Dollar General 2007 Annual Report Download - page 10
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8
Merchandise
We separate our merchandise into the following four categories for reporting purposes:
highly consumable, seasonal, home products, and basic clothing. Highly consumable consists of
packaged food, candy, snacks and refrigerated products, health and beauty aids, home cleaning
supplies and pet supplies; seasonal consists of seasonal and other holiday-related items, toys,
stationery and hardware; and home products consists of housewares and domestics. The
percentage of net sales of each of our four categories of merchandise for the period indicated
below was as follows:
2007 2006 2005
Highly consumable 66.5% 65.7% 65.3%
Seasonal 15.9% 16.4% 15.7%
Home products 9.2% 10.0% 10.6%
Basic clothing 8.4% 7.9% 8.4%
Our home products and seasonal categories typically account for the highest gross profit
margin, and the highly consumable category typically accounts for the lowest gross profit
margin.
We currently maintain approximately 5,400 core stock-keeping units, or SKUs, per store
and an additional 3,000 non-core SKUs that get rotated in and out of the store over the course of
a year. In 2007, we reduced the number of non-core SKUs.
We purchase our merchandise from a wide variety of suppliers. Approximately 12% of
our purchases in 2007 were from The Procter & Gamble Company. Our next largest supplier
accounted for approximately 6% of our purchases in 2007. We directly imported approximately
9% of our purchases at cost (15% at retail) in 2007.
The Dollar General Store
The average Dollar General store has approximately 6,900 square feet of selling space
and is typically operated by a manager, an assistant manager and two or more sales clerks.
Approximately 47% of our stores are located in strip shopping centers, 51% are in freestanding
buildings and 2% are in downtown buildings. We attempt to locate primarily in small towns or in
neighborhoods of more densely populated areas where occupancy expenses are relatively low.
We generally have not encountered difficulty locating suitable store sites in the past, and
management does not currently anticipate experiencing material difficulty in finding future
suitable locations.