Dollar General 2009 Annual Report Download - page 25

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.
Disruptions due to labor stoppages, strikes or slowdowns, or other disruptions involving our vendors or
the transportation and handling industries also may negatively affect our ability to receive merchandise
and thus may negatively affect sales. These and other factors affecting our suppliers and our access to
products could adversely affect our financial performance. As we increase our imports of merchandise
from foreign vendors, the risks associated with foreign imports will increase.
Product liability and food safety claims could adversely affect our business, reputation and financial
performance.
Despite our best efforts to ensure the quality and safety of the products we sell, we may be subject
to product liability claims from customers or penalties from government agencies relating to products,
including food products, that are recalled, defective or otherwise alleged to be harmful. Such claims
may result from tampering by unauthorized third parties, product contamination or spoilage, including
the presence of foreign objects, substances, chemicals, other agents, or residues introduced during the
growing, storage, handling and transportation phases. All of our vendors and their products must
comply with applicable product and food safety laws. We generally seek contractual indemnification and
insurance coverage from our suppliers. However, if we do not have adequate insurance or contractual
indemnification available, such claims could have a material adverse effect on our business, financial
condition and results of operation. Our ability to obtain indemnification from foreign suppliers may be
hindered by the manufacturers’ lack of understanding of U.S. product liability or other laws, which may
make it more likely that we be required to respond to claims or complaints from customers as if we
were the manufacturer of the products. Even with adequate insurance and indemnification, such claims
could significantly damage our reputation and consumer confidence in our products. Our litigation
expenses could increase as well, which also could have a materially negative impact on our results of
operations even if a product liability claim is unsuccessful or is not fully pursued.
Our private brands may not achieve or maintain broad market acceptance and increases 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 gaining and 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.
We are subject to governmental regulations, procedures and requirements. A significant change in, or
noncompliance with, these regulations could have a material adverse effect on our financial performance.
Our business is subject to numerous federal, state and local laws and regulations. We routinely
incur costs in complying with these regulations. New laws or regulations, particularly those dealing with
healthcare reform, product safety, and labor and employment, among others, or changes in existing
laws and regulations, particularly those governing the sale of products, may result in significant added
expenses or may require extensive system and operating changes that may be difficult to implement
and/or could materially increase our cost of doing business. In addition, such changes or new laws may
require the write off and disposal of existing product inventory, resulting in significant adverse financial
impact to us. Untimely compliance or noncompliance with applicable regulations or untimely or
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