Dollar General 2007 Annual Report Download - page 16

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hurricane season. These factors could otherwise disrupt and adversely affect our operations and
financial performance.
Risks associated with the domestic and foreign suppliers from whom our products are
sourced could adversely affect our financial performance.
The products we sell are sourced from a wide variety of domestic and international
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 in 2007, but many of our
domestic vendors directly import their products or components of their products. Political and
economic instability in the countries in which foreign suppliers are located, the financial
instability of suppliers, suppliers’ failure to meet our supplier standards, labor problems
experienced by our suppliers, the availability of raw materials to suppliers, merchandise quality
or safety issues, currency exchange rates, transport availability and cost, inflation, and other
factors relating to the suppliers and the countries in which they are located or from which they
import are beyond our control. In addition, the United States’ foreign trade policies, tariffs and
other impositions on imported goods, trade sanctions imposed on certain countries, the limitation
on the importation of certain types of goods or of goods containing certain materials from other
countries and other factors relating to foreign trade are beyond our control. Disruptions due to
labor stoppages, strikes or slowdowns, or other disruptions, involving our vendors or the
transportation and handling industries also may negatively affect our ability to receive
merchandise and thus may negatively affect sales. These and other factors affecting our suppliers
and our access to products could adversely affect our financial performance. In addition, our
ability to obtain indemnification from foreign suppliers may be hindered by the manufacturers’
lack of understanding of U.S. product liability or other laws, which may make it more likely that
we may be required to respond to claims or complaints from customers as if we were the
manufacturer of the products. As we increase our imports of merchandise from foreign vendors,
the risks associated with foreign imports will increase.
We are dependent on attracting and retaining qualified employees while also controlling
labor costs.
Our future performance depends on our ability to attract, retain and motivate qualified
employees. Many of these employees are in entry-level or part-time positions with historically
high rates of turnover. Availability of personnel varies widely from location to location. Our
ability to meet our labor needs generally, including our ability to find qualified personnel to fill
positions that become vacant at our existing stores and distribution centers, while controlling our
labor costs, is subject to numerous external factors, including the level of competition for such
personnel in a given market, the availability of a sufficient number of qualified persons in the
work force of the markets in which we are located, unemployment levels within those markets,
prevailing wage rates and changes in minimum wage laws, changing demographics, health and
other insurance costs and changes in employment legislation. Increased turnover also can have
significant indirect costs, including more recruiting and training needs, store disruptions due to
management changeover and potential delays in new store openings or adverse customer
reactions to inadequate customer service levels due to personnel shortages. Competition for