Dollar General 2009 Annual Report Download - page 13

PART I
ITEM 1. BUSINESS
General
We are the largest discount retailer in the United States by number of stores, with 8,877 stores
located in 35 states as of February 26, 2010, primarily in the southern, southwestern, midwestern and
eastern United States. We offer a broad selection of merchandise, including consumables, seasonal,
home products and apparel. Our merchandise includes high quality national brands from leading
manufacturers, as well as comparable quality private brand selections with prices at substantial
discounts to national brands. We offer our merchandise at everyday low prices (typically $10 or less)
through our convenient small-box (approximately 7,100 square feet) locations.
Our History
J.L. Turner founded our Company in 1939 as J.L. Turner and Son, Wholesale. We were
incorporated as a Kentucky corporation under the name J.L. Turner & Son, Inc. in 1955, when we
opened our first Dollar General store. We changed our name to Dollar General Corporation in 1968
and reincorporated in 1998 as a Tennessee corporation. Our common stock was publicly traded from
1968 until July 2007, when we merged with an entity controlled by investment funds affiliated with
Kohlberg Kravis Roberts & Co., L.P., or KKR. On November 13, 2009 our common stock again
became publicly traded upon our completion of an initial public offering of 39,215,000 shares of our
common stock, including 22,700,000 newly issued shares. We are a subsidiary of Buck Holdings, L.P., a
Delaware limited partnership controlled by KKR, which beneficially owns over 85% of our outstanding
common stock.
Our Business Model
Our long history of profitable growth is founded on a commitment to a relatively simple business
model: providing a broad base of customers with their basic everyday and household needs,
supplemented with a variety of general merchandise items, at everyday low prices in conveniently
located, small-box stores.
Fiscal year 2009 represented our 20th consecutive year of same-store sales growth. This growth,
regardless of economic conditions, suggests that we have a less cyclical model than most retailers and,
we believe, is a result of our compelling value and convenience proposition. Both customer traffic and
average transaction amount have increased during 2008 and 2009 despite a very difficult economic
environment, and our research indicates that in excess of 95% of new and existing customers plan to
continue shopping with us after the economy recovers.
Our attractive store economics, including a relatively low initial investment and simple, low cost
operating model, have allowed us to grow our store base to over 8,800 stores in 35 states, and provides
us significant opportunities to continue our strategy of profitable store growth.
Compelling Value and Convenience Proposition. Our ability to deliver highly competitive prices on
national brand and quality private brand products in convenient locations and our easy in and out
shopping format provide a compelling shopping experience and distinguish us from other discount,
convenience and drugstore retailers. Our slogan, ‘‘Save time. Save money. Every day!’’ summarizes our
appeal to customers. 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 to profitably coexist alongside
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