Dollar General 2012 Annual Report Download - page 90

10-K
Our private brands may not maintain broad market acceptance and increase the risks we face.
We have substantially increased the number of our private brand items, and the program is a
sizable part of our future growth plans. We believe that our success in maintaining broad market
acceptance of our private brands depends on many factors, including pricing, our costs, quality and
customer perception. We may not achieve or maintain our expected sales for our private brands. As a
result, our business, financial condition and results of operations could be materially and adversely
affected.
A significant disruption to our distribution network or to the timely receipt of inventory could adversely
impact sales or increase our transportation costs, which would decrease our profits.
We rely on our distribution and transportation network to provide goods to our stores in a timely
and cost-effective manner through deliveries to our distribution centers from vendors and then from
the distribution centers or direct ship vendors to our stores by various means of transportation,
including shipments by sea and truck. Any disruption, unanticipated expense or operational failure
related to this process could affect store operations negatively. For example, unexpected delivery delays
or increases in transportation costs (including through increased fuel costs, a decrease in transportation
capacity for overseas shipments, or work stoppages or slowdowns) could significantly decrease our
ability to make sales and earn profits. Labor shortages or work stoppages in the transportation industry
or long-term disruptions to the national and international transportation infrastructure that lead to
delays or interruptions of deliveries could also negatively affect our business.
We maintain a network of distribution facilities and have plans to build new facilities to support
our growth objectives. Delays in opening distribution centers could adversely affect our future
operations by slowing store growth, which may in turn reduce revenue growth. In addition, distribution-
related construction or expansion projects entail risks which could cause delays and cost overruns, such
as: shortages of materials or skilled labor; work stoppages; unforeseen construction, scheduling,
engineering, environmental or geological problems; weather interference; fires or other casualty losses;
and unanticipated cost increases. The completion date and ultimate cost of these projects could differ
significantly from initial expectations due to construction-related or other reasons. We cannot guarantee
that any project will be completed on time or within established budgets.
Rising fuel costs could materially adversely affect our business.
Fuel prices are significantly influenced by international, political and economic circumstances.
Increases in the price of fuel pose a challenge to our continued priority of optimizing our gross profit
rate. Sustained inflated prices or further price increases for any reason, including fuel supply shortages
or unusual price volatility, could materially increase our transportation costs, adversely affecting our
gross profit and results of operations. In addition, competitive pressures in our industry may inhibit our
ability to reflect these increased costs in the prices of our products. We will diligently attempt to keep
product costs as low as possible as we face these increases while still working to optimize gross profit
and meet our customers’ needs.
Risks associated with or faced by 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. In
2012, our largest supplier accounted for 8% of our purchases, and our next largest supplier accounted
for approximately 7% of such purchases. We have not experienced any difficulty in obtaining sufficient
quantities of core merchandise and believe that, if one or more of our current sources of supply
became unavailable, we would generally be able to obtain alternative sources without experiencing a
substantial disruption of our business. However, such alternative sources could increase our
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