Dollar General 2013 Annual Report Download - page 90

the transportation industry or long-term disruptions to the national and international transportation
infrastructure that lead to delays or interruptions of deliveries or which would necessitate our securing
alternative labor or shipping suppliers could also increase our costs or otherwise 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 financial
performance by slowing store growth, which may in turn reduce revenue growth, or by increasing
transportation costs. In addition, distribution-related construction or expansion projects entail risks that
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.
Risks associated with or faced by our suppliers could adversely affect our financial performance.
The products we sell are sourced from a wide variety of domestic and international suppliers, and
we are dependent on our vendors to supply merchandise in a timely and efficient manner. In 2013, 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
merchandise costs and reduce the quality of our merchandise, and an inability to obtain alternative
sources could adversely affect our sales. Additionally, if a supplier fails to deliver on its commitments,
whether due to financial difficulties or other reasons, we could experience merchandise out-of-stocks
that could lead to lost sales and damage to our reputation.
We directly imported approximately 6% of our purchases (measured at cost) in 2013, but many of
our domestic vendors directly import their products or components of their products. Changes to the
prices and flow of these goods for any reason, such as political and economic instability in the countries
in which foreign suppliers are located, the financial instability of suppliers, suppliers’ failure to meet
our standards, issues with labor practices of our suppliers or labor problems they may experience (such
as strikes, stoppages or slowdowns, which could also increase labor costs during and following the
disruption), the availability and cost of raw materials to suppliers, increased import duties, merchandise
quality or safety issues, currency exchange rates, transport availability and cost, transport security,
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 and could adversely affect our operations and profitability.
Because a substantial amount of our imported merchandise comes from China, a change in the Chinese
currency or other policies could negatively impact our merchandise costs. 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. These and other factors affecting our suppliers and our access to products could adversely
affect our business and financial performance. As we increase our imports of merchandise from foreign
vendors, the risks associated with foreign imports will increase.
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10-K