Dollar General 2005 Annual Report Download - page 16

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FORWARD-LOOKING STATEMENTS/RISK FACTORS
Except for specific historical information, many of the
discussions in this report may express or imply projections
of revenues or expenditures, plans and objectives for
future operations, growth or initiatives, expected future
economic performance, or the expected outcome or
impact of pending or threatened litigation.These and sim-
ilar statements regarding events or results which Dollar
General Corporation (the “Company” or “Dollar General”)
expects will or may occur in the future are forward-looking
statements concerning matters that involve risks, uncer-
tainties and other factors which may cause the actual per-
formance of the Company to differ materially from those
expressed or implied by these statements. All forward-
looking information should be evaluated in the context of
these risks, uncertainties and other factors.The words
“believe,”“anticipate,”“project,”“plan,”“expect,”“estimate,”
“objective,”“forecast,”“goal,”“intend,”“will likely result,” or
“will continue”and similar expressions generally identify
forward-looking statements. The Company believes the
assumptions underlying these forward-looking statements
are reasonable; however, any of the assumptions could be
inaccurate, and therefore, actual results may differ materi-
ally from those projected in or implied by the forward-
looking statements. Factors and risks that may result in
actual results differing from this forward-looking informa-
tion include, but are not limited to, those listed below, as
well as other factors discussed throughout this document,
including, without limitation, the factors described under
“Critical Accounting Policies and Estimates” in
Management’s Discussion and Analysis contained herein,
or discussed, from time to time, in the Company’s filings
with the Securities and Exchange Commission (the “SEC”),
press releases and other communications.
Readers are cautioned not to place undue reliance
on forward-looking statements made in this document,
since the statements speak only as of the document’s
date. The Company has no obligation, and does not
intend, to publicly update or revise any of these forward-
looking statements to reflect events or circumstances
occurring after the date of this document or to reflect the
occurrence of unanticipated events. Readers are
advised, however, to consult any further disclosures the
Company may make on related subjects in its documents
filed with or furnished to the SEC or in its other public
disclosures.
The Company’s business is moderately seasonal with the
highest portion of sales occurring during the fourth quarter.
Adverse events during the fourth quarter could, therefore,
materially affect the Company’s financial statements as a
whole. The Company realizes a significant portion of its net
sales and net income during the Christmas selling season
in the fourth quarter. In anticipation of this holiday, the
Company purchases substantial amounts of seasonal
inventory and hires many temporary employees. A sea-
sonal merchandise inventory imbalance could result if for
any reason the Company’s net sales during the Christmas
selling season were to fall below seasonal norms. If such
an imbalance were to occur, more markdowns than antici-
pated might be required to minimize the imbalance.The
Company’s profitability and operating results could be
adversely affected by unanticipated markdowns and by
lower than anticipated sales. Lower than anticipated sales
in the Christmas selling season would also negatively
impact the Company’s ability to leverage the increased
labor costs.
Competition in the retail industry could limit the
Company’s growth opportunities and reduce its profitability.
The Company operates in the discount retail merchandise
business, which is highly competitive. This competitive
environment subjects the Company to the risk of reduced
profitability because of the lower prices, and thus the
lower margins, required to maintain the Company’s com-
petitive position. The Company competes with discount
stores and with many other retailers, including mass mer-
chandise, grocery, drug, convenience, variety and other
specialty stores. These other retail companies operate
stores in many of the areas where the Company operates.
The Company’s direct competitors in the dollar store retail
category include, without limitation, Family Dollar, Dollar
Tree, Fred’s, and various local, independent operators.
Competitors from other retail categories include Wal-Mart
and Walgreens, among others. Some of the Company’s
competitors utilize aggressive promotional activities,
advertising programs, and pricing discounts and the
Company’s results of operations could be adversely
affected if the Company does not respond effectively to
these efforts.
The discount retail merchandise business is subject to
excess capacity, and some of the Company’s competitors
are much larger and have substantially greater resources
than the Company. The competition for customers has
intensified in recent years as larger competitors, such as
Wal-Mart, have moved into, or increased their presence in,
the Company’s geographic markets. The Company
remains vulnerable to the marketing power and high level
of consumer recognition of these major national discount
chains and to the risk that these chains or others could
venture into the “dollar store”industry in a significant way.
Generally, the Company expects an increase in competition.