Dollar General 2012 Annual Report Download - page 3

Richard W. Dreiling
Chairman and Chief Executive Officer
April 11, 2013
To Our Fellow Shareholders,
Customers and Employees
Serving our customers by helping them Save time. Save
money. Every day! has never been more important than it
was throughout 2012 and remains today. Dollar General is
serving more customers in more markets than ever before,
and we continue to see significant opportunities to grow.
Our fiscal 2012 financial performance once again set new
records as we worked to fulfill our mission of “Serving
Others,” including our shareholders, our customers and
our employees.
Highlights of 2012 include the following:
• Net sales increased 8.2% to $16.02 billion, or $216
per square foot. Excluding the 53rd week in 2011, net
sales increased 10.4%.
• Same-store sales grew 4.7%, marking our 23rd
consecutive year of same-store sales growth.
• Operating profit increased 11% to $1.66 billion, or 10.3%
of sales, setting a new record operating profit rate.
• Net income increased 24% to $953 million, and
earnings per diluted share increased 28% to $2.85.
• Operating activities generated $1.13 billion of cash
flows, which we primarily used to invest in growth
for the future and to return cash to shareholders
through share repurchases.
• We opened 625 new stores, remodeled or relocated
592 stores, and opened two new distribution centers,
ending the year with 10,506 stores in 40 states
supported by 11 distribution centers across the U.S.
• As part of our ongoing share repurchase program,
we repurchased 14.4 million shares of our common
stock at a total cost of $671.4 million in 2012.
• We also made significant progress on optimizing
our capital structure by refinancing the remainder
of our high interest rate debt in July 2012, reducing
future interest expense and strengthening our
financial position.
We are very pleased with our financial performance as
well as our continued progress toward building for the
future. Our successful business model is based on meeting
the everyday needs of a broad base of customers, and
helping them make the most of their spending dollars by
offering a wide selection of quality items at value prices
in conveniently located easy-to-shop stores. Our core
customer, most often a woman, is typically responsible
for maintaining a household on a tight budget and is
often underserved by other retailers. We see this as our
opportunity to help make her life better every day, and,
as evidenced by 23 consecutive years of same-store sales
growth, our customers recognize our efforts.
In 2012, customers responded with enthusiasm to our new
merchandising initiatives and improvements in our stores.
We continued to improve our merchandise in-stock levels
and enhance our category management processes which
help us determine the most productive merchandise
for our customers. For example, in 2012, we expanded
the number of coolers for refrigerated and frozen foods
in approximately 1,400 existing stores, made further
progress on our beer and wine rollout and implemented
successful new initiatives in our home products offerings.
Customers are increasingly relying on Dollar General for
their consumables needs, so we are testing other slightly
larger store formats that offer more perishable food items.
We’ve also continued to expand our private brands in
consumables and are especially pleased with the success
of our proprietary Rexall brand in healthcare products.
Daily, over 90,000 Dollar General employees are
working hard to serve our customers in communities
across the U.S. In 2012, we implemented new training
and development programs and we further utilized our
new workforce management system to help our store
managers more effectively manage their stores. As a
result, our store manager retention has improved, our
store productivity has increased and store labor costs as
a percentage of sales have decreased while improving
our customer’s overall shopping experience.
Dollar General is positioned to have another great year
in 2013. We have a strong foundation for growth that
we built together as a team. I have confidence that we
can successfully execute our 2013 plans and continue to
deliver long-term sustainable returns for our shareholders
through earnings growth and ongoing share repurchases.
Kindest regards,