Dollar General 2004 Annual Report Download - page 6

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As I write to you today, approaching my second anniversary with the Company, I continue to appreciate the enthusiasm
of our associates and their commitment to our mission of Serving Others. In 2003, we began several key initiatives to
improve our operating effectiveness and to better serve our customers. We made significant progress on those initia-
tives in 2004 and still produced a successful financial performance for the year. Our financial position is strong, and we
are dramatically improving our ability to compete. The need for our business model has never been stronger.
As you know, global economic forces collided in 2004 in a way that significantly affected U.S. consumers in general and
those in the extreme value retail sector in particular. High unemployment among less educated workers, rising fuel costs
and the ongoing war in Iraq meant more challenges for our core customers. In this environment, as our results reflect,
Dollar General was able to differentiate itself from its competitors. We maintained the prices and quality our customers
need, and we continued to attract new shoppers from a broader mix of the population, particularly higher income house-
holds. We introduced our model into new territories in 2004 and again found appreciation for our business proposition of
providing branded core products at low prices in conveniently located small stores.
We worked very hard in 2004 to manage the risks associated with external factors and with the challenges we faced as
we began implementing our strategic plan. As a result of that hard work, we achieved strong results for the year. To recap:
• Total net sales grew 11.5% to $7.7 billion, while same-store sales increased 3.2%, one of the highest increases among
our direct competitors.
• Earnings per share were $1.04, up 17% over 2003. Excluding the impact of a restatement-related penalty in 2003,
earnings per share increased 13%.
• We opened 722 new stores, including 13 new Dollar General Markets. By fiscal year-end,
we operated 7,320 stores in 30 states, including 15 Dollar General Markets.
• To support this store growth, we increased our total distribution center shipping capacity
by 15%. In addition, we started construction on our eighth distribution center in South
Carolina scheduled to begin operations in June 2005.
• We added coolers to over 4,300 stores, including all of our new stores so that,
by the end of the year, 92% of our stores were selling refrigerated food items.
• We obtained food stamp (EBT) certification for over 6,300 stores, or 86% of
our total network in 2004, allowing us to accept food stamps, an important ben-
efit for our core customers.
• We completed the development phase of our store operations improvement proj-
ect. By year-end, 350 pilot stores had been converted to the EZstore process.
To Our Shareholders,
David A. Perdue
Chairman and Chief Executive Officer