ​ (73.0) ​ (6.2) ​ (282.9) ​ (19.4) ​ % of net sales ​ 2.85 % 3.10 % 4.26 % ​ ​ ​ ​ ​ ​ ​ ​ ​ Net sales ​ $ 38,691.6 ​ $ 37,844.9 ​ $ 34,220.4 ​ $ 846.7 ​ 2.2 % $ 3,624.4 ​ 10.6 % Cost of goods sold ​ 26,972.6 ​ 26,024.8 ​ 23,407.4 ​ 947.8 ​ 3.6 ​ 2,617.3 ​ 11.2 ​ % of net sales ​ 69.71 % 68.77 % 68.40 % ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross profit ​ 11,719.0 ​ 11,820.1 ​ 10,813.0 ​ (101.1) ​ (0.9) ​ 1,007.1 ​ 9.3 ​ % of net sales ​ 30.29 % 31.23 % 31.60 % ​ ​ ​ ​ ​ ​ ​ ​ ​ Selling, general and administrative expenses ​ 9,272.7 ​ 8,491.8 ​ 7,592.3 ​ 780.9 ​ 9.2 ​ 899.5 ​ 11.8 ​ % of net sales ​ 23.97 % 22.44 % 22.19 % ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating profit ​ 2,446.3 ​ 3,328.3 ​ 3,220.7 ​ (882.0) ​ (26.5) ​ 107.6 ​ 3.3 ​ % of net sales ​ 6.32 % 8.79 % 9.41 % ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense ​ 326.8 ​ 211.3 ​ 157.5 ​ 115.5 ​ 54.7 ​ 53.7 ​ 34.1 ​ % of net sales ​ 0.84 % 0.56 % 0.46 % ​ ​ ​ ​ ​ ​ ​ ​ ​ Other (income) expense ​ — ​ 0.4 ​ — ​ (0.4) ​ — ​ 0.4 ​ — ​ % of net sales ​ 0.00 % 0.00 % 0.00 % ​ ​ ​ ​ ​ ​ ​ ​ ​ Income before income taxes ​ 2,119.5 ​ 3,116.6 ​ 3,063.1 ​ (997.1) ​ (32.0) ​ 53.5 ​ 1.7 ​ % of net sales ​ 5.48 % 8.24 % 8.95 % ​ ​ ​ ​ ​ ​ ​ ​ ​ Income tax expense ​ 458.2 ​ 700.6 ​ 663.9 ​ (242.4) ​ (34.6) ​ 36.7 ​ 5.5 ​ % of net sales ​ 1.18 % 1.85 % 1.94 % ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 1,661.3 ​ $ 2,416.0 ​ $ 2,399.2 ​ $ (754.7) ​ (31.2) % $ 16.8 ​ 0.7 % % of net sales ​ 4.29 % 6.38 % 7.01 % ​ ​ ​ ​ ​ ​ ​ ​ ​ Diluted earnings per share ​ $ 7.55 ​ $ 10.68 ​ $ 10.17 ​ $ (3.13) ​ (29.3) % $ 0.51 ​ 5.0 % ​ Net Sales .
The information contained in Note 5 to the consolidated financial statements contained in Part II, Item 8 of this report is incorporated herein by reference. ​ We believe our cash flow from operations, and our existing cash balances, combined with availability under the Revolving Facility, 364-Day Revolving Facility, CP Notes and access to the debt markets, will provide sufficient liquidity to fund our current obligations, projected working capital requirements, capital spending and anticipated dividend payments for a period that includes the next twelve months as well as the next several years.
The information contained in Note 5 to the consolidated financial statements contained in Part II, Item 8 of this report is incorporated herein by reference. ​ We believe our cash flow from operations, and our existing cash balances, combined with availability under the Revolving Facility, CP Notes and access to the debt markets, will provide sufficient liquidity to fund our current obligations, projected working capital requirements, capital spending and anticipated dividend payments for a period that includes the next twelve months as well as the next several years.
We retain a significant portion of the risk for our workers’ compensation, employee health, general liability, property loss, automobile and certain third-party landlord claim exposures. These represent significant costs primarily due to our large employee base and number of stores. Provisions are made for these liabilities on an undiscounted basis.
We retain a significant portion of the risk for our workers’ compensation, employee health, general liability, property loss, auto liability and certain third-party landlord claim exposures. These represent significant costs primarily due to our large employee base and number of stores. Provisions are made for these liabilities on an undiscounted basis.
Our merchandise includes national brands from leading manufacturers, as well as our own private brand selections with prices at substantial discounts to national brands.
Our merchandise includes national brands from leading manufacturers, as well as our own private brand selections with prices often at substantial discounts to national brands.
Changes in income taxes in 2021 compared to 2020 are primarily due to the timing of payments for income taxes. ​ On an ongoing basis, we closely monitor and manage our inventory balances, and they may fluctuate from period to period based on new store openings, the timing of purchases, and other factors.
Changes in income taxes in 2022 compared to 2021 are primarily due to the timing of payments for income taxes. ​ On an ongoing basis, we closely monitor and manage our inventory balances, and they may fluctuate from period to period based on new store openings, the timing of purchases, and other factors.
Average sales per square foot is calculated based on total sales for the preceding 12 months as of the ending date of the reporting period divided by the average selling square footage during the period, including the end of the fiscal year, the beginning of the fiscal year, and the end of each of our three interim fiscal quarters.
Average sales per square foot is calculated based on total sales for the preceding 12 months as of the ending date of the reporting period divided by the average selling square footage during the period, including the end of the fiscal year, the beginning of the fiscal year, and the end of each of our three interim fiscal quarters. ​ Inventory turnover .
Such opportunities include providing our customers with additional shopping access points and even greater convenience by leveraging and developing digital tools and technology, such as our Dollar General app, which contains a variety of tools to enhance the in-store shopping experience.
Such opportunities include providing our customers with a variety of shopping access points and even greater value and convenience by leveraging and developing digital tools and technology, such as our Dollar General app, which contains a variety of tools to enhance the in-store shopping experience.
During 2022, we opened 1,039 new stores and remodeled or relocated 1,922 stores. ​ Significant components of property and equipment purchases in 2021 included the following approximate amounts: $510 million for improvements, upgrades, remodels and relocations of existing stores; $268 million for distribution and transportation-related capital expenditures; $244 million related to store facilities, primarily for leasehold improvements, fixtures and equipment in new stores; and $44 million for information systems upgrades and technology-related projects.
During 2022, we opened 1,039 new stores and remodeled or relocated 1,922 stores. ​ 37 Table of Contents Significant components of property and equipment purchases in 2021 included the following approximate amounts: $510 million for improvements, upgrades, remodels and relocations of existing stores; $268 million for distribution and transportation-related capital expenditures; $244 million related to store facilities, primarily for leasehold improvements, fixtures and equipment in new stores; and $44 million for information systems upgrades and technology-related projects.
These judgments include ensuring departments consist of similar products, recording estimated shrinkage between physical inventories, and timely recording of markdowns needed to sell inventory. ​ We perform an annual LIFO analysis whereby all merchandise units are considered for inclusion in the index formulation.
These judgments include ensuring departments consist of similar products, recording estimated shrinkage between physical inventories, and timely recording of markdowns needed to sell inventory. 38 Table of Contents ​ We perform an annual LIFO analysis whereby all merchandise units are considered for inclusion in the index formulation.
Uncertain tax positions require determinations and liabilities to be estimated based on provisions of the tax law which may be subject to change or varying interpretation. If our determinations and estimates prove to be inaccurate, the resulting adjustments could be material to our future financial results. ​ Lease Accounting .
Uncertain tax positions require determinations and liabilities to be estimated based on 39 Table of Contents provisions of the tax law which may be subject to change or varying interpretation. If our determinations and estimates prove to be inaccurate, the resulting adjustments could be material to our future financial results. ​ Lease Accounting .
These assumptions include the term that 39 Table of Contents the options are expected to be outstanding, the historical volatility of our stock price, applicable interest rates and the dividend yield of our stock. Other factors involving judgments that affect the expensing of share-based payments include estimated forfeiture rates of share-based awards.
These assumptions include the term that the options are expected to be outstanding, the historical volatility of our stock price, applicable interest rates and the dividend yield of our stock. Other factors involving judgments that affect the expensing of share-based payments include estimated forfeiture rates of share-based awards.
Our first store in Mexico opened in February of 2023. We offer a broad selection of merchandise, including consumable products such as food, paper and cleaning products, health and beauty products and pet supplies, and non-consumable products such as seasonal merchandise, home decor and domestics, and basic apparel.
Our first stores in Mexico opened in 2023. We offer a broad selection of merchandise, including consumable products such as food, paper and cleaning products, health and beauty products and pet supplies, and non-consumable products such as seasonal merchandise, home decor and domestics, and basic apparel.
Changes in same-store sales are calculated based on the comparable 52 calendar weeks in the current and prior years. The method of calculating same-store sales varies across the retail industry. As a result, our calculation of same-store sales is not necessarily comparable to similarly titled measures reported by other companies.
Changes in same-store sales are calculated based on the comparable 52 calendar weeks in the current and prior years. The method of calculating same-store sales varies across the retail industry. As a result, our calculation of same-store sales is not necessarily comparable to similarly titled measures reported by other companies. ​ Average sales per square foot.
For more detail about our share repurchase program, see Part II, Item 5 of this report and Note 11 to the consolidated financial statements contained in Part II, Item 8 of this report. ​ Other Considerations ​ In March 2023, the Board of Directors declared a quarterly cash dividend of $0.59 per share which is payable on or before April 25, 2023 to shareholders of record of our common stock on April 11, 2023.
For more detail about our share repurchase program, see Part II, Item 5 of this report and Note 11 to the consolidated financial statements contained in Part II, Item 8 of this report. ​ Other Considerations ​ In March 2024, the Board of Directors declared a quarterly cash dividend of $0.59 per share which is payable on or before April 23, 2024 to shareholders of record of our common stock on April 9, 2024.
The primary macroeconomic factors that affect our core customers include unemployment and underemployment rates, wage growth, changes in U.S. and global trade policy, and changes to certain government assistance programs (including cost of living adjustments), such as the Supplemental Nutrition Assistance Program (“SNAP”), unemployment benefits, and economic stimulus payments.
The primary macroeconomic factors that affect our core customers include unemployment and underemployment rates, inflation, wage growth, changes in U.S. and global trade policy, and changes in U.S. government policy and assistance programs (including cost of living adjustments), such as the Supplemental Nutrition Assistance Program (“SNAP”), unemployment benefits, and economic stimulus programs.
The applicable interest rate margin for borrowings as of February 3, 2023 was 1.015% for Adjusted Term SOFR borrowings and 0.015% for base-rate borrowings. We must also pay a facility fee, payable on any used and unused commitment amounts of the Revolving Facility, and customary fees on letters of credit issued under the Revolving Facility.
The applicable interest rate margin for borrowings as of February 2, 2024 was 1.015% for Adjusted Term SOFR borrowings and 0.015% for base-rate borrowings. We must also pay a facility fee, payable on any used and unused commitment amounts of the Revolving Facility, and customary fees on letters of credit issued under the Revolving Facility.
The following text contains references to years 2022, 2021, and 2020, which represent fiscal years ended February 3, 2023, January 28, 2022, and January 29, 2021, respectively. Our fiscal year ends on the Friday closest to January 31. Fiscal year 2022 was a 53-week accounting period and fiscal years 2021 and 2020 were 52-week accounting periods. ​ Seasonality .
The following text contains references to years 2023, 2022, and 2021, which represent fiscal years ended February 2, 2024, February 3, 2023, and January 28, 2022, respectively. Our fiscal year ends on the Friday closest to January 31. Fiscal years 2023 and 2021 were 52-week accounting periods and fiscal year 2022 was a 53-week accounting period. ​ Seasonality .
At February 3, 2023, we had total consolidated outstanding debt (including the current portion of long-term obligations) of $7.0 billion, most of which was in the form of senior notes. All of our material borrowing arrangements are described in greater detail below.
At February 2, 2024, we had total consolidated outstanding debt (including the current portion of long-term obligations) of $7.0 billion, most of which was in the form of senior notes. All of our material borrowing arrangements are described in greater detail below.
Substantially all amounts are reflected on an undiscounted basis in our consolidated balance sheets. ​ (c) Commercial commitments include information technology license and support agreements, supplies, fixtures, letters of credit for import merchandise, and other inventory purchase obligations. ​ (d) Purchase obligations include legally binding agreements for software licenses and support, supplies, fixtures, and merchandise purchases (excluding such purchases subject to letters of credit). ​ 35 Table of Contents Share Repurchase Program ​ Our common stock repurchase program had a total remaining authorization of approximately $1.38 billion at February 3, 2023.
Substantially all amounts are reflected on an undiscounted basis in our consolidated balance sheets. ​ (c) Commercial commitments include information technology license and support agreements, supplies, fixtures, letters of credit for import merchandise, and other inventory purchase obligations. ​ (d) Purchase obligations include legally binding agreements for software licenses and support, supplies, fixtures, and merchandise purchases (excluding such purchases subject to letters of credit). ​ Share Repurchase Program ​ Our common stock repurchase program had a total remaining authorization of approximately $1.38 billion at February 2, 2024.
We are now using two larger format stores (approximately 8,500 square feet and 9,500 square feet, respectively), and expect the 8,500 square foot format, along with our existing Dollar General Plus format of a similar size, to continue as our base prototypes for the majority of new stores, replacing our traditional 7,300 square foot format and higher-cooler count Dollar General Traditional Plus format.
We are using two larger format stores (approximately 8,500 square feet and 9,500 square feet, respectively), and consistent with 2023, expect the 8,500 square foot format, along with our existing Dollar General Plus format of a similar size, to continue as our base prototypes for the majority of new stores in 2024, replacing our traditional 7,300 square foot format and higher-cooler count Dollar General Traditional Plus format.
Depending on our liquidity levels, conditions in the capital markets and other factors, we may from time to time consider the issuance of debt, equity or other securities, the proceeds of which could provide additional liquidity for our operations. ​ For fiscal 2023, we anticipate potential combined borrowings under the Revolving Facility, 364-Day Revolving Facility, and CP Notes to be a maximum of approximately $2.0 billion outstanding at any one time, including any anticipated borrowings to fund repurchases of common stock. ​ Revolving Credit Facilities ​ Our Revolving Facility consists of a $2.0 billion senior unsecured revolving credit facility of which up to $100.0 million is available for the issuance of letters of credit and which is scheduled to mature on December 2, 2026. ​ Borrowings under the Revolving Facility bear interest at a rate equal to an applicable interest rate margin plus, at our option, either (a) Adjusted Term SOFR (which is Term SOFR (as published by CME Group Benchmark Administration Limited) plus a credit spread adjustment of 0.10%) or (b) a base rate (which is usually equal to the prime rate).
Depending on our liquidity levels, conditions in the capital markets and other factors, we may from time to time consider the issuance of debt, equity or other securities, the proceeds of which could provide additional liquidity for our operations. ​ For fiscal 2024, we anticipate potential combined borrowings under the Revolving Facility and CP Notes to be a maximum of approximately $500 million outstanding at any one time. ​ Revolving Facility ​ Our Revolving Facility consists of a $2.0 billion senior unsecured revolving credit facility of which up to $100.0 million is available for the issuance of letters of credit and which is scheduled to mature on December 2, 2026. ​ Borrowings under the Revolving Facility bear interest at a rate equal to an applicable interest rate margin plus, at our option, either (a) Adjusted Term SOFR (which is Term SOFR (as published by CME Group Benchmark Administration Limited) plus a credit spread adjustment of 0.10%) or (b) a base rate (which is usually equal to the prime rate).
We repurchased 12.3 million shares of our common stock at a total cost of $2.5 billion and paid cash dividends of $355.9 million. ​ Critical Accounting Policies and Estimates ​ The preparation of financial statements in accordance with generally accepted accounting principles in the United States (“U.S.
We repurchased 12.1 million shares of our common stock at a total cost of $2.5 billion and paid cash dividends of $392.2 million. ​ Critical Accounting Policies and Estimates ​ The preparation of financial statements in accordance with generally accepted accounting principles in the United States (“U.S.
The applicable interest rate margins for borrowings and the facility fees under the 364-Day Revolving Facility are subject to adjustment from time to time based on our long-term senior unsecured debt ratings. ​ The Revolving Facility and the 364-Day Revolving Facility contain a number of customary affirmative and negative covenants that, among other things, restrict, subject to certain exceptions, our (and our subsidiaries’) ability to: incur additional liens; sell all or substantially all of the our assets; consummate certain fundamental changes or change in the our lines of business; and incur additional subsidiary indebtedness.
The applicable interest rate margins for borrowings, the facility fees and the letter of credit fees under the Revolving Facility are subject to adjustment from time to time based on our long-term senior unsecured debt ratings. ​ The credit agreement governing the Revolving Facility contains a number of customary affirmative and negative covenants that, among other things, restrict, subject to certain exceptions, our (and our subsidiaries’) ability to: incur additional liens; sell all or substantially all of our assets; consummate certain fundamental changes or change in our lines of business; and incur additional subsidiary indebtedness.
Although the Board 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 factors, our results of operations, cash requirements, financial condition, contractual restrictions and other factors that our Board may deem relevant in its sole discretion. ​ Our inventory balance represented approximately 53% of our total assets exclusive of operating lease assets, goodwill, and other intangible assets as of February 3, 2023.
Although the Board 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 factors, our results of operations, cash requirements, financial condition, contractual restrictions, excess debt capacity and other factors that our Board may deem relevant in its sole discretion. ​ Our inventory balance represented approximately 49% of our total assets exclusive of operating lease assets, goodwill, and other intangible assets as of February 2, 2024.
Our borrowing availability under the Revolving Facility may be effectively limited by our commercial paper notes (“CP Notes”) as further described 32 Table of Contents below.
Our borrowing availability under the Revolving Facility may be effectively limited by our commercial paper notes (“CP Notes”) as further described below.
It also should be read in conjunction with the Cautionary Disclosure Regarding Forward-Looking Statements and the Risk Factors disclosures set forth in the Introduction and in Item 1A of this report, respectively. ​ Executive Overview ​ We are the largest discount retailer in the United States by number of stores, with 19,147 stores located in 47 U.S. states and Mexico as of March 3, 2023, with the greatest concentration of stores in the southern, southwestern, midwestern and eastern United States.
It also should be read in conjunction with the Cautionary Disclosure Regarding Forward-Looking Statements and the Risk Factors disclosures set forth in the Introduction and in Item 1A of this report, respectively. ​ Executive Overview ​ We are the largest discount retailer in the United States by number of stores, with 20,022 stores located in 48 U.S. states and Mexico as of March 1, 2024, with the greatest concentration of stores in the southern, southwestern, midwestern and eastern United States.
Our KPIs include same-store sales, average sales per square foot, and inventory turnover. Same-store sales are calculated based upon our stores that were open at least 13 full fiscal months and remain open at the end of the reporting period. We include stores that have been remodeled, expanded or relocated in our same-store sales calculation.
Same-store sales are calculated based upon our stores that were open at least 13 full fiscal months and remain open at the end of the reporting period. We include stores that have been remodeled, expanded or relocated in our same-store sales calculation.
Capital expenditures in 2023 are anticipated to support our store growth as well as our remodel and relocation initiatives, including capital outlays for leasehold improvements, fixtures and equipment; the construction of new stores; costs to support and enhance our supply chain initiatives including new and existing distribution center facilities and our private fleet; technology initiatives; as well as routine and ongoing capital requirements. ​ Cash flows from financing activities .
Capital expenditures in 2024 are anticipated to support our store growth as well as our remodel and relocation initiatives, including capital outlays for leasehold improvements, fixtures and equipment; the construction of new stores; costs to support and enhance our supply chain initiatives including new and existing distribution center facilities and replacement of certain transportation related assets; technology initiatives; as well as routine and ongoing capital requirements. ​ Cash flows from financing activities .
At February 3, 2023, the 364-Day Revolving Facility had no outstanding borrowings. ​ Borrowings under the 364-Day Revolving Facility bear interest at a rate equal to an applicable interest rate margin plus, at our option, either (a) Adjusted Term SOFR (which is Term SOFR (as published by CME Group Benchmark Administration Limited) plus a credit spread adjustment of 0.10%) or (b) a base rate (which is usually equal to the prime rate).
Borrowings under the 364-Day Revolving Facility bore interest at a rate equal to an applicable interest rate margin plus, at the Company’s option, either (a) Adjusted Term SOFR (which is Term SOFR, as published by CME Group Benchmark Administration Limited, plus a credit spread adjustment of 0.10%) or (b) a base rate (which is usually equal to the prime rate).
Interest expense increased $53.7 million to $211.3 million in 2022 compared to 2021 and increased $7.1 million to $157.5 million in 2021 compared to 2020 primarily due to higher outstanding borrowings and higher interest rates. See the detailed discussion under “Liquidity and Capital Resources” regarding the financing of various long-term obligations. ​ Income Taxes .
Interest expense increased $115.5 million to $326.8 million in 2023 compared to 2022 and increased $53.7 million to $211.3 million in 2022 compared to 2021, in each case primarily due to higher outstanding borrowings and higher interest rates. See the detailed discussion under “Liquidity and Capital Resources” regarding the financing of various long-term obligations. ​ Income Taxes .
Significant components of property and equipment purchases in 2022 included the following approximate amounts: $589 million for improvements, upgrades, remodels and relocations of existing stores; $443 million for distribution and transportation-related capital expenditures; $373 million related to store facilities, primarily for leasehold improvements, fixtures and equipment in new stores; and $62 million for information systems upgrades and technology-related projects.
During 2023, we opened 987 new stores and remodeled or relocated 2,136 stores. ​ Significant components of property and equipment purchases in 2022 included the following approximate amounts: $589 million for improvements, upgrades, remodels and relocations of existing stores; $443 million for distribution and transportation-related capital expenditures; $373 million related to store facilities, primarily for leasehold improvements, fixtures and equipment in new stores; and $62 million for information systems upgrades and technology-related projects.
The apparel category increased by $7.8 million, or 2%, in 2022, decreased by $39.2 million, or 10%, in 2021, and increased by $12.9 million, or 3%, in 2020. ​ Cash flows from investing activities .
The apparel category decreased by $12.6 million, or 4%, in 2023, increased by $7.8 million, or 2%, in 2022, and decreased by $39.2 million, or 10%, in 2021. ​ Cash flows from investing activities .
During that period, we expanded the number of stores we operate by 2,826, representing growth of approximately 17%, and we remodeled or relocated 5,554 stores, or approximately 34% of the stores we operated as of the beginning of the three-year period.
During that period, we expanded the number of stores we operate by 2,809, representing store growth of approximately 16%, and we remodeled or relocated 5,910 stores, or approximately 34% of the stores we operated as of the beginning of the three-year period.
A greater LIFO provision which was driven by higher product costs, a higher proportion of lower margin consumables sales, and increases in inventory markdowns, damages and shrink each contributed to the decrease in the gross profit rate.
A greater LIFO provision which was driven by higher product costs, a higher proportion of lower margin consumables sales, and increases in inventory markdowns, damages and shrink each contributed to the decrease in the gross profit rate. These factors were partially offset by higher inventory markups and improvements in transportation costs. ​ SG&A.
Both facilities also contain customary events of default. ​ As of February 3, 2023, we had no outstanding borrowings, no outstanding letters of credit, and borrowing availability of $2.0 billion under the Revolving Facility that, due to our intention to maintain borrowing availability related to the commercial paper program described below, could contribute liquidity of $0.3 billion.
The credit agreement governing the Revolving Facility also contains customary events of default. ​ As of February 2, 2024, we had no outstanding borrowings, no outstanding letters of credit, and borrowing availability of $2.0 billion under the Revolving Facility that, due to our intention to maintain borrowing availability related to the commercial paper program described below, could contribute liquidity of $1.8 billion.
Variable rate long-term debt includes the Revolving Facility (although such facility had a balance of zero as of February 3, 2023), the 364-Day Revolving Facility (although such facility had a balance of zero as of February 3, 2023), the CP Notes (which had a balance of $1.5 billion as of February 3, 2023, and which amount is net of $230.8 million held by a wholly-owned subsidiary), and interest rate swaps being accounted for as fair value hedges. ​ (b) We retain a significant portion of the risk for our workers’ compensation, employee health, general liability, property loss, automobile, and certain third-party landlord claims exposures.
Variable rate long-term debt includes the Revolving Facility (although such facility had a balance of zero as of February 2, 2024), the CP Notes (which had a balance of $0 as of February 2, 2024, and which amount is net of $197.7 million held by a wholly-owned subsidiary), and interest rate swaps being accounted for as fair value hedges. ​ 35 Table of Contents (b) We retain a significant portion of the risk for our workers’ compensation, employee health, general liability, property loss, auto liability, and certain third-party landlord claims exposures.
Finally, significant unseasonable or unusual weather patterns or extreme weather, such as that discussed below, can impact customer shopping behaviors. ​ We remain committed to our long-term operating priorities as we consistently strive to improve our performance while retaining our customer-centric focus.
Finally, significant unseasonable or unusual weather patterns or extreme weather can impact customer shopping behaviors, although we did not identify any such impact to any significant degree in 2023. ​ We remain committed to our long-term operating priorities as we consistently strive to improve our performance while retaining our customer-centric focus.
The net sales increase in 2022 was primarily due to sales from new stores, and an increase in same-store sales of 4.3% compared to 2021, partially offset by the impact of store closures. In 2022, our 17,886 same-stores accounted for sales of $35.3 billion.
In 2023, our 18,763 same-stores accounted for sales of $36.9 billion. 31 Table of Contents ​ The net sales increase in 2022 was primarily due to sales from new stores, and an increase in same-store sales of 4.3% compared to 2021, partially offset by the impact of store closures.
The effective income tax rate for 2022 was 22.5% compared to a rate of 21.7% for 2021 which represents a net increase of 0.8 percentage points.
The effective income tax rate for 2023 was 21.6% compared to a rate of 22.5% for 2022 which represents a net decrease of 0.9 percentage points.
The Revolving Facility and the 364-Day Revolving Facility also contain financial covenants which require the maintenance of a minimum fixed charge coverage ratio and a maximum leverage ratio. As of February 3, 2023, we were in compliance with all such covenants.
The credit agreement governing the Revolving Facility also contains financial covenants which require the maintenance of a minimum fixed charge coverage ratio and a maximum leverage ratio. As of February 2, 2024, we were in compliance with all such covenants.
As of February 3, 2023, the facility fee rate was 0.11%.
As of February 2, 2024, the facility fee rate was 0.11%.
We paid quarterly cash dividends of $0.55 per share in 2022.
We paid quarterly cash dividends of $0.59 per share in 2023.
We are also required to pay a facility fee to the lenders under the 364-Day Revolving Facility for any used and unused commitments. As of February 3, 2023, the applicable interest rate margin for Adjusted Term SOFR loans was 1.035% and the facility fee rate was 0.09% per annum.
The Company was also required to pay a facility fee to the lenders under the 364-Day Revolving Facility for any used and unused commitments. Prior to its expiration, the applicable interest rate margin for Adjusted Term SOFR loans was 1.035% and the facility fee rate was 0.09%.
Additionally, our customers are impacted by increases in those expenses that generally comprise a large portion of their household budgets, such as rent, healthcare, energy and fuel prices, as well as cost inflation in frequently purchased household products (including food), such as that which we have continued to experience as further discussed below.
Additionally, our customers continue to experience higher expenses that generally comprise a large portion of their household budgets, such as rent, healthcare, energy and fuel prices, as well as cost inflation in frequently purchased household products (including food).
Several of our strategic and other sales-driving initiatives are also designed to capture growth opportunities and are discussed in more detail below. ​ During the second half of 2022, we experienced higher inventory damages and shrink than we anticipated.
Several of our strategic and other sales-driving initiatives are also designed to capture growth opportunities and are discussed in more detail below. ​ We experienced higher damages in the first half of 2023, as well as significantly higher shrink throughout 2023.
The increase in same-store sales reflects an increase in average transaction amount which was driven by higher average item retail prices as a result of higher inflation, partially offset by a decline in customer traffic. Same-store sales decreased in each of our product categories except consumables, with the largest percentage decrease in the apparel category.
The increase in same-store sales reflects an increase in average transaction amount which was driven by higher average item retail prices as a result of higher inflation, partially offset by a decline in customer traffic. Same-store sales increased in the consumables category, and declined in the apparel, seasonal, and home products categories.
In 2023, we intend to continue our current strategy of pursuing store growth, remodels and relocations. ​ At February 3, 2023, we had a $2.0 billion unsecured revolving credit agreement (the “Revolving Facility”), $750.0 million 364-day unsecured revolving credit facility (the “364-Day Revolving Facility”), $5.4 billion aggregate principal amount of senior notes, and a commercial paper program that may provide borrowing availability of up to $2.0 billion.
In 2024, we intend to continue our current strategy of pursuing store growth, remodels and relocations although at a slower pace than the past three years. ​ At February 2, 2024, we had a $2.0 billion unsecured revolving credit agreement (the “Revolving Facility”), $6.9 billion aggregate principal amount of senior notes, and a commercial paper program that may provide borrowing availability of up to $2.0 billion.
The primary expenses that were higher as a percentage of net sales in 2022 were utilities, retail labor, and repairs and maintenance, partially offset by incentive compensation expenses and store occupancy costs. ​ SG&A as a percentage of net sales was 22.2% in 2021 compared to 21.2% in 2020, an increase of 96 basis points.
The primary expenses that were higher as a percentage of net sales in 2023 were retail labor, store occupancy costs, depreciation and amortization, repairs and maintenance, and other services purchased, including debt and credit card transaction fees, which were partially offset by a decrease in incentive compensation. ​ SG&A as a percentage of net sales was 22.4% in 2022 compared to 22.2% in 2021, an increase of 25 basis points.
As we work to provide everyday low prices and meet our customers’ affordability needs, we remain focused on enhancing our margins through pricing and markdown optimization, effective category management, distribution and transportation efficiencies, private brands penetration, global sourcing, and inventory shrink and damage reduction initiatives.
Certain of our initiatives are intended to address this sales mix trend; however, there can be no assurances that these efforts will be successful. ​ As we work to provide everyday low prices and meet our customers’ affordability needs, we remain focused on enhancing our margins through inventory shrink and damage reduction initiatives, as well as pricing and markdown optimization, effective category management and inventory reduction efforts, distribution and transportation efficiencies, private brands penetration and global sourcing.
During 2021, we opened 1,050 new stores and remodeled or relocated 1,852 stores. ​ Significant components of property and equipment purchases in 2020 included the following approximate amounts: $447 million for improvements, upgrades, remodels and relocations of existing stores; $271 million for distribution and transportation-related capital expenditures; $250 million related to store facilities, primarily for leasehold improvements, fixtures and equipment in new stores; and $50 million for information systems upgrades and technology-related projects.
Significant components of property and equipment purchases in 2023 included the following approximate amounts: $683 million for improvements, upgrades, remodels and relocations of existing stores; $542 million for distribution and transportation-related capital expenditures; $390 million related to store facilities, primarily for leasehold improvements, fixtures and equipment in new stores; and $67 million for information systems upgrades and technology-related projects.
In October 2022 we redeemed $900.0 million aggregate principal amount of 3.25% senior notes due 2023 and incurred a loss on redemption of $0.4 million. ​ The Senior Indenture contains covenants limiting, among other things, our ability (subject to certain exceptions) to consolidate, merge, or sell or otherwise dispose of all or substantially all of our assets; and our ability and the ability of our subsidiaries to incur or guarantee indebtedness secured by liens on any shares of voting stock of significant subsidiaries. ​ 34 Table of Contents The Senior Indenture also provides for events of default which, if any of them occurs, would permit or require the principal of and accrued interest on our Senior Notes to become or to be declared due and payable, as applicable. ​ Rating Agencies ​ Our senior unsecured debt is rated “Baa2,” by Moody’s with a stable outlook and “BBB” by Standard & Poor’s with a stable outlook, and our commercial paper program is rated “P-2” by Moody’s and “A-2” by Standard and Poor’s.
Upon the occurrence of a change of control triggering event, which is defined in the Senior Indenture, each holder of our Senior Notes has the right to require us to repurchase some or all of such holder’s Senior Notes at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the repurchase date. ​ The Senior Indenture contains covenants limiting, among other things, our ability (subject to certain exceptions) to consolidate, merge, or sell or otherwise dispose of all or substantially all of our assets; and our ability and the ability of our subsidiaries to incur or guarantee indebtedness secured by liens on any shares of voting stock of significant subsidiaries. ​ The Senior Indenture also provides for events of default which, if any of them occurs, would permit or require the principal of and accrued interest on our Senior Notes to become or to be declared due and payable, as applicable. ​ Rating Agencies ​ Our senior unsecured debt is rated “Baa2,” by Moody’s with a stable outlook and “BBB” by Standard & Poor’s with a negative outlook, and our commercial paper program is rated “P-2” by Moody’s and “A-2” by Standard and Poor’s.
In 2022, higher rates of inflation affected the costs of building materials and certain of our other capital costs. ​ Liquidity and Capital Resources ​ Current Financial Condition and Recent Developments ​ During the past three years, we have generated an aggregate of approximately $8.7 billion in cash flows from operating activities and incurred approximately $3.7 billion in capital expenditures.
In 2021, we experienced increases in product costs due in part to higher rates of inflation. ​ 32 Table of Contents Liquidity and Capital Resources ​ Current Financial Condition and Recent Developments ​ During the past three years, we have generated an aggregate of approximately $7.2 billion in cash flows from operating activities and incurred approximately $4.3 billion in capital expenditures.
Inventory turnover is calculated based on total cost of goods sold for the preceding four quarters divided by the average inventory balance as of the ending date of the reporting period, including the end of the fiscal year, the beginning of the fiscal year, and the end of each of our three interim fiscal quarters.
Inventory turnover is calculated based on total cost of goods sold for the preceding four quarters divided by the average inventory balance as of the ending date of the reporting period, including the end of the fiscal year, the beginning of the fiscal year, and the end of each of our three interim fiscal quarters. ​ A continued focus on our four operating priorities as discussed above, and other impacts as discussed below, resulted in the following overall operating and financial performance in 2023 as compared to 2022.
During 2020, we opened 1,000 new stores and remodeled or relocated 1,780 stores. ​ Capital expenditures during 2023 are projected to be in the range of $1.8 billion to $1.9 billion.
During 2021, we opened 1,050 new stores and remodeled or relocated 1,852 stores. ​ Capital expenditures during 2024 are projected to be in the range of $1.3 billion to $1.4 billion.
Adverse developments in those actions could materially and adversely affect our liquidity. ​ Cash Flows ​ Cash flows from operating activities. Cash flows from operating activities were $1.98 billion in 2022, which represents a $881.3 million decrease compared to 2021.
Adverse developments in those actions could materially and adversely affect our liquidity. ​ 36 Table of Contents Cash Flows ​ Cash flows from operating activities. Cash flows from operating activities were $2.4 billion in 2023, which represents a $407.2 million increase compared to 2022.
In 2022, gross profit increased by 9.3%, and as a percentage of net sales decreased by 37 basis points to 31.2% compared to 2021.
Partially offsetting the factors which decreased our overall gross profit rate were a lower LIFO provision and decreased transportation costs. ​ In 2022, gross profit increased by 9.3%, and as a percentage of net sales decreased by 37 basis points to 31.2% compared to 2021.
Basis points, as referred to below, are equal to 0.01% as a percentage of net sales. ​ ● Net sales in 2022 increased 10.6% over 2021. Sales in same-stores increased 4.3%, primarily due to an increase in average transaction amount.
Basis points, as referred to below, are equal to 0.01% as a percentage of net sales. ​ ● Net sales in 2023 increased 2.2%. Sales in same-stores increased 0.2%, primarily due to an increase in customer traffic.
The decrease in same-store sales reflects a decline in customer traffic partially offset by an increase in average transaction amount which was driven by higher average item retail prices. Same-store sales decreased in each of our product categories, with the largest percentage decrease in the apparel category. ​ Gross Profit.
The increase in same-store sales reflects an increase in customer traffic, partially offset by a decrease in the average transaction amount. The decrease in average transaction amount was driven by a decline in items per transaction, partially offset by higher average item retail prices.
The primary expenses that were higher as a percentage of net sales in 2021 were retail labor, store occupancy costs, depreciation and amortization, employee benefits, utilities, and workers’ compensation and general liability expenses, partially offset by reductions in discretionary employee bonus and other miscellaneous COVID-related expenses and incentive compensation expenses. ​ Interest Expense .
The primary expenses that were higher as a percentage of net sales in 2022 were utilities, retail labor, and repairs and maintenance, partially offset by incentive compensation expenses and store occupancy costs. ​ Interest Expense .
As of February 3, 2023, our consolidated balance sheet reflected outstanding unsecured CP Notes of $1.5 billion.
As of February 2, 2024, our consolidated balance sheet reflected no outstanding unsecured CP Notes.
Changes in income taxes in 2022 compared to 2021 are primarily due to the timing of payments for income taxes. ​ Cash flows from operating activities were $2.87 billion in 2021, which represents a $1.01 billion decrease compared to 2020.
Changes in income taxes including a decrease in cash paid for income taxes in 2023 compared to 2022 are primarily due to the decrease in pre-tax earnings in 2023. ​ Cash flows from operating activities were $1.98 billion in 2022, which represents a $881.3 million decrease compared to 2021.
Average sales per square foot in 2022 were $273, including a $5 contribution from the 53 rd week. ​ ● The gross profit rate decreased by 37 basis points due primarily to an increased LIFO provision and a greater proportion of lower margin consumables sales. ​ ● SG&A as a percentage of sales increased by 25 basis points primarily due to increases in utilities, retail labor, and repairs and maintenance. ​ ● Operating profit increased 3.3% to $3.33 billion in 2022 compared to $3.22 billion in 2021. ​ ● Interest expense increased by $53.7 million in 2022 primarily due to higher average borrowings and higher interest rates. ​ ● The change in the effective income tax rate to 22.5% in 2022 from 21.7% in 2021 was primarily due to decreased income tax benefits associated with stock-based compensation compared to 2021 . ​ ● We reported net income of $2.42 billion, or $10.68 per diluted share, for 2022 compared to net income of $2.40 billion, or $10.17 per diluted share, for 2021. ​ ● We generated approximately $1.98 billion of cash flows from operating activities in 2022, a decrease of 30.8% compared to 2021. ​ ● Inventory turnover was 4.0 times, and inventories increased 14.3% on a per store basis compared to 2021. ​ ● We repurchased approximately 11.6 million shares of our outstanding common stock for $2.7 billion. ​ Readers should refer to the detailed discussion of our operating results below for additional comments on financial performance in the current year as compared with the prior years presented. ​ Results of Operations ​ Accounting Periods.
Average sales per square foot in 2023 were $264 . ​ ● The gross profit rate decreased by 94 basis points due primarily to increased shrink and inventory markdowns and lower inventory markups. ​ ● SG&A as a percentage of sales increased by 153 basis points primarily due to increases in retail labor including the $150 million retail labor investment, store occupancy costs, and depreciation and amortization. ​ ● Operating profit decreased 26.5% to $2.45 billion in 2023 compared to $3.33 billion in 2022. ​ ● Interest expense increased by $115.5 million in 2023 primarily due to higher average borrowings and higher interest rates. ​ ● The change in the effective income tax rate to 21.6% in 2023 from 22.5% in 2022 was primarily due to the effect of certain rate-impacting items (such as federal tax credits) on lower earnings before taxes and a lower state effective rate resulting from increased recognition of state tax credits compared to 2022. ​ ● We reported net income of $1.66 billion, or $7.55 per diluted share, for 2023 compared to net income of $2.42 billion, or $10.68 per diluted share, for 2022. ​ ● We generated approximately $2.4 billion of cash flows from operating activities in 2023, an increase of 20.5% compared to 2022. ​ ● Inventory turnover was 3.7 times, and inventories decreased 1.1% on a per store basis compared to 2022. ​ Readers should refer to the detailed discussion of our operating results below for additional comments on financial performance in the current year as compared with the prior years presented. ​ 30 Table of Contents Results of Operations ​ Accounting Periods.
Net sales for the 53 rd week of 2022 totaled $678.1 million. ​ The net sales increase in 2021 was primarily due to sales from new stores, partially offset by a decrease in same-store sales of 2.8% compared to 2020 as well as the impact of store closures. In 2021, our 16,954 same-stores accounted for sales of $32.4 billion.
The net sales increase in 2023 was primarily due to sales from new stores and an increase in same-store sales of 0.2% compared to 2022, partially offset by the impact of store closures. Net sales for the 53 rd week of fiscal 2022 were $678.1 million.
Changes in merchandise inventories resulted in a $550.1 million decrease in our working capital in 2021 which was similar to the decrease of $575.8 million in 2020 as described in greater detail below.
Changes in merchandise inventories resulted in a $299.1 million decrease in our working capital in 2023 compared to the decrease of $1.7 billion in 2022 as described in greater detail below.
We believe this concept represents a significant growth opportunity and are targeting nearly 300 standalone pOpshelf stores by the end of fiscal 2023, and approximately 1,000 stores by the end of fiscal 2025. ​ Our “DG Fresh” initiative, a self-distribution model for frozen and refrigerated products that is designed to reduce product costs, enhance item assortment, improve our in-stock position, and enhance sales, has positively contributed to our sales performance since we completed the initial rollout in the second quarter of 2021, driven by higher in-stock levels and the introduction of new products in select stores.
At the end of 2023, we operated 216 standalone pOpshelf locations. ​ Our “DG Fresh” initiative, a self-distribution model for frozen and refrigerated products that is designed to reduce product costs, enhance item assortment, improve our in-stock position, and enhance sales, has positively contributed to our sales and gross margin performance since we completed the initial rollout in 2021.
We plan to continue enhancing this position over time while employing ongoing cost discipline to reduce certain expenses as a percentage of sales.
We plan to continue enhancing this position over time while employing ongoing cost discipline to reduce certain expenses as a percentage of sales. Nonetheless, we seek to maintain flexibility to invest in the business as necessary to enhance our long-term competitiveness and profitability.
We anticipate funding 2023 capital requirements with a combination of some or all of the following: existing cash balances, cash flows from operations, availability under our Revolving Facility and 364-Day Revolving Facility and/or the issuance of additional senior notes and CP Notes.
We anticipate funding 2024 capital requirements with a combination of some or all of the following: existing cash balances, cash flows from operations, availability under our Revolving Facility and/or the issuance of additional CP Notes. We plan to continue to invest in store growth and development of approximately 800 new stores and approximately 1,585 stores to be remodeled or relocated.
Our goal is to create an environment that attracts, develops, and retains talented personnel, particularly at the store manager level, because employees who are promoted from within our company generally have longer tenures and are greater contributors to improvements in our financial performance. ​ To further enhance shareholder returns, we repurchased shares of our common stock and paid quarterly cash dividends in 2022, and our Board of Directors recently increased the quarterly cash dividend, beginning with the dividend to be paid on or before April 25, 2023.
Our goal is to create an environment that attracts, develops, and retains talented personnel, particularly at the store manager level, because employees who are promoted from within our company generally have longer tenures and are greater contributors to improvements in our financial performance.
In 2023, we plan to make an investment of approximately $100 million to further enhance our store standards and compliance efforts as well as the customer and associate experience in our stores, primarily through incremental labor hours.
Furthermore, in 2023 we invested approximately $150 million in retail labor, primarily through labor hours, to further enhance our store standards, including on-shelf availability, and compliance efforts as well as the customer and associate experience in our stores. ​ In addition to the labor investment in 2023, we took additional actions to support our customers, stores and distribution centers.
While we anticipate shrink and damages may continue to pressure our results through the first half of 2023, we believe we are taking actions that we believe will reduce the impact of these challenges to our business as we move throughout the year. 26 Table of Contents ​ Historically, sales in our consumables category, which tend to have lower gross margins, have been the key drivers of net sales and customer traffic, while sales in our non-consumables categories, which tend to have higher gross margins, have contributed to more profitable sales growth and an increase in average transaction amount.
Historically, sales in our consumables category, which tend to have lower gross margins, have been the key drivers of net sales and customer traffic, while sales in our non-consumables categories, which tend to have higher gross margins, have contributed to more profitable sales growth and an increase in average transaction amount.
During the 2022 period we had proceeds from the issuance of long-term debt of $2.3 billion, and our repayments of long-term debt totaled $911.3 million. Net commercial paper borrowings increased by $1.4 billion and we had no borrowings or repayments under the Revolving Facility or the 37 Table of Contents 364-Day Revolving Facility.
During the 2023 period we received proceeds from the issuance of long-term debt of $1.5 billion. Net commercial paper borrowings decreased by $1.5 billion, and we received and repaid $500.0 million under the 364-Day Revolving Facility.
There can be no assurance that our mitigation efforts will be successful. Moreover, recent increases in market interest rates have had a negative impact on our interest expense, both with respect to issuances of commercial paper notes and other indebtedness. ​ Our diverse teams are a competitive advantage, and we proactively seek ways to continue investing in their development.
Moreover, increases in market interest rates have had, and will likely continue to have, a negative impact on our interest expense, both with respect to issuances of commercial paper notes, if any, and other indebtedness.
The home products category increased by $315.4 million, or 43%, in 2022, by $230.0 million, or 45%, in 2021, and by $66.3 million, or 15%, in 2020.
The seasonal category decreased by $207.1 million, or 13%, in 2023, increased by $455.5 million, or 42%, in 2022, and increased by $177.8 million, or 20%, in 2021. The home products category decreased by $291.3 million, or 28%, in 2023, increased by $315.4 million, or 43%, in 2022, and increased by $230.0 million, or 45%, in 2021.
Each of these measures is commonly used by investors in retail companies to measure the health of the business.
We use these measures to maximize profitability and for decisions about the allocation of resources. Each of these measures is commonly used by investors in retail companies to measure the health of the business. 29 Table of Contents ​ Same-store sales.
Changes in accounts 36 Table of Contents payable resulted in a $98.7 million increase in our working capital in 2021 compared to a $745.6 million increase in 2020, due primarily to the timing of receipts and payments.
Changes in accounts payable resulted in a $36.9 million increase in our working capital in 2023 compared to a $194.7 million decrease in 2022, due primarily to the timing of inventory receipts and related payments. Net income decreased to $1.7 billion in 2023 as compared to $2.4 billion in 2022.
This accrual is 38 Table of Contents calculated as a percentage of sales at each retail store, at a department level, based on the store’s most recent historical shrink rate.
This accrual is calculated as a percentage of sales at each retail store, at a department level, based on the store’s most recent historical shrink rate. From time to time as circumstances may warrant, we consider more recent shrink experience in the calculation of our shrink accrual. The impact of doing so has not been material.
The effective income tax rate was lower in 2021 primarily due to increased income tax benefits associated with federal tax credits partially offset by a higher state effective tax rate compared to 2020. ​ Effects of Inflation ​ In 2022 and 2021, we experienced increases in product costs due in part to higher rates of inflation, particularly to the global supply chain as well as our own internal supply chain.
The effective income tax rate was higher in 2022 primarily due to decreased income tax benefits associated with stock-based compensation compared to 2021. ​ Effects of Inflation ​ In 2023, we experienced moderate increases in product costs due to lower rates of inflation.
The timing, manner and number of shares repurchased will depend on a variety of factors, including price, market conditions, compliance with the covenants and restrictions under our debt agreements and other factors. The repurchase program has no expiration date and may be modified or terminated from time to time at the discretion of our Board of Directors.
The timing, manner and number of shares repurchased will depend on a variety of factors, including price, market conditions, compliance with the covenants and restrictions under our debt agreements, cash requirements, excess debt capacity, results of operations, financial condition and other factors.
These and the other strategic initiatives discussed above have required and will require us to incur upfront expenses for which there may not be an immediate return in terms of sales or enhanced profitability. ​ To further optimize our cost structure and facilitate greater operational control within our supply chain, we more-than-doubled the size of our private tractor fleet in 2022 to more than 1,600 tractors.
From time to time, our strategic initiatives, including without limitation those discussed above, have required and may continue to require us to incur upfront expenses for which there may not be an immediate return in terms of sales or enhanced profitability. ​ To further optimize our cost structure and facilitate greater operational control within our supply chain, we further expanded our private fleet in 2023 from 1,600 tractors at the end of fiscal 2022 to more than 2,000 tractors at the end of 2023, representing the majority of all outbound trucks delivering from our distribution centers. ​ Certain of our operating expenses, such as wage rates and occupancy costs, have continued to increase in recent years, due primarily to market forces such as labor availability, increases in minimum wage rates and increases in property rents and interest rates.
In 2021, consumables and non-consumables sales increased at approximately the same rate when compared to 2020. ​ SG&A. SG&A as a percentage of net sales was 22.4% in 2022 compared to 22.2% in 2021, an increase of 25 basis points.
SG&A as a percentage of net sales was 24.0% in 2023 compared to 22.4% in 2022, an increase of 153 basis points.

… 82 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+0 added−1 removed2 unchanged
Biggest changeFor a detailed discussion of our Revolving Facility, our 364-Day Revolving Facility and our commercial paper program, see Note 5 to the consolidated financial statements. ​ A change in interest rates on variable rate debt impacts our pre-tax earnings and cash flows; whereas a change in interest rates on fixed rate debt impacts the economic fair value of debt but not our pre-tax earnings and cash flows.
Biggest changeFor a detailed discussion of our Revolving Facility and our commercial paper program, see Note 5 to the consolidated financial statements. ​ A change in interest rates on variable rate debt impacts our pre-tax earnings and cash flows; whereas a change in interest rates on fixed rate debt impacts the economic fair value of debt but not our pre-tax earnings and cash flows. ​ At February 2, 2024, our primary interest rate exposure was from changes in interest rates which affect our variable rate debt.
Based on our outstanding variable rate debt as of February 3, 2023, after giving consideration to our interest rate swap agreements, 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 $18.5 million in 2022. ​ At January 28, 2022, our primary interest rate exposure was from changes in interest rates which affect our variable rate debt.
Based on our outstanding variable rate debt as of February 2, 2024, after giving consideration to our interest rate swap agreements, 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 $3.5 million in 2023. ​ At February 3, 2023, our primary interest rate exposure was from changes in interest rates which affect our variable rate debt.
Under the terms of these agreements, we swapped fixed interest rates on a portion of our 2030 Senior Notes for three-month LIBOR rates. In recent years, our principal interest rate exposure has been from outstanding borrowings under our Revolving Facility as well as our commercial paper program.
Under the terms of these agreements, we swap fixed interest rates on a portion of our 2030 Senior Notes for compounded SOFR rates. In recent years, our principal interest rate exposure has been from outstanding borrowings under our Revolving Facility as well as our commercial paper program.
Based on our outstanding variable rate debt as of January 28, 2022, after giving consideration to our interest rate swap agreements, 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 $4.1 million in 2021 . ​ 41 Table of Contents
Based on our outstanding variable rate debt as of February 3, 2023, after giving consideration to our interest rate swap agreements, 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 $18.5 million in 2022 . ​ 41 Table of Contents
All derivative financial instrument transactions must be authorized and executed pursuant to approval by the Board of Directors. As a matter of policy, we do not buy or sell financial instruments for speculative or trading purposes, and any such derivative financial instruments are intended to be used to reduce risk by hedging an underlying economic exposure.
As a matter of policy, we do not buy or sell financial instruments for speculative or trading purposes, and any such derivative financial instruments are intended to be used to reduce risk by hedging an underlying economic exposure.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ​ Financial Risk Management ​ We are exposed to market risk primarily from adverse changes in interest rates, and to a lesser degree commodity prices. To minimize this risk, we may periodically use financial instruments, including derivatives.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ​ Financial Risk Management ​ We are exposed to market risk primarily from adverse changes in interest rates and commodity prices. To minimize this risk, we may periodically use financial instruments, including derivatives. All derivative financial instrument transactions must be authorized and executed pursuant to approval by the Board of Directors.
As of February 3, 2023, we had $1.5 billion of consolidated commercial paper borrowings and no borrowings outstanding under our Revolving Facility or our 364-Day Revolving Facility.
As of February 2, 2024, we had no consolidated commercial paper borrowings and no borrowings outstanding under our Revolving Facility.
Removed
At February 3, 2023, our primary interest rate exposure was from changes in interest rates which affect our variable rate debt.