Dollar General 2013 Annual Report Download - page 84
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Distribution and Transportation
Our stores are currently supported by twelve distribution centers located strategically throughout
our geographic footprint, including our newest distribution center in Bethel, Pennsylvania which began
shipping in January 2014. We lease additional temporary warehouse space as necessary to support our
distribution needs. Over the past few years we have made significant investments in facilities,
technological improvements and upgrades, and we continue to improve work processes, all of which
increase our efficiency and ability to support our merchandising and operations initiatives as well as our
new store growth. We continually analyze and rebalance the network to ensure that it remains efficient
and provides the service our stores require. See ‘‘—Properties’’ for additional information pertaining to
our distribution centers.
Most of our merchandise flows through our distribution centers and is delivered to our stores by
third-party trucking firms, utilizing our trailers. Our agreements with these trucking firms are based on
estimated costs of diesel fuel, with the difference in estimated and current market fuel costs passed
through to us. The costs of diesel fuel are significantly influenced by international, political and
economic circumstances. If fuel price increases were to arise for any reason, including fuel supply
shortages or unusual price volatility, the resulting higher fuel prices could materially increase our
transportation costs.
Seasonality
Our business is seasonal to a certain extent. Generally, our highest sales volume occurs in the
fourth quarter, which includes the Christmas selling season, and the lowest occurs in the first quarter.
In addition, our quarterly results can be affected by the timing of certain holidays, the timing of new
store openings and store closings, the amount of sales contributed by new and existing stores, as well as
financial transactions such as debt refinancing and stock repurchases. We purchase substantial amounts
of inventory in the third quarter and incur higher shipping costs and higher payroll costs in anticipation
of the increased sales activity during the fourth quarter. In addition, we carry merchandise during our
fourth quarter that we do not carry during the rest of the year, such as gift sets, holiday decorations,
certain baking items, and a broader assortment of toys and candy.
7
10-K