DOLLAR GENERAL CORP

FORM 10-K

(Annual Report)

Filed 03/19/20 for the Period Ending 01/31/20

Address 100 MISSION RIDGE

GOODLETTSVILLE, TN, 37072

Telephone 6158554000

CIK 0000029534

Symbol DG

SIC Code 5331 - Retail-Variety Stores

Industry Discount Stores

Sector Consumer Cyclicals

Fiscal Year 02/02

http://www.edgar-online.com

Distribution and use of this document restricted under EDGAR Online, a division of Donnelley Financial Solutions, Terms of Use.

TableofContents

UNITEDSTATES

SECURITIESANDEXCHANGECOMMISSION

Washington,D.C.20549

FORM10-K

(MarkOne)

☒ AnnualReportPursuanttoSection13or15(d)oftheSecuritiesExchangeActof1934

ForthefiscalyearendedJanuary31,2020,or

☐ TransitionReportPursuanttoSection13or15(d)oftheSecuritiesExchangeActof1934

Forthetransitionperiodfrom________to________

Commissionfilenumber:001-11421

DOLLARGENERALCORPORATION

(Exact name of registrant as specified in its charter)

TENNESSEE 61-0502302

(State or other jurisdiction of (I.R.S. Employer

incorporation or organization) Identification No.)

100MISSIONRIDGE

GOODLETTSVILLE,TN37072

(Address of principal executive offices, zip code)

Registrant’stelephonenumber,includingareacode:(615)855-4000

SecuritiesregisteredpursuanttoSection12(b)oftheAct:

Titleofeachclass TradingSymbol(s)  Nameofeachexchangeonwhichregistered

CommonStock,parvalue$0.875pershare DG NewYorkStockExchange

SecuritiesregisteredpursuanttoSection12(g)oftheAct:None

Indicatebycheckmarkiftheregistrantisawell-knownseasonedissuer,asdefinedinRule405oftheSecuritiesAct.Yes☒No☐

IndicatebycheckmarkiftheregistrantisnotrequiredtofilereportspursuanttoSection13or15(d)oftheAct.Yes☐No☒

Indicatebycheckmarkwhethertheregistrant(1)hasfiledallreportsrequiredtobefiledbySection13or15(d)oftheSecuritiesExchange

Actof1934duringthepreceding12months(orforsuchshorterperiodthattheregistrantwasrequiredtofilesuchreports),and(2)hasbeensubjectto

suchfilingrequirementsforthepast90days.Yes☒No☐

IndicatebycheckmarkwhethertheregistranthassubmittedelectronicallyeveryInteractiveDataFilerequiredtobesubmittedpursuantto

Rule405ofRegulationS-Tduringthepreceding12months(orforsuchshorterperiodthattheregistrantwasrequiredtosubmitsuchfiles).Yes☒

No☐

Indicatebycheckmarkwhethertheregistrantisalargeacceleratedfiler,anacceleratedfiler,anon-acceleratedfiler,asmallerreporting

company,oranemerginggrowthcompany.Seethedefinitionsof“largeacceleratedfiler,”“acceleratedfiler,”“smallerreportingcompany,”and

“emerginggrowthcompany”inRule12b-2oftheExchangeAct.

Largeacceleratedfiler☒ Acceleratedfiler☐

Non-acceleratedfiler☐ Smallerreportingcompany☐

Emerginggrowthcompany☐

Ifanemerginggrowthcompany,indicatebycheckmarkiftheregistranthaselectednottousetheextendedtransitionperiodforcomplying

withanyneworrevisedfinancialaccountingstandardsprovidedpursuanttoSection13(a)oftheExchangeAct.☐

Indicatebycheckmarkwhethertheregistrantisashellcompany(asdefinedinRule12b-2oftheExchangeAct).Yes☐No☒

Theaggregatemarketvalueoftheregistrant’scommonstockoutstandingandheldbynon-affiliatesasofAugust2,2019was$34.3billion

calculatedusingtheclosingmarketpriceoftheregistrant’scommonstockasreportedontheNYSEonsuchdate($133.69).Forthispurpose,directors,

executiveofficersandgreaterthan10%recordshareholdersareconsideredtheaffiliatesoftheregistrant.

Theregistranthad251,941,312sharesofcommonstockoutstandingasofMarch12,2020.

DOCUMENTSINCORPORATEDBYREFERENCE

CertainoftheinformationrequiredinPartIIIofthisForm10-Kisincorporatedbyreferencetotheregistrant’sdefinitiveproxystatementto

befiledfortheAnnualMeetingofShareholderstobeheldonMay27,2020.

TableofContents
TABLEOFCONTENTS
INTRODUCTION
PARTI
ITEM1.BUSINESS 4
ITEM1A.RISKFACTORS 9
ITEM1B.UNRESOLVEDSTAFFCOMMENTS 17
ITEM2.PROPERTIES 18
ITEM3.LEGALPROCEEDINGS 18
ITEM4.MINESAFETYDISCLOSURES 19
INFORMATIONABOUTOUREXECUTIVEOFFICERS 19
PARTII
ITEM5.MARKETFORREGISTRANT'SCOMMONEQUITY,RELATEDSTOCKHOLDER
MATTERSANDISSUERPURCHASESOFEQUITYSECURITIES 22
ITEM6.SELECTEDFINANCIALDATA 22
ITEM7.MANAGEMENT'SDISCUSSIONANDANALYSISOFFINANCIALCONDITIONAND
RESULTSOFOPERATIONS 25
ITEM7A.QUANTITATIVEANDQUALITATIVEDISCLOSURESABOUTMARKETRISK 39
ITEM8.FINANCIALSTATEMENTSANDSUPPLEMENTARYDATA 40
ReportofIndependentRegisteredPublicAccountingFirm 40
DOLLARGENERALCORPORATIONANDSUBSIDIARIESCONSOLIDATEDBALANCESHEETS 43
DOLLARGENERALCORPORATIONANDSUBSIDIARIESCONSOLIDATEDSTATEMENTSOFINCOME 44
DOLLARGENERALCORPORATIONANDSUBSIDIARIESCONSOLIDATEDSTATEMENTSOF
COMPREHENSIVEINCOME 45
DOLLARGENERALCORPORATIONANDSUBSIDIARIESCONSOLIDATEDSTATEMENTSOF
SHAREHOLDERS'EQUITY 46
DOLLARGENERALCORPORATIONANDSUBSIDIARIESCONSOLIDATEDSTATEMENTSOFCASH
FLOWS 47
DOLLARGENERALCORPORATIONANDSUBSIDIARIESNOTESTOCONSOLIDATEDFINANCIAL
STATEMENTS 48
ITEM9.CHANGESINANDDISAGREEMENTSWITHACCOUNTANTSONACCOUNTING
ANDFINANCIALDISCLOSURE 69
ITEM9A.CONTROLSANDPROCEDURES 69
ReportofIndependentRegisteredPublicAccountingFirm 70
ITEM9B.OTHERINFORMATION 71
PARTIII
ITEM10.DIRECTORS,EXECUTIVEOFFICERSANDCORPORATEGOVERNANCE 74
ITEM11.EXECUTIVECOMPENSATION 74
ITEM12.SECURITYOWNERSHIPOFCERTAINBENEFICIALOWNERSANDMANAGEMENT
ANDRELATEDSTOCKHOLDERMATTERS 75
ITEM13.CERTAINRELATIONSHIPSANDRELATEDTRANSACTIONS,ANDDIRECTOR
INDEPENDENCE 75
ITEM14.PRINCIPALACCOUNTINGFEESANDSERVICES 75
PARTIV
ITEM15.EXHIBITS,FINANCIALSTATEMENTSCHEDULES 76
ITEM16FORM10-KSUMMARY 82
SIGNATURES 83

TableofContents

INTRODUCTION

General

Thisreportcontainsreferencestoyears2020,2019,2018,2017,2016,and2015,whichrepresentfiscalyears

endingorendedJanuary29,2021,January31,2020,February1,2019,February2,2018,February3,2017,andJanuary

29,2016,respectively.OurfiscalyearendsontheFridayclosesttoJanuary31.Our2016fiscalyearconsistedof53

weeks,whileeachoftheremainingyearslistedconsistsof52weeks.Allofthediscussionandanalysisinthisreport

shouldbereadwith,andisqualifiedinitsentiretyby,theConsolidatedFinancialStatementsandrelatednotes.

Solelyforconvenience,ourtrademarksandtradenamesmayappearinthisreportwithoutthe®orTMsymbol

whichisnotintendedtoindicatethatwewillnotassert,tothefullestextentunderapplicablelaw,ourrightsortherightto

thesetrademarksandtradenames.

CautionaryDisclosureRegardingForward-LookingStatements

Weinclude“forward-lookingstatements”withinthemeaningofthefederalsecuritieslawsthroughoutthis

report,particularlyundertheheadings“Business,”“Management’sDiscussionandAnalysisofFinancialConditionand

ResultsofOperations,”and“Note7–CommitmentsandContingencies,”amongothers.Youcanidentifythesestatements

becausetheyarenotlimitedtohistoricalfactortheyusewordssuchas“may,”“will,”“should,”“could,”“can,”“would,”

“believe,”“anticipate,”“project,”“plan,”“expect,”“estimate,”“goal,”“seek,”“ensure,”“potential,”“opportunity,”

“objective,”“intend,”“predict,”“committed,”“likely,”“continue,”“strive,”“aim,”“scheduled,”“focusedon,”or

“subjectto”andsimilarexpressionsthatconcernourstrategies,plans,initiatives,intentionsorbeliefsaboutfuture

occurrencesorresults.Forexample,allstatementsrelatingto,amongothers,ourestimatedandprojectedexpenditures,

cashflows,resultsofoperations,financialconditionandliquidity;ourplansandobjectivesfor,andexpectations

regarding,futureoperations,economicandcompetitivemarketconditions,growthorinitiatives,includingbutnotlimited

tothenumberofplannedstoreopenings,remodelsandrelocations,storeformats,progressofmerchandisingandother

initiatives,trendsinsalesofconsumableandnon-consumableproducts,andleveloffuturecostsandexpenses;potential

futurestockrepurchasesandcashdividends;anticipatedborrowingunderourunsecuredrevolvingcreditagreementand

commercialpaperprogram;potentialimpactoflegalorregulatorychangesandourresponsesthereto,includingthe

potentialimpactoftariffsimposedbytheU.S.government;potentialimpactoftheCOVID-19outbreak;anticipated

impactofnewaccountingstandards;effortstoimprovedistributionandtransportationefficiencies,includingself-

distribution;effortstoimproveourin-stockposition,customerconveniencepropositionandstorelaborproductivity;or

expectedoutcomeoreffectofpendingorthreatenedlegaldisputes,litigationorauditsareforward-lookingstatements.

Allforward-lookingstatementsaresubjecttorisks,uncertaintiesandotherfactorsthatmaycauseouractual

resultstodiffermateriallyfromthosewhichweexpected.Manyofthesestatementsarederivedfromouroperating

budgetsandforecasts,whicharebasedonmanydetailedassumptionsthatwebelievearereasonable.However,itisvery

difficulttopredicttheeffectofknownfactors,andwecannotanticipateallfactorsthatcouldaffectfutureresults.

Importantfactorsthatcouldcauseactualresultstodiffermateriallyfromtheexpectationsexpressedorimpliedin

ourforward-lookingstatementsaredisclosedunder“RiskFactors”inPartI,Item1Aandelsewhereinthisdocument

(including,withoutlimitation,inconjunctionwiththeforward-lookingstatementsthemselvesandundertheheading

“CriticalAccountingPoliciesandEstimates”).Allforward-lookingstatementsarequalifiedintheirentiretybytheseand

othercautionarystatementsthatwemakefromtimetotimeinourotherSECfilingsandpubliccommunications.You

shouldevaluateforward-lookingstatementsinthecontextoftheserisksanduncertaintiesandarecautionednottoplace

unduerelianceonsuchstatements.Thesefactorsmaynotcontainallofthefactorsthatareimportanttoyou.Wecannot

assureyouthatwewillrealizetheresultsordevelopmentsweexpectoranticipateor,evenifsubstantiallyrealized,that

theywillresultintheconsequencesoraffectusorouroperationsinthewayweexpect.Forward-lookingstatementsinthis

reportaremadeonlyasofthedatehereof.Weundertakenoobligation,andspecificallydisclaimanyduty,toupdateor

reviseanyforward-lookingstatementasaresultofnewinformation,futureeventsorotherwise,exceptasmayberequired

bylaw.

TableofContents

PARTI

ITEM1. BUSINESS

General

WeareamongthelargestdiscountretailersintheUnitedStatesbynumberofstores,with16,368storeslocated

in45statesasofFebruary28,2020,withthegreatestconcentrationofstoresinthesouthern,southwestern,midwestern

andeasternUnitedStates.Weofferabroadselectionofmerchandise,includingconsumableitems,seasonalitems,home

productsandapparel.Ourmerchandiseincludesnationalbrandsfromleadingmanufacturers,aswellasourownprivate

brandselectionswithpricesatsubstantialdiscountstonationalbrands.Weofferourcustomersthesenationalbrandand

privatebrandproductsateverydaylowprices(typically$10orless)inourconvenientsmall-boxlocations.

OurHistory

J.L.TurnerfoundedourCompanyin1939asJ.L.TurnerandSon,Wholesale.Wewereincorporatedasa

KentuckycorporationunderthenameJ.L.Turner&Son,Inc.in1955,whenweopenedourfirstDollarGeneralstore.We

changedournametoDollarGeneralCorporationin1968andreincorporatedin1998asaTennesseecorporation.Our

commonstockwaspubliclytradedfrom1968untilJuly2007,whenwemergedwithanentitycontrolledbyinvestment

fundsaffiliatedwithKohlbergKravisRoberts&Co.L.P.,orKKR.InNovember2009ourcommonstockagainbecame

publiclytradedontheNewYorkStockExchangeunderthesymbol“DG”,andinDecember2013theentitycontrolledby

investmentfundsaffiliatedwithKKRsolditsremainingsharesofourcommonstock.

OurBusinessModel

Ourlonghistoryofprofitablegrowthisfoundedonacommitmenttoarelativelysimplebusinessmodel:

providingabroadbaseofcustomerswiththeirbasiceverydayandhouseholdneeds,supplementedwithavarietyof

generalmerchandiseitems,ateverydaylowpricesinconvenientlylocated,small-boxstores.Wecontinuallyevaluatethe

needsanddemandsofourcustomersandmodifyourmerchandiseselectionsandpricingaccordingly,whileremaining

focusedonincreasingprofitability,cashgenerationandreturnsforourshareholders.

Ourlong-termoperatingprioritiesremain:1)drivingprofitablesalesgrowth,2)capturinggrowthopportunities,

3)enhancingourpositionasalow-costoperator,and4)investinginourpeopleasacompetitiveadvantage.Formore

informationontheseoperatingpriorities,seethe“ExecutiveOverview”sectionofManagement’sDiscussionandAnalysis

ofFinancialConditionandResultsofOperations,includedinPartII,Item7ofthisreport.

In2019,weachievedour30thconsecutiveyearofpositivesame-storesalesgrowth.Webelievethatthisgrowth,

whichhastakenplaceinavarietyofeconomicconditions,isaresultofourcompellingvalueandconvenience

proposition,althoughnoassurancescanbegiventhatwewillcontinuetoachievepositivesame-storesalesgrowthinany

givenyear.

Compelling Value and Convenience Proposition.Ourabilitytodeliverhighlycompetitivepricesinconvenient

locationsandoureasy“inandout”shoppingformatcreateacompellingshoppingexperiencethatwebelievedistinguishes

usfromotherdiscountretailersaswellasconvenience,drug,grocery,onlineandmassmerchantretailers.Ourslogan

“Savetime.Savemoney.Everyday!”summarizesourappealtocustomers.Webelieveourabilitytoeffectivelydeliver

bothvalueandconvenienceallowsustosucceedinsmallmarketswith

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limitedshoppingalternatives,aswellasinlargerandmorecompetitivemarkets.Ourvalueandconveniencepropositionis

evidencedbythefollowingattributesofourbusinessmodel:

● Everyday Low Prices on Quality Merchandise. Ourresearchindicatesthatweofferapriceadvantage

overmostfoodanddrugretailersandthatourpricesarecompetitivewitheventhelargestdiscount

retailers.Ourabilitytooffereverydaylowpricesonqualitymerchandiseissupportedbyourlow-cost

operatingstructureandourstrategytomaintainalimitednumberofitemspermerchandisecategory,

whichwebelievehelpsusmaintainstrongpurchasingpower.Weoffernationallyadvertisedbrandsat

theseeverydaylowpricesinadditiontoofferingourownprivatebrandsatsubstantiallylowerprices.

● Convenient Locations. Ourstoresareconvenientlylocatedinavarietyofrural,suburbanandurban

communities.Weseektolocateourstoresincloseproximitytoourcustomers,whichhelpsdrive

customerloyaltyandtripfrequencyandmakesusanattractivealternativetolargediscountandother

large-boxretailandgrocerystores.

● Time-Saving Shopping Experience. Westrivetoprovidecustomerswithahighlyconvenient,easyto

navigateshoppingexperience.Oursmall-boxstoresmakeiteasiertogetinandoutquickly.Our

productofferingincludesmostnecessities,suchasbasicpackagedandrefrigeratedorfrozenfoodand

dairyproducts,cleaningsupplies,paperproducts,healthandbeautycareitems,tobaccoproducts,

greetingcardsandotherstationeryitems,basicapparel,housewares,hardwareandautomotivesupplies,

amongothers.Ourconvenienthoursandbroadmerchandiseofferingallowourcustomerstofulfilltheir

requirementsforbasicgoodsandminimizetheirneedtoshopelsewhere.

Substantial Growth Opportunities.Webelievewehavesubstantiallong-termgrowthpotentialintheU.S.,and

wehaveidentifiedsignificantopportunitiestoaddnewstoresinbothexistingandnewmarkets.Inaddition,wehave

opportunitiestorelocateorremodellocationswithinourexistingstorebasetobetterserveourcustomers.Ourattractive

storeeconomics,includingarelativelylowinitialinvestmentandsimple,low-costoperatingmodel,haveallowedusto

growourstorebasetocurrentlevelsandprovideussignificantopportunitiestocontinueourprofitablestoregrowth

strategy.

OurMerchandise

Weofferafocusedassortmentofeverydaynecessities,whichwebelievehelpstodrivefrequentcustomervisits,

andkeyitemsinabroadrangeofgeneralmerchandisecategories.Ourproductassortmentprovidestheopportunityforour

customerstoaddressmostoftheirbasicshoppingneedswithonetrip.Weofferawideselectionofnationallyadvertised

brandsfromleadingmanufacturers.Additionally,ourprivatebrandproductsofferevengreatervaluewithoptionsto

purchasebothproductsthatareofcomparablequalitytonationalbrandsaswellasopeningpricepointitems,eachat

substantialdiscountstothenationalbrands.

Consumablesisourlargestmerchandisecategoryandhascontinuedtobecomealargerpercentageofourtotal

salesasindicatedinthetablebelow.Consumablesincludepaperandcleaningproducts(suchaspapertowels,bathtissue,

paperdinnerware,trashandstoragebags,andlaundry);packagedfood(suchascereals,cannedsoupsandvegetables,

condiments,spices,sugarandflour);perishables(suchasmilk,eggs,bread,refrigeratedandfrozenfood,beerandwine);

snacks(suchascandy,cookies,crackers,saltysnacksandcarbonatedbeverages);healthandbeauty(suchasover-the-

countermedicinesandpersonalcareproductsincludingsoap,bodywash,shampoo,cosmetics,dentalhygieneandfoot

careproducts);pet(suchaspetsuppliesandpetfood);andtobaccoproducts.

Seasonalproductsincludeholidayitems,toys,batteries,smallelectronics,greetingcards,stationery,prepaid

phonesandaccessories,gardeningsupplies,hardware,automotiveandhomeofficesupplies.

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Homeproductsincludekitchensupplies,cookware,smallappliances,lightbulbs,storagecontainers,frames,

candles,craftsuppliesandkitchen,bedandbathsoftgoods.

Apparelincludescasualeverydayapparelforinfants,toddlers,girls,boys,womenandmen,aswellassocks,

underwear,disposablediapers,shoesandaccessories.

Thepercentageofnetsalesofeachofourfourcategoriesofmerchandiseforthefiscalyearsindicatedbelowwas

asfollows:

 2019  2018  2017 

Consumables  78.0 % 77.5 % 76.9 %

Seasonal  11.7 % 11.9 % 12.1 %

Homeproducts  5.8 % 5.9 % 6.0 %

Apparel  4.5 % 4.7 % 5.0 %

Ourseasonalandhomeproductscategoriestypicallyaccountforthehighestgrossprofitmargins,andthe

consumablescategorytypicallyaccountsforthelowestgrossprofitmargin.

TheDollarGeneralStore

ThetypicalDollarGeneralstoreisoperatedbyastoremanager,oneormoreassistantstoremanagers,andthree

ormoresalesassociates.Ourstoresgenerallyfeaturealow-cost,nofrillsbuildingwithlimitedmaintenancecapital,low

operatingcosts,andafocusedmerchandiseofferingwithinabroadrangeofcategories,allowingustodeliverlowretail

priceswhilegeneratingstrongcashflowsandcapitalinvestmentreturns.Ourstoresaverageapproximately7,400square

feetofsellingspace,andapproximately75%ofourstoresarelocatedintownsof20,000orfewerpeople.Wegenerally

havehadgoodsuccessinlocatingsuitablestoresitesinthepast,andwebelievethatthereisampleopportunityfornew

storegrowthinexistingandnewmarkets.Inaddition,webelievewehavesignificantopportunitiesavailableforour

relocationandremodelprograms.

Ourstoregrowthoverthepastthreeyearsissummarizedinthefollowingtable:

 Storesat    Net  

Beginning Stores Stores Store Storesat 

Year ofYear Opened Closed Increase EndofYear

2017  13,320  1,315  101  1,214  14,534

2018  14,534  900  64  836  15,370

2019  15,370  975  67  908  16,278

OurCustomers

Ourcustomersseekvalueandconvenience.Dependingontheirfinancialsituationandgeographicproximity,

customers’relianceonDollarGeneralvariesfromfill-inshopping,tomakingperiodictripstostockuponhousehold

items,tomakingweeklyormorefrequenttripstomeetmostessentialneeds.Wegenerallylocateourstoresandplanour

merchandiseselectionstobestservetheneedsofourcorecustomers,thelowandfixedincomehouseholdsoften

underservedbyotherretailers,andwearefocusedonhelpingthemmakethemostoftheirspendingdollars.Atthesame

time,however,DollarGeneralshoppersfromawiderangeofincomebracketsandlifestagesappreciateourquality

merchandiseaswellasourattractivevalueandconvenienceproposition.

OurSuppliers

Wepurchasemerchandisefromawidevarietyofsuppliersandmaintaindirectbuyingrelationshipswithmany

producersofnationalbrandmerchandise.Despiteourbroadoffering,wemaintainonlyalimitednumberofitemsper

category,allowingustokeepouraveragecostslow.Ourtwolargestsupplierseachaccountedfor

TableofContents

approximately8%ofourpurchasesin2019.Ourprivatebrandscomefromawidevarietyofsuppliers.Wedirectly

importedapproximately6%ofourpurchasesatcostin2019.

Weconsistentlyhavebeenabletoobtainsufficientquantitiesofcoremerchandiseandbelievethat,ifoneor

moreofourcurrentsourcesofsupplybecameunavailable,wegenerallywouldbeabletoobtainalternativesources;

however,suchalternativesourcescouldincreaseourmerchandisecostsandsupplychainleadtimeandexpenses,resultin

atemporaryreductioninstoreinventorylevels,reduceourselection,orreducethequalityofourmerchandise,andan

inabilitytoobtainalternativesourcescouldadverselyaffectoursales.

DistributionandTransportation

Ourstoresarecurrentlysupportedbydistributioncentersfornon-refrigeratedmerchandiselocatedstrategically

throughoutourgeographicfootprint.Weleaseadditionaltemporarywarehousespaceasnecessarytosupportour

distributionneeds.Inadditiontoourtraditionaldistributioncenters,wenowoperatemultipletemperature-controlled

distributionfacilitiesinsupportof“DGFresh”,ourstrategic,multi-phasedshifttoself-distributionoffrozenand

refrigeratedgoods,suchasdairy,deliandfrozenproducts.Weregularlyanalyzeandrebalancethenetworktoensurethat

itremainsefficientandprovidestheservicelevelsourstoresrequire.See“—Properties”below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.Wealsoownmorethan300semi-trailertruckswithwhichwetransportour

merchandise.Inaddition,vendorsorthird-partydistributorsdeliverorshipcertainfooditemsandothermerchandise

directlytoourstores.

Seasonality

Ourbusinessissomewhatseasonal.Generally,ourmostprofitablesalesmixoccursinthefourthquarter,which

includestheChristmassellingseason.Inaddition,ourquarterlyresultscanbeaffectedbythetimingofcertainholidays,

newstoreopenings,remodels,relocationsandstoreclosings.Wetypicallypurchasesubstantialamountsofinventoryand

incurhighershippingandpayrollcostsinthethirdquarterinanticipationofincreasedsalesactivityduringthefourth

quarter.SeeNote12totheconsolidatedfinancialstatementsforadditionalinformation.

OurCompetition

Weoperateinthebasicdiscountconsumergoodsmarket,whichishighlycompetitivewithrespecttoprice,

customers,storelocation,merchandisequality,assortmentandpresentation,serviceofferings,in-stockconsistency,

customerservice,promotionalactivity,employees,andmarketshare.Wecompetewithdiscountstoresandmanyother

retailers,includingmassmerchandise,warehouseclub,grocery,drug,convenience,variety,online,andcertainspecialty

stores.Theseotherretailcompaniesoperatestoresinmanyoftheareaswhereweoperate,andmanyofthemengagein

extensiveadvertisingandmarketingefforts.OurdirectcompetitorsincludeFamilyDollar,DollarTree,BigLots,99Cents

Onlyandvariouslocal,independentoperators,aswellasWalmart,Target,Kroger,Aldi,Lidl,Walgreens,CVS,and

RiteAid,amongothers.Certainofourcompetitorshavegreaterfinancial,distribution,marketingandotherresourcesthan

wedoandmaybeabletosecurebetterarrangementsfromsuppliersthanwecan.Competitionisintenseandwebelieveit

willcontinuetobeso,withcertaincompetitorsreducingtheirstorelocationswhileothersmoveintoorincreasetheir

presenceinourgeographicandproductmarketsandincreasetheavailabilityofmobile,web-basedandotherdigital

technologytofacilitateamoreconvenientandcompetitivecustomeronlineandin-storeshoppingexperience.

Webelievethatwedifferentiateourselvesfromotherformsofretailingbyofferingconsistentlylowpricesina

convenient,small-storeformat.Weareabletomaintaincompetitivepricesdueinparttoourlow-costoperatingstructure

andtherelativelylimitedassortmentofproductsoffered.Purchasinglargevolumesofmerchandisewithinourfocused

assortmentineachmerchandisecategoryallowsustokeepouraverageproduct

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costslow,contributingtoourabilitytooffercompetitiveeverydaylowpricestoourcustomers.See“—OurBusiness

Model”aboveforfurtherdiscussionofourcompetitivesituation.

OurEmployees

AsofFebruary28,2020,weemployedapproximately143,000full-timeandpart-timeemployees,including

divisionalandregionalmanagers,districtmanagers,storemanagers,otherstorepersonnelanddistributioncenterand

administrativepersonnel.Wehaveincreasinglyfocusedonrecruiting,training,motivatingandretainingemployees,and

webelievethatthequality,performanceandmoraleofouremployeescontinuetobeanimportantpartofoursuccessin

recentyears.Webelieveouroverallrelationshipwithouremployeesisgood.

OurTrademarks

WeownmarksthatareregisteredwiththeUnitedStatesPatentandTrademarkOfficeandareprotectedunder

applicableintellectualpropertylaws.Weattempttoobtainregistrationofourtrademarkswheneverpracticableandto

pursuevigorouslyanyinfringementofthosemarks.Ourtrademarkregistrationshavevariousexpirationdates;however,

assumingthatthetrademarkregistrationsareproperlyrenewed,theyhaveaperpetualduration.Wealsoholdanexclusive

licensetotheRexallbrandthroughatleastMarch5,2026andtheBelieveBeautybrandthroughatleastMarch23,2022.

AvailableInformation

OurInternetwebsiteaddressiswww.dollargeneral.com.Theinformationonourwebsiteisnotincorporatedby

referenceinto,andisnotapartof,thisForm10-K.WefilewithorfurnishtotheSecuritiesandExchangeCommission

(the“SEC”)annualreportsonForm10-K,quarterlyreportsonForm10-Q,currentreportsonForm8-K,andamendments

tothosereports,proxystatementsandannualreportstoshareholders,and,fromtimetotime,registrationstatementsand

otherdocuments.ThesedocumentsareavailablefreeofchargetoinvestorsonorthroughtheInvestorInformationsection

ofourwebsiteassoonasreasonablypracticableafterweelectronicallyfilethemwithorfurnishthemtotheSEC.The

SECalsomaintainsaninternetsitethatcontainsreports,proxyandinformationstatementsandotherinformation

regardingissuers,suchasDollarGeneral,thatfileelectronicallywiththeSEC.Theaddressofthatwebsiteis

http://www.sec.gov.

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ITEM1A. RISKFACTORS

InvestmentinourCompanyinvolvesrisks.Youshouldcarefullyconsidertherisksdescribedbelowandtheother

informationinthisreportandotherfilingsthatwemakefromtimetotimewiththeSEC,includingourconsolidated

financialstatementsandaccompanyingnotes.Anyofthefollowingriskscouldmateriallyandadverselyaffectour

business,financialcondition,resultsofoperationsorliquidity.Theserisksarenottheonlyrisksweface.Ourbusiness,

financialcondition,resultsofoperationsorliquiditycouldalsobeadverselyaffectedbyadditionalfactorsthatapplytoall

companiesgenerallyorbyrisksnotcurrentlyknowntousorthatwecurrentlyviewtobeimmaterial.Wecanprovideno

assuranceandmakenorepresentationthatourriskmitigationefforts,althoughwebelievetheyarereasonable,willbe

successful.

Economic factors may reduce our customers’ spending, impair our ability to execute our strategies and

initiatives, and increase our costs and expenses, which could result in materially decreased sales or profitability.

Manyofourcustomershavefixedorlowincomesandlimiteddiscretionaryspendingdollars.Anyfactorthat

couldadverselyaffecttheirdisposableincomecoulddecreaseourcustomers’spendingorcausethemtoshifttheir

spendingtoourlowermarginproductchoices,whichcouldresultinmateriallydecreasedsalesandprofitability.Factors

thatcouldreduceourcustomers’disposableincomeincludebutarenotlimitedtohighunemploymentor

underemploymentlevelsordeclineinrealwages;inflation;higherfuel,energy,healthcareandhousingcosts,interest

rates,consumerdebtlevels,andtaxrates;taxlawchangesthatnegativelyaffectcreditsandrefunds;lackofavailable

credit;anddecreasesin,oreliminationof,governmentsubsidiessuchasunemploymentandfoodassistanceprograms.

Manyoftheeconomicfactorslistedabove,aswellascommodityrates;transportation,leaseandinsurancecosts;

wagerates;foreignexchangeratefluctuations;measuresthatcreatebarrierstoorincreasethecostsofinternationaltrade

(includingincreasedimportdutiesortariffs);changesinapplicablelawsandregulations;andothereconomicfactors,also

couldimpairourabilitytosuccessfullyexecuteourstrategiesandinitiatives,aswellasincreaseourcostofgoodssoldand

selling,generalandadministrativeexpenses(includingrealestatecosts),andmayhaveotheradverseconsequencesthat

weareunabletofullyanticipateorcontrol,allofwhichmaymateriallydecreaseoursalesorprofitability.

Our plans depend significantly on strategies and initiatives designed to increase sales and profitability and

improve the efficiencies, costs and effectiveness of our operations, and failure to achieve or sustain these plans could

materially affect our results of operations.

Wehaveshort-termandlong-termstrategiesandinitiatives(suchasthoserelatingtomerchandising,realestate

andnewstoredevelopment,storeformats,digital,shrink,sourcing,privatebrand,inventorymanagement,supplychain,

storeoperations,expensereduction,andtechnology)invariousstagesoftesting,evaluation,andimplementation,which

aredesignedtocontinuetoimproveourresultsofoperationsandfinancialcondition.Theeffectivenessoftheseinitiatives

isinherentlyuncertain,evenwhentestedsuccessfully,andisdependentonconsistencyoftrainingandexecution,

workforcestability,easeofexecution,andtheabsenceofoffsettingfactorsthatcaninfluenceresultsadversely.Manyof

thesefactorsaremadeevenmorechallengingbythenumberanddiversegeographiclocationsofourstoresand

distributioncentersandourdecentralizedfieldmanagement.Otherriskfactorsdescribedhereinalsocouldnegatively

affectgeneralimplementation.Failuretoachievesuccessfulorcost-effectiveimplementationofourinitiativescould

materiallyadverselyaffectourbusiness,resultsofoperationsandfinancialcondition.

Thesuccessofourmerchandisinginitiatives,particularlyournon-consumableinitiativesandeffortstoincrease

salesofhighermarginproductswithintheconsumablescategory,furtherdependsinpartuponourabilitytopredictthe

productsthatourcustomerswilldemandandtoidentifyandtimelyrespondtoevolvingtrendsindemographicmixesin

ourmarketsandconsumerpreferences.Ifweareunabletoselectandtimelyobtain

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productsthatareattractivetocustomersandatcoststhatallowustosellthematanacceptableprofit,ortoeffectively

marketsuchproducts,itcouldresultinmateriallydecreasedsalesandprofitability.

ThesuccessofourDGFreshinitiative,ourcoldchainself-distributioninitiative,furtherdependsinpartonour

abilitytoeffectivelytransitionthesedistributionoperationsfromourcurrentserviceproviderswithoutbusinessdisruption,

aswellasontheavailabilityofcertainsupplychainresources,includingtemperature-controlleddistributioncenters,

refrigeratedtransportationequipment,anddrivers.ThesuccessofourFastTrackinitiative,whichisdesignedtoenhance

ourin-storelaborproductivity,on-shelfavailabilityandcustomerconvenience,furtherdependsinpartoncustomer

interestandadoptionofself-checkout,ourabilitytogaincostefficienciesandcontrolshrinklevelsfromtheinitiative,

vendorcooperation,andsuccessfulimplementationandmaintenanceofthenecessarytechnology.

If we cannot timely and cost-effectively execute our real estate projects and meet our financial expectations, or

if we do not anticipate or successfully address the challenges imposed by our expansion, including into new states or

urban areas, it could materially impede our planned future growth and our profitability.

Delaysinorfailuretocompleteasignificantportionofourrealestateprojects,orfailuretomeetourfinancial

expectationsfortheseprojects,couldmateriallyadverselyaffectourgrowthandourprofitability.Ourabilitytotimely

open,relocateandremodelprofitablestoresandexpandintoadditionalmarketareasisakeycomponentofourplanned

futuregrowthandmaydependinparton:theavailabilityofsuitablestorelocationsandcapitalfunding;theabsenceof

entitlementprocessoroccupancydelays,includingzoningrestrictionsandmoratoriaonsmallboxdiscountretail

developmentpassedbylocalgovernments;theabilitytonegotiateacceptableleaseanddevelopmentterms(forexample,

realestatedevelopmentrequirementsandcostofbuildingmaterialsandlabor),tocost-effectivelyhireandtrainnew

personnel,especiallystoremanagers,andtoidentifyandaccuratelyassesssufficientcustomerdemand;andgeneral

economicconditions.

Wealsomaynotanticipateorsuccessfullyaddressallofthechallengesimposedbytheexpansionofour

operations,includingintonewstatesorurbanareaswherewehavelimitedornomeaningfulexperienceorbrand

recognition.Thoseareasmayhavedifferentcompetitiveandmarketconditions,consumertastesanddiscretionary

spendingpatternsthanourexistingmarkets,aswellashighercostofentryandoperatingcosts.Thesefactorsmaycause

ournewstorestobelessprofitablethanstoresinourexistingmarkets,whichcouldslowfuturegrowthintheseareas.In

addition,manynewstoreswillbelocatedinareaswherewehaveexistingstores,whichinadvertentlymaytemporarilyor

permanentlydivertalargerthananticipatednumberofcustomersandsalesfromourexistingstores,therebyadversely

affectingouroverallfinancialperformance.

We face intense competition that could limit our growth opportunities and materially adversely affect our

results of operations and financial condition.

Theretailbusinessishighlycompetitivewithrespecttoprice,customers,storelocation,merchandisequality,

productassortmentandpresentation,serviceofferings,in-stockconsistency,customerservice,easeofshopping

experience,promotionalactivity,employees,andmarketshare.Wecompetewithdiscountstoresandmanyotherretailers,

includingmassmerchandise,warehouseclub,grocery,drug,convenience,variety,onlineretailers,andcertainspecialty

stores.Tomaintainourcompetitiveposition,wemayberequiredtolowerprices,eithertemporarilyorpermanently,and

mayhavelimitedabilitytoincreasepricesinresponsetoincreasedcosts,resultinginlowermarginsandreduced

profitability.Certainofourcompetitorshavegreaterfinancial,distribution,marketingandotherresources,andmaybe

abletosecurebetterarrangementswithsuppliers,thanwecan.

Competitionisintense,andisexpectedtocontinuetobeso,withcertaincompetitorsreducingtheirstore

locationswhileothersenterorincreasetheirpresenceinourgeographicandproductmarkets(includingthroughthe

expansionofavailabilityofdeliveryservices)andexpandavailabilityofmobile,web-basedandotherdigital

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technologiestofacilitateamoreconvenientandcompetitiveonlineandin-storeshoppingexperience.Ifourcompetitorsor

othersweretoenterourindustryinasignificantway,includingthroughalliancesorotherbusinesscombinations,itcould

significantlyalterthecompetitivedynamicsoftheretailmarketplaceandresultincompetitorswithgreatlyimproved

competitivepositions,whichcouldmateriallyaffectourfinancialperformance.Ourabilitytoeffectivelycompetewill

dependsubstantiallyuponourcontinuedabilitytodevelopandexecutecompellingandcost-effectivestrategiesand

initiatives.Ifwefailtoanticipateorrespondeffectivelytocompetitivepressuresandindustrychanges,itcouldmaterially

affectourresultsofoperationsandfinancialcondition.

Inventory shrinkage may negatively affect our results of operations and financial condition.

Weexperiencesignificantinventoryshrinkage.Althoughsomelevelofinventoryshrinkageisanunavoidable

costofdoingbusiness,higherratesofinventoryshrinkageorincreasedsecurityorothercoststocombatinventorytheft

couldadverselyaffectourresultsofoperationsandfinancialcondition.Therecanbenoassurancethatwewillbe

successfulinoureffortstoreduceinventoryshrinkage.

Our cash flows from operations, profitability and financial condition may be negatively affected if we are not

successful in managing our inventory balances.

Ourinventorybalancerepresentedapproximately55%ofourtotalassetsexclusiveofgoodwill,operatinglease

assets,andotherintangibleassetsasofJanuary31,2020.Efficientinventorymanagementisakeycomponentofour

businesssuccessandprofitability.Wemustmaintainsufficientinventorylevelsandanappropriateproductmixtomeet

ourcustomers’demandswithoutallowingthoselevelstoincreasesuchthatthecoststostoreandholdthegoodsunduly

impactsourfinancialresultsorincreasestheriskofinventoryshrinkage.Ifwedonotaccuratelypredictcustomertrends,

spendinglevels,orpricesensitivity,wemayhavetotakeunanticipatedmarkdownstodisposeoftheexcessinventory,

whichalsocanadverselyaffectourfinancialresults.Wecontinuetofocusonwaystoreducetheserisks,butwecannot

makeassurancesthatwewillbesuccessfulinourinventorymanagement.Ifwearenotsuccessfulinmanagingour

inventorybalances,ourcashflowsfromoperationsandfinancialconditionmaybenegativelyaffected.

Failure to maintain the security of our business, customer, employee or vendor information or to comply with

privacy laws could expose us to litigation, government enforcement actions and costly response measures, and could

materially harm our reputation and affect our business and financial performance.

Inconnectionwithsales,wetransmitconfidentialcreditanddebitcardinformationwhichisencryptedusing

point-to-pointencryption.Wealsohaveaccessto,collectormaintaincertainprivateorconfidentialinformationregarding

ourcustomers,employeesandtheirdependents,andvendors,aswellasourbusiness.Someofthisinformationisstored

electronicallyinconnectionwithoure-commerceandmobileapplications,someofwhichmayleveragethird-party

serviceproviders.Additionally,wemayshareinformationwithselectvendorsthatassistusinconductingourbusiness.

Whilewehaveimplementedproceduresandtechnologyintendedtoprotectsuchinformationandrequireappropriate

controlsofourserviceproviders,cyberattackerscouldcompromisesuchcontrolsandobtainsuchinformation,as

cyberattacksarebecomingincreasinglysophisticatedanddonotalwaysimmediatelyproducesignsofintrusion.

Moreover,inadvertentormaliciousemployeeactionscouldresultinadefeatofsecuritymeasuresandcompromiseouror

ourthird-partyvendors’informationsystems.Likeotherretailers,weandourvendorshaveexperiencedthreatstodataand

systems,includingbyperpetratorsofattemptedrandomortargetedmaliciouscyberattacks,computerviruses,worms,bot

attacksorotherdestructiveordisruptivesoftwareandattemptstomisappropriateourinformationandcausesystem

failuresanddisruptions.Ifcyberattackersobtaincustomer,employeeorvendorpasswordsthroughunrelatedthird-party

breaches,thesepasswordscouldbeusedtogainaccesstotheirinformationoraccountswithus.

Becauseweacceptdebitandcreditcardsforpayment,wearesubjecttoindustrydataprotectionstandardsand

protocols,suchasthePaymentCardIndustryDataSecurityStandards,issuedbythePaymentCard

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IndustrySecurityStandardsCouncil.Nonetheless,wemaybevulnerableto,andunabletodetectandappropriately

respondto,datasecuritybreachesanddataloss,includingcybersecurityattacksorotherbreachesofcardholderdata.

Asignificantsecuritybreachofanykindexperiencedbyusoroneofourvendors,whichcouldbeundetectedfor

aperiodoftime,orasignificantfailurebyusoroneofourvendorstocomplywithapplicableprivacyandinformation

securitylaws,regulationsandstandardscouldexposeustorisksofdataloss,litigation,governmentenforcementactions,

finesorpenalties,creditcardbrandassessments,negativepublicityandreputationalharm,businessdisruptionandcostly

responsemeasures(forexample,providingnotificationto,andcreditmonitoringservicesfor,affectedindividuals,aswell

asfurtherupgradestooursecuritymeasures)whichmaynotbecoveredbyormayexceedthecoveragelimitsofour

insurancepolicies,andcouldmateriallydisruptouroperations.Anyresultingnegativepublicitycouldsignificantlyharm

ourreputationwhichcouldcauseustolosemarketshareasaresultofcustomersdiscontinuingtheuseofoure-commerce

andmobileapplicationsordebitorcreditcardsinourstoresornotshoppinginourstoresaltogetherandcouldmaterially

adverselyaffectourbusinessandfinancialperformance.

Material damage or interruptions to our information systems as a result of external factors, staffing shortages

or challenges in maintaining or updating our existing technology or developing or implementing new technology could

materially adversely affect our business and results of operations.

Wedependonavarietyofinformationtechnologysystems,includingsystemsownedandmanagedbythird-

partyvendors,fortheefficientfunctioningofourbusiness,including,withoutlimitation,transactionprocessingandthe

managementofouremployees,facilities,logistics,inventories,storesandcustomer-facingdigitalapplicationsand

operations.Ourtechnologyinitiativesmaynotdeliverdesiredresultsormaydosoonadelayedschedule.Additionally,

suchsystemsaresubjecttodamageorinterruptionfrompowersurgesandoutages,facilitydamage,physicaltheft,

computerandtelecommunicationsfailures,inadequateorineffectiveredundancy,maliciouscode(includingcomputer

viruses,worms,ransomware,orsimilar),cyberattacks(includingaccountcompromise;phishing;denialofserviceattacks;

andapplication,networkorsystemvulnerabilityexploitation),softwareupgradefailuresorcodedefects,naturaldisasters

andhumanerror.Designdefectsordamageorinterruptiontothesesystemsmayrequireasignificantinvestmenttofixor

replace,disruptouroperations,resultinthelossorcorruptionofcriticaldata,andharmourreputation,allofwhichcould

materiallyadverselyaffectourbusinessorresultsofoperations.

Wealsorelyheavilyonourinformationtechnologystaff.Failuretomeetthesestaffingneedsmaynegatively

affectourabilitytofulfillourtechnologyinitiativeswhilecontinuingtoprovidemaintenanceonexistingsystems.Werely

onthirdpartiestomaintainandperiodicallyupgrademanyofthesesystemssothattheycancontinuetosupportour

business.Welicensethesoftwareprogramssupportingmanyofoursystemsfromindependentsoftwaredevelopers.The

inabilityofthesevendors,developersorustocontinuetomaintainandupgradethesesystemsandsoftwareprograms

coulddisruptorreducetheefficiencyofouroperationsifwewereunabletoconverttoalternatesystemsinanefficient

andtimelymannerandcouldexposeustogreaterriskofacyberattack.Inaddition,costsanddelaysassociatedwiththe

implementationofneworupgradedsystemsandtechnology,includingthemigrationofapplicationstothecloud,orwith

maintenanceoradequatesupportofexistingsystemsalsocoulddisruptorreducetheefficiencyofouroperations,failto

operateasdesigned,resultinthepotentiallossorcorruptionofdataorinformation,disruptoperationsandaffectour

abilitytomeetbusinessandreportingrequirementsandadverselyaffectourprofitability.

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A significant disruption to our distribution network, the capacity of our distribution centers or the timely

receipt of inventory could adversely affect sales or increase our transportation costs, which would decrease our

profitability.

Werelyonourdistributionandtransportationnetworktoprovidegoodstoourstorestimelyandcost-effectively.

Usingvarioustransportationmodes,includingocean,rail,andtruck,weandourvendorsmovegoodsfromvendor

locationstoourdistributioncentersandourstores.Anydisruption,unanticipatedorunusualexpenseoroperationalfailure

relatedtothisprocess(forexample,deliverydelays,includingasaresultofpandemicoutbreaks,orincreasesin

transportationcosts,includingincreasedfuelcosts,importfreightcosts,carrierordriverwagesasaresultofdriver

shortages;adecreaseintransportationcapacityforoverseasshipments;laborshortages;orworkstoppagesforslowdowns)

couldnegativelyimpactsalesandprofits.Laborshortagesorworkstoppagesinthetransportationindustryordisruptions

tothenationalandinternationaltransportationinfrastructurethatleadtodeliverydelaysorthatnecessitateoursecuring

alternativelabororshippingsupplierscouldalsoincreaseourcostsorotherwisenegativelyaffectourbusiness.Therecent

outbreakofthestrainofCOVID-19hasledvariousgovernmentstotakeprecautionarymeasurestolimitthespreadofthe

virus,includingportclosuresandotherrestrictions,whichcoulddisrupttheglobaltransportationanddistributionofgoods

resultinginproductdeliverydelaysorhigherdeliveryprices.Asofthedateofthisfiling,wedonotanticipatethatsupply

chaindisruptionseitherknownorexperiencedtodateasaresultoftheCOVID-19outbreakarelikelytohaveamaterial

impactonourfinancialresultsin2020.However,theextenttowhichtheCOVID-19outbreakmayimpactourdistribution

network,resultsofoperations(includingsales)orbusinessinthefutureisuncertainasthesituationcontinuestoevolve,

andsuchimpactcouldbemoresignificant.

Wemaintainanetworkofdistributionfacilitiesandaremovingforwardwithplanstobuildorleasenewfacilities

tosupportourgrowthobjectivesandstrategicinitiatives.Delaysinopeningsuchfacilitiescouldadverselyaffectour

financialperformancebyslowingstoregrowthortherolloutofcertainstrategicinitiativessuchasourDGFreshinitiative,

whichmayinturnreducerevenuegrowth,orbyincreasingtransportationandproduct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.Forthesereasons,the

completiondateandultimatecostoftheseprojectscoulddiffersignificantlyfrominitialexpectations,and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.

Wesourceourmerchandisefromawidevarietyofdomesticandinternationalsuppliers,andwedependonthem

tosupplymerchandiseinatimelyandefficientmanner.In2019,ourtwolargestsupplierseachaccountedfor

approximately8%ofourpurchases.Ifoneormoreofourcurrentsourcesofsupplybecameunavailable,webelievewe

generallywouldbeabletoobtainalternativesources,butitcouldincreaseourmerchandisecostsandsupplychainlead

time,resultinatemporaryreductioninstoreinventorylevels,andreducetheselectionandqualityofourmerchandise.An

inabilitytoobtainalternativesourcescouldmateriallydecreaseoursales.Additionally,ifasupplierfailstodeliveronits

commitments,wecouldexperiencemerchandiseout-of-stocksthatcouldleadtolostsalesandreputationalharm.Further,

failureofsupplierstomeetourcomplianceprotocolscouldprolongourprocurementleadtime,resultinginlostsalesand

adversemarginimpact.

Wedirectlyimportedapproximately6%ofourpurchases(measuredatcost)in2019,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unrest,actsofwar,currencyfluctuations,disruptionsinmaritimelanes,portlabordisputes,

economicconditionsandinstabilityincountriesinwhichforeignsuppliersarelocated,thefinancialinstabilityof

suppliers,failuretomeetourstandards,issueswithoursuppliers’laborpractices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,pandemicoutbreaks,merchandisequalityorsafetyissues,transportavailabilityand

cost,increasesinwageratesandtaxes,transport

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security,inflation,andotherfactorsrelatingtosuppliersandthecountriesinwhichtheyarelocatedorfromwhichthey

import,oftenarebeyondourcontrolandcouldadverselyaffectouroperationsandprofitability.

Whileweareworkingtodiversifyoursourcesofimportedgoods,asubstantialamountofourimported

merchandisecomesfromChina,andthus,achangeintheChineseleadership,theeffectsofpandemicoutbreaksincluding

COVID-19,economicandmarketconditions,internaleconomicstimulusactions,orcurrencyorotherpolicies,aswellas

traderelationsbetweenChinaandtheUnitedStatesandincreasesincostsoflaborandwagetaxes,couldnegatively

impactourmerchandisecosts.WecurrentlyexpectdelaysinthereceiptofcertaingoodsasaresultoftheCOVID-19

outbreak,butasofthedateofthisfiling,wedonotanticipatethattheseknownsupplychaindisruptionsexperiencedto

dateasaresultoftheCOVID-19outbreakarelikelytohaveamaterialimpactonourfinancialresultsin2020.However,

theextenttowhichtheCOVID-19outbreakmayimpactoursupplychain,resultsofoperations(includingsales)or

businessinthefutureisuncertainasthesituationcontinuestoevolve,andsuchimpactcouldbemoresignificant.In

addition,theUnitedStates’foreigntradepolicies,duties,tariffsandotherimpositionsonimportedgoods,tradesanctions

imposedoncertaincountries(particularlyChina),importlimitationsoncertaintypesofgoodsorofgoodscontaining

certainmaterialsfromothercountriesandotherfactorsrelatingtoforeigntradeandportlaboragreementsarebeyondour

control.Theseandotherfactorsaffectingoursuppliersandouraccesstoproductscouldadverselyaffectourbusinessand

financialperformance.Ifweincreaseourproductimportsfromforeignvendors,therisksassociatedwiththeseimports

alsowillincrease,andwemaybeexposedtoadditionalordifferentrisksasweincreaseimportsofgoodsproducedin

countriesotherthanChina.

Product liability, product recall or other product safety or labeling claims could adversely affect our business,

reputation and financial performance.

Wearedependentonourvendorstoensurethattheproductswebuyfromthemcomplywithapplicableproduct

safetyandlabelinglawsandregulationsandtoinformusofallapplicablerestrictionsonthesaleofsuchproducts.

Nonetheless,productliability,personalinjuryorotherclaimsmaybeassertedagainstusrelatingtoproduct

contamination,tampering,expiration,mislabeling,recallandothersafetyorlabelingissues,includingthoserelatingto

productsthatwemayself-distributethroughourDGFreshinitiative.

Weseekbutmaynotbesuccessfulinobtainingcontractualindemnificationandinsurancecoveragefromour

vendors.Ifwedonothaveadequatecontractualindemnificationorinsuranceavailable,suchclaimscouldmaterially

adverselyaffectourbusiness,financialconditionandresultsofoperations.Ourabilitytoobtainindemnificationfrom

foreignvendorsmaybehinderedbyourabilitytoobtainjurisdictionoverthemtoenforcecontractualobligations.Even

withadequateinsuranceandindemnification,suchclaimscouldsignificantlyharmourreputationandconsumer

confidenceinourproductsandwecouldincursignificantlitigationexpenses,whichalsocouldmateriallyaffectour

resultsofoperationsevenifaproductliabilityclaimisunsuccessfulornotfullypursued.

A significant change in governmental regulations and requirements could materially increase our cost of

doing business, and noncompliance with governmental regulations could materially adversely affect our financial

performance.

Weroutinelyincursignificantcostsincomplyingwithnumerousandfrequentlychanginglawsandregulations.

Thecomplexityofthisregulatoryenvironmentandrelatedcompliancecostsareincreasingduetoadditionallegaland

regulatoryrequirements,ourexpandingoperations,andincreasedregulatoryscrutinyandenforcementefforts.Newor

revisedlaws,regulations,policiesandrelatedinterpretationsandenforcementpractices,particularlythosedealingwith

environmentalcompliance,productandfoodsafetyorlabeling,informationsecurityandprivacy,laborandemployment,

employeewages,andthosegoverningthesaleofproducts,maysignificantlyincreaseourexpensesorrequireextensive

systemandoperatingchangesthatcouldmateriallyincreaseourcostofdoingbusiness.Violationsofapplicablelawsand

regulationsoruntimelyorincompleteexecutionofarequiredproductrecallcanresultinsignificantpenalties(including

lossoflicenses,eligibilitytoacceptcertaingovernmentbenefitssuchasSNAPorsignificantfines),classactionorother

litigation,

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andreputationaldamage.Additionally,changesintaxlaws,theinterpretationofexistinglaws,orourfailuretosustainour

reportingpositionsonexaminationcouldadverselyaffectouroveralleffectivetaxrate.

Legal proceedings may adversely affect our reputation, business, results of operations and financial condition.

Ourbusinessissubjecttotheriskoflitigationorotherlegalproceedingsbyemployees,consumers,suppliers,

competitors,shareholders,governmentagenciesandothersthroughprivateactions,classactions,multi-districtlitigation,

arbitrations,derivativeactions,administrativeproceedings,regulatoryactionsorotherlitigation.Forexample,weare

involvedincertainlegalproceedingsasdiscussedinNote7totheconsolidatedfinancialstatements.Theoutcomeoflegal

proceedings,particularlyclassactionormulti-districtlitigationormassarbitrationsandregulatoryactions,canbedifficult

toassessorquantify.Plaintiffsinthesetypesoflawsuitsmayseekrecoveryofverylargeorindeterminateamounts,and

themagnitudeofthepotentiallossmayremainunknownforlengthyperiods.Inaddition,certainofthesematters,if

decidedadverselytousorsettledbyus,mayresultinliabilitymaterialtoourfinancialstatementsasawholeormay

negativelyaffectouroperatingresultsifchangestoourbusinessoperationsarerequired,andsometimesthese

developmentsareunanticipated.Legalproceedingsingeneral,andclassactions,multi-districtlitigationandderivative

actionsinparticular,canbeexpensiveanddisruptive,andadversepublicitycouldharmourreputation,regardlessofthe

validityoftheallegations.Asaresult,legalproceedingsmayadverselyaffectourbusiness,resultsofoperationsand

financialcondition.SeealsoNote7totheconsolidatedfinancialstatements.

Our current insurance program may expose us to unexpected costs and negatively affect our financial

performance.

Ourinsurancecoveragereflectsdeductibles,self-insuredretentions,limitsofliabilityandsimilarprovisionsthat

webelieveareprudentbasedonouroperations.However,therearetypesoflosseswemayincurbutagainstwhichwe

cannotbeinsuredorwhichwebelievearenoteconomicallyreasonabletoinsure,suchaslossesduetoactsofwar,certain

crimes,includingemployeecrime,certainwageandhourandotheremployment-relatedclaimsandlitigation,actions

basedoncertainconsumerprotectionlaws,andsomenaturalandotherdisastersorsimilarevents.Ifweincurmaterial

uninsuredlosses,ourfinancialperformancecouldsuffer.Certainmaterialeventsmayresultinsizablelossesforthe

insuranceindustryandadverselyaffecttheavailabilityofadequateinsurancecoverageorresultinexcessivepremium

increases.Tooffsetnegativeinsurancemarkettrends,wemayelecttoself-insure,accepthigherdeductiblesorreducethe

amountofcoverage.Inaddition,weself-insureasignificantportionofexpectedlossesunderourworkers’compensation,

automobileliability,generalliability(includingclaimsmadeagainstcertainofourlandlords)andgrouphealthinsurance

programs.Significantchangesinactuarialassumptionsandmanagementestimatesunderlyingourrecordedliabilitiesfor

theselosses,includingexpectedincreasesinmedicalandindemnitycosts,couldresultinmateriallydifferentexpenses

thanexpectedundertheseprograms,whichcouldmateriallyadverselyaffectourresultsofoperationsandfinancial

condition.Althoughwemaintainpropertyinsuranceforcatastrophiceventsatourstoresupportcenteranddistribution

centers,weareeffectivelyself-insuredforotherpropertylosses.Ifweexperienceagreaternumberoftheselossesthanwe

anticipate,ourfinancialperformancecouldbeadverselyaffected.

Natural disasters and unusual weather conditions (whether or not caused by climate change), pandemic

outbreaks or other health crises, acts of violence or terrorism, and global political events could disrupt business and

result in lower sales and otherwise adversely affect our financial performance.

Theoccurrenceofoneormorenaturaldisasters,suchashurricanes,fires,floods,tornadoesandearthquakes,

unusualweatherconditions,pandemicoutbreaksorotherhealthcrises(includingbutnotlimitedtotheCOVID-19

outbreak),actsofviolenceorterrorism(includingwithinourstores,distributioncentersorotherCompanyproperty),or

disruptiveglobalpoliticalevents,suchascivilunrestincountriesinwhichoursuppliersarelocated,orsimilardisruptions

couldadverselyaffectourreputation,businessandfinancialperformance.Ifanyoftheseeventsresultintheclosureof

oneormoreofourdistributioncenters,asignificantnumberofstores,orourcorporateheadquartersorimpactoneor

moreofourkeysuppliers,ouroperationsandfinancial

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performancecouldbemateriallyadverselyaffectedthroughaninabilitytomakedeliveriesorprovideothersupport

functionstoourstoresandthroughlostsales.Theseeventsalsocouldaffectconsumershoppingpatternsorprevent

customersfromreachingourstores,whichcouldleadtolostsalesandhighermarkdowns,orresultinincreasesinfuelor

otherenergyprices,afuelshortage,storeordistributioncenteropeningdelays,thetemporarylackofanadequatework

forceinamarket,thetemporaryorlong-termdisruptionofproductavailabilityinourstores,thetemporaryorlong-term

inabilitytoobtaintechnologyneededtoeffectivelyrunourbusiness,anddisruptionofourutilityservicesorinformation

systems.Theseeventsmayalsoincreasethecostsofinsuranceiftheyresultinsignificantlossofpropertyorother

insurabledamage.

Failure to attract, train and retain qualified employees while controlling labor costs, as well as other labor

issues, could adversely affect our financial performance.

Ourfuturegrowthandperformance,positivecustomerexperienceandlegalandregulatorycompliancedepends

onourabilitytoattract,train,retainandmotivatequalifiedemployeeswhileoperatinginanindustrychallengedby

historicallyhighratesofemployeeturnover.Ourabilitytomeetourlaborneeds,whilecontrollingourlaborcosts,is

subjecttomanyexternalfactors,includingcompetitionforandavailabilityofqualifiedpersonnel,unemploymentlevels,

wagerates,minimumwagelaws,healthandotherinsurancecosts,changesinemploymentandlaborlawsorother

workplaceregulations(includingchangesinemployeebenefitprogramssuchashealthinsuranceandpaidleave

programs),employeeactivism,andourreputationandrelevancewithinthelabormarket.Ifweareunabletoattract,train

andretainadequatenumbersofqualifiedemployees,ouroperations,customerservicelevels,legalandregulatory

compliance,andsupportfunctionscouldsuffer.Inaddition,totheextentasignificantportionofouremployeebase

unionizes,orattemptstounionize,ourlaborandotherrelatedcostscouldincrease.Ourabilitytopassalonglaborand

otherrelatedcoststoourcustomersisconstrainedbyoureverydaylowpricemodel,andwemaynotbeabletooffsetsuch

increasedcostselsewhereinourbusiness.

Our success depends on our executive officers and other key personnel. If we lose key personnel or are unable

to hire additional qualified personnel, our business may be harmed.

Ourfuturesuccessdependstoasignificantdegreeontheskills,experienceandeffortsofourexecutiveofficers

andotherkeypersonnel.Theunexpectedlossoftheservicesofanyofsuchpersonscouldadverselyaffectouroperations.

Therecanbenoassurancethatourexecutivesuccessionplanning,retentionorhiringeffortswillbesuccessful.

Competitionforskilledandexperiencedmanagementpersonnelisintense,andourfuturesuccesswillalsodependonour

abilitytoattractandretainqualifiedpersonnel,andafailuretoattractandretainnewqualifiedpersonnelcouldadversely

affectouroperations.

Our private brands may not be successful in improving our gross profit rate and may increase certain of the

risks we face.

Thesaleofprivatebranditemsisanimportantcomponentofoursalesgrowthandgrossprofitrateenhancement

plans.Broadmarketacceptanceofourprivatebrandsdependsonmanyfactors,includingpricing,quality,customer

perception,andtimelydevelopmentandintroductionofnewproducts.Wecannotgiveassurancethatwewillachieveor

maintainourexpectedlevelofprivatebrandsales.Thesaleandexpansionoftheseofferingsalsosubjectsustoor

increasescertainrisks,suchas:productliabilityclaimsandproductrecalls;disruptionsinrawmaterialandfinished

productsupplyanddistributionchains;inabilitytosuccessfullyprotectourproprietaryrights;claimsrelatedtothe

proprietaryrightsofthirdparties;andotherrisksgenerallyencounteredbyentitiesthatsource,sellandmarketexclusive

brandedofferingsforretail.Failuretoappropriatelyaddresstheseriskscouldmateriallyadverselyaffectourprivatebrand

initiatives,reputation,resultsofoperationsandfinancialcondition.

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Because our business is somewhat seasonal, adverse events during the fourth quarter could materially affect

our financial statements as a whole.

PrimarilybecauseofsalesofChristmas-relatedmerchandise,ourmostprofitablesalesmixgenerallyoccursin

thefourthquarter.Inanticipationofthisholiday,wepurchasesubstantialamountsofseasonalinventory,andifsalesfall

belowseasonalnormsorourexpectationsitcouldresultinunanticipatedmarkdowns.Adverseevents,suchas

deterioratingeconomicconditions,highunemploymentrates,highgasprices,transportationdisruptions,orunusualor

unanticipatedadverseweathercouldresultinlower-than-plannedsalesduringtheChristmassellingseason,whichinturn

couldreduceourprofitabilityandotherwiseadverselyaffectourfinancialperformanceandoperatingresults.

Deterioration in market conditions or changes in our credit profile could adversely affect our business

operations and financial condition.

Werelyonthepositivecashflowwegeneratefromouroperatingactivitiesandouraccesstothecreditand

capitalmarketstofundouroperations,growthstrategy,andreturnofcashtoourshareholdersthroughsharerepurchases

anddividends.Changesinthecreditandcapitalmarkets,includingmarketdisruptions,limitedliquidityandinterestrate

fluctuations,mayincreasethecostoffinancingorrestrictouraccesstothesepotentialsourcesoffutureliquidity.Our

continuedaccesstoliquiditysourcesonfavorabletermsdependsonmultiplefactors,includingouroperatingperformance

andcreditratings.Ourdebtsecuritiescurrentlyareratedinvestmentgrade,andadowngradeofthisratinglikelywould

negativelyimpactouraccesstothedebtcapitalmarketsandincreaseourcostofborrowing.Asaresult,disruptionsinthe

debtmarketsoranydowngradeofourcreditratingscouldadverselyaffectourbusinessoperationsandfinancialcondition

andourabilitytoreturncashtoourshareholders.Wecanmakenoassurancesthatourabilitytoobtainadditional

financingthroughthedebtmarketswillnotbeadverselyaffectedbyeconomicconditionsorthatwewillbeableto

maintainorimproveourcurrentcreditratings.

New accounting guidance or changes in the interpretation or application of existing accounting guidance

could adversely affect our financial performance.

Theimplementationofnewaccountingstandardscouldrequirecertainsystems,internalprocessandcontrolsand

otherchangesthatcouldincreaseouroperatingcosts,andwillresultinchangestoourfinancialstatements.In2019for

example,theimplementationofaccountingstandardsrelatedtoleases,asissuedbytheFinancialAccountingStandards

Board,requiredustomakesignificantchangestoourleasemanagementandotheraccountingsystems,andresultedina

materialimpacttoourconsolidatedfinancialstatements.

U.S.generallyacceptedaccountingprinciplesandrelatedaccountingpronouncements,implementation

guidelinesandinterpretationswithregardtoawiderangeofmattersthatarerelevanttoourbusinessinvolvemany

subjectiveassumptions,estimatesandjudgmentsbyourmanagement.Changesintheserulesortheirinterpretationorin

underlyingmanagementassumptions,estimatesorjudgmentscouldsignificantlychangeourreportedorexpectedfinancial

performance.Theoutcomeofsuchchangescouldincludelitigationorregulatoryactionswhichcouldadverselyaffectour

financialconditionandresultsofoperations.

ITEM1B. UNRESOLVEDSTAFFCOMMENTS

None.

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ITEM2. PROPERTIES

AsofFebruary28,2020,weoperated16,368retailstoreslocatedin45statesasfollows:

State NumberofStoresState NumberofStores

Alabama  796  Nevada  22

Arizona  121  NewHampshire  40

Arkansas  452  NewJersey  148

California  226  NewMexico  99

Colorado  51  NewYork  495

Connecticut  64  NorthCarolina  870

Delaware  47  NorthDakota  42

Florida  900  Ohio  858

Georgia  915  Oklahoma  461

Illinois  578  Oregon  57

Indiana  566  Pennsylvania  781

Iowa  264  RhodeIsland  20

Kansas  247  SouthCarolina  564

Kentucky  565  SouthDakota  55

Louisiana  574  Tennessee  815

Maine  58  Texas  1,552

Maryland  140  Utah  11

Massachusetts  50  Vermont  37

Michigan  574  Virginia  435

Minnesota  163  WestVirginia  249

Mississippi  538  Wisconsin  192

Missouri  547 Wyoming 1

Nebraska  128

Mostofourstoresarelocatedinleasedpremises.Individualstoreleasesvaryastotheirterms,rentalprovisions

andexpirationdates.Manystores,includingasignificantportionofournewstores,aresubjecttobuild-to-suit

arrangementswithlandlords,whichtypicallycarryaprimaryleasetermofupto15yearswithmultiplerenewaloptions.

Wealsohavestoressubjecttoshorter-termleases,andmanyoftheseleaseshaverenewaloptions.

AsofFebruary28,2020,weoperated17distributioncentersfornon-refrigeratedmerchandisewith

approximately16.9millionsquarefeet,fourofwhichareleasedandtheremainderofwhichareowned.Approximately

7.25acresofthelandforoneofthedistributioncentersissubjecttoagroundlease.Wealsoleasedapproximately1.1

millionsquarefeetofwarehousespaceinsupportofourdistributionnetworkfornon-refrigeratedmerchandise.In

addition,weoperatedfivecoldstoragedistributioncenterswithapproximately1.1millionsquarefeet,fourofwhichare

leasedandoneofwhichisowned,andwehaveexecutedleasesfortwoadditionalcoldstoragedistributioncenterswith

approximately0.7millionsquarefeet,whichareexpectedtobeoperationallaterin2020.

Ourexecutiveofficesarelocatedinapproximately302,000squarefeetofownedbuildingsandapproximately

42,000squarefeetofleasedofficespaceinGoodlettsville,Tennessee.

ITEM3. LEGALPROCEEDINGS

TheinformationcontainedinNote7totheconsolidatedfinancialstatementsundertheheading“Legal

proceedings”containedinPartII,Item8ofthisreportisincorporatedhereinbythisreference.

TableofContents

ITEM4. MINESAFETYDISCLOSURES

None.

INFORMATIONABOUTOUREXECUTIVEOFFICERS

InformationregardingourcurrentexecutiveofficersasofMarch19,2020issetforthbelow.Eachofour

executiveofficersservesatthediscretionofourBoardofDirectorsandiselectedannuallybytheBoardtoserveuntila

successorisdulyelected.Therearenofamilialrelationshipsbetweenanyofourdirectorsorexecutiveofficers.

Name  Age  Position

ToddJ.Vasos 58 ChiefExecutiveOfficerandDirector

JohnW.Garratt 51 ExecutiveVicePresidentandChiefFinancialOfficer

JefferyC.Owen 50 ChiefOperatingOfficer

MichaelJ.Kindy 54 ExecutiveVicePresident,GlobalSupplyChain

JasonS.Reiser 51 ExecutiveVicePresidentandChiefMerchandisingOfficer

StevenG.Sunderland 56 ExecutiveVicePresident,StoreOperations

RhondaM.Taylor 52 ExecutiveVicePresidentandGeneralCounsel

CarmanR.Wenkoff 52 ExecutiveVicePresidentandChiefInformationOfficer

AnitaC.Elliott 55 SeniorVicePresidentandChiefAccountingOfficer

KathleenA.Reardon 48 SeniorVicePresidentandChiefPeopleOfficer

Mr. Vasos hasservedasChiefExecutiveOfficerandamemberofourBoardsinceJune2015.HejoinedDollar

GeneralinDecember2008asExecutiveVicePresident,DivisionPresidentandChiefMerchandisingOfficerandwas

promotedtoChiefOperatingOfficerinNovember2013.PriortojoiningDollarGeneral,Mr.Vasosservedinexecutive

positionswithLongsDrugStoresCorporationforsevenyears,includingExecutiveVicePresidentandChiefOperating

Officer(February2008toNovember2008)andSeniorVicePresidentandChiefMerchandisingOfficer(2001to2008),

wherehewasresponsibleforallpharmacyandfront-endmarketing,merchandising,procurement,supplychain,

advertising,storedevelopment,storelayoutandspaceallocation,andtheoperationofthreedistributioncenters.Healso

previouslyservedinleadershippositionsatPhar-MorFoodandDrugInc.andEckerdCorporation.

Mr. GarratthasservedasExecutiveVicePresidentandChiefFinancialOfficersinceDecember2015.Hejoined

DollarGeneralinOctober2014asSeniorVicePresident,Finance&StrategyandsubsequentlyservedasInterimChief

FinancialOfficerfromJuly2015toDecember2015.Mr.Garrattpreviouslyheldvariouspositionsofincreasing

responsibilityincorporatestrategyandfinancialplanningwithYum!Brands,Inc.,oneoftheworld’slargestrestaurant

companies,betweenMay2004andOctober2014,includingVicePresident,FinanceandDivisionControllerfortheKFC

divisionandearlierforthePizzaHutdivisionandforYumRestaurantsInternational(October2013toOctober2014);

SeniorDirector,YumCorporateStrategy(March2010toOctober2013),reportingdirectlytothecorporateChief

FinancialOfficerandleadingcorporatestrategyaswellasdrivingkeycross-divisionalinitiatives;andvariousother

financialpositions.HepreviouslyheldfinancialmanagementpositionsatAlcoaInc.(April2002toMay2004)and

GeneralElectric(March1999toApril2002),afterbeginninghiscareerwithAlcoainMay1990.Mr.Garratthasservedas

adirectorofHumanaInc.sinceFebruary2020.

Mr. OwenhasservedasChiefOperatingOfficersinceAugust27,2019.HereturnedtoDollarGeneralinJune

2015asExecutiveVicePresidentofStoreOperations,withover21yearsofpreviousemploymentexperiencewiththe

Company.PriortohisdeparturefromDollarGeneralinJuly2014,hewasSeniorVicePresident,StoreOperations.Prior

toAugust2011,Mr.OwenservedasVicePresident,DivisionManager,andfromNovember2006toMarch2007he

servedasRetailDivisionManager.PriortoNovember2006,hewasSeniorDirector,OperationsProcessImprovement.

Mr.OwenalsoservedtheCompanyinvariousoperations

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rolesofincreasingimportanceandresponsibilityfromDecember1992toSeptember2004.Mr.Owenhasservedasa

directorofKirkland’sInc.sinceMarch2015.

Mr. KindyhasservedasExecutiveVicePresident,GlobalSupplyChainsinceAugust2018.HejoinedDollar

GeneralasVicePresident,DistributionCentersinDecember2008,becameVicePresident,TransportationinMay2013,

andwaspromotedtoSeniorVicePresident,GlobalSupplyChaininJune2015.PriortojoiningDollarGeneral,Mr.Kindy

had14yearsofgrocerydistributionmanagementand5yearsoflogisticsanddistributionconsultingexperience.Heserved

asSeniorDirector,WarehouseOperations,forConAgraFoodsfromNovember2007toDecember2008.Sincebeginning

hiscareerinJuly1989,Mr.KindyalsoheldvariousdistributionandwarehouseleadershippositionsatSafeway,Inc.,

Crum&CrumLogistics,andSpecializedDistributionManagement,Inc.,andservedasaprincipalconsultantfor

PricewaterhouseCoopers.

Mr. Reiser hasservedasExecutiveVicePresidentandChiefMerchandisingOfficersinceJuly2017.He

previouslyservedasExecutiveVicePresidentandChiefOperatingOfficerofVitaminShoppe,Inc.,amulti-channel

specialtyretailerandcontractmanufacturerofhealthandwellnessproducts,fromJuly2016toJuly2017,whereheled

merchandising,operations,end-to-endsupplychain,informationtechnology,realestateandconstruction,planning,

pricingandmerchandisingoperations.HealsopreviouslyservedasExecutiveVicePresident,ChiefMerchandising

Officer(January2014toJune2016)andasSeniorVicePresident,HardlinesMerchandising(July2013toJanuary2014)

fordiscountretailerDollarTree,Inc.(successortoFamilyDollarStores,Inc.)andwasemployedbyWalmartStores,Inc.

for17yearsinavarietyofroles,includingVicePresident,Merchandising,Health&FamilyCareofSam’sClub

(November2010toJune2013);VicePresident,Operations&Compliance,Health&WellnessofSam’sClub(May2010

toNovember2010);DivisionalMerchandiseManager,Wellness(May2009toMay2010);SeniorBuyerPharmacy/OTC

ofSam’sClub(November2006toMay2009);Director,GovernmentRelationsandRegulatoryAffairs(August2002to

November2006);PharmacyDistrictManager(August2000toAugust2002);andPharmacyManager(October1995to

August2000).

Mr. Sunderland hasservedasExecutiveVicePresident,StoreOperations,sinceAugust2019.HejoinedDollar

GeneralasSeniorVicePresident,StoreOperations,inSeptember2014.Mr.SunderlandpreviouslyservedasSeniorVice

President,RetailOperations,ofOfficeDepot,Inc.(November2013toJanuary2014);SeniorVicePresident,Retail

Operations,ofOfficeMaxIncorporated(May2012toNovember2013);ChiefOperatingOfficerofBallyTotalFitness

HoldingCorporation(2011toApril2012);andWorldKitchen,LLC’sPresidentofRetail(2009to2011).Mr.Sunderland

beganhiscareerwithSearsin1987,holdingvariouspositionsofincreasingresponsibility,includingVicePresidentof

StrategicOperationsforSearsHoldingsCorporationfrom2007until2009.

Ms. Taylor hasservedasExecutiveVicePresidentandGeneralCounselsinceMarch2015.ShejoinedDollar

GeneralasanEmploymentAttorneyinMarch2000andwassubsequentlypromotedtoSeniorEmploymentAttorneyin

2001,DeputyGeneralCounselin2004,VicePresidentandAssistantGeneralCounselinMarch2010,andSeniorVice

PresidentandGeneralCounselinJune2013.PriortojoiningDollarGeneral,shepracticedlawwithOgletree,Deakins,

Nash,Smoak&Stewart,P.C.,whereherpracticewasfocusedonlaborlawandemploymentlitigation.Shehasalsoheld

attorneypositionswithFord&HarrisonLLPandStokesBartholomew.

Mr. Wenkoff hasservedasExecutiveVicePresidentandChiefInformationOfficersinceJuly2017.He

previouslyservedastheChiefInformationOfficer(May2012toJune2017)andChiefDigitalOfficer(June2016toJune

2017)ofFranchiseWorldHeadquarters,LLC(“Subway”),arestaurantchain,wherehewasresponsibleforglobal

technologyanddigitalstrategy,executionandoperationsfortheSubwaybrandandallofitsrestaurants.Heowneda

SubwayfranchisefromJuly2015untilOctober2017.HealsopreviouslyservedasChairmanoftheBoardandCo-

PresidentofRetailGiftCardAssociation(February2008toMay2012);DeputyChiefInformationOfficerfor

IndependentPurchaseCooperative,Inc.(May2005toMay2012)andPresidentofitssubsidiary,ValuePayServicesLLC

(May2005toFebruary2011);founderandPresidentofStoredValueManagement,Inc.(January2004toMay2005);and

VicePresident,OperationsandFinance,andGeneralCounsel

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ofOntainCorporation(January2000toDecember2004).Mr.Wenkoffbeganhiscareerin1993asanarticledstudent,

andthenattorneywithDouglasSymes&Brissendenandservedinvariouslegalpositions,includingGeneralCounsel,

withPivotalCorporationfrom1997to2000.

Ms. ElliotthasservedasSeniorVicePresidentandChiefAccountingOfficersinceDecember2015.Shejoined

DollarGeneralasSeniorVicePresidentandControllerinAugust2005.PriortojoiningDollarGeneral,sheservedasVice

PresidentandControllerofBigLots,Inc.fromMay2001toAugust2005,whereshewasresponsibleforaccounting

operations,financialreportingandinternalaudit.PriortoservingatBigLots,sheservedasVicePresidentandController

forJitney-JungleStoresofAmerica,Inc.fromApril1998toMarch2001,whereshewasresponsiblefortheaccounting

operationsandtheinternalandexternalfinancialreportingfunctions.PriortoservingatJitney-Jungle,shepracticedpublic

accountingfor12years,6ofwhichwerewithErnst&YoungLLP.

Ms. Reardon hasservedasSeniorVicePresidentandChiefPeopleOfficersinceMay2019.ShejoinedDollar

GeneralasDirector,HumanResourcesinSeptember2009andwaspromotedtoVicePresident,TalentManagementin

October2012.ShebecameVicePresident,RetailHumanResourcesinOctober2014andwaspromotedtoSeniorVice

President,HumanResourcesinMarch2019.PriortojoiningDollarGeneral,Ms.Reardonheldseveralpositionsof

increasingresponsibilityatCentexfromAugust2005untilSeptember2009,servingasDirectorofHumanResourcesfrom

October2007untilSeptember2009.SincebeginninghercareerinMay1998,Ms.Reardonalsoheldvariousroleswith

CarrierCorporation,includingManagerofHumanResourcesfromAugust2003untilAugust2005,andwasalsoaCareer

ConsultantattheDardenGraduateSchoolofBusinessAdministration,UniversityofVirginia,fromAugust2001until

August2003.

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PARTII

ITEM5. MARKETFORREGISTRANT’SCOMMONEQUITY,RELATEDSTOCKHOLDERMATTERS

ANDISSUERPURCHASESOFEQUITYSECURITIES

MarketInformation

OurcommonstockistradedontheNewYorkStockExchangeunderthesymbol“DG.”OnMarch12,2020,

therewereapproximately2,613shareholdersofrecordofourcommonstock.

Dividends

Wehavepaidquarterlycashdividendssince2015.OurBoardofDirectorsmostrecentlyincreasedtheamountof

thequarterlycashdividendto$0.36beginningwiththedividendpayableonApril21,2020.WhileourBoardofDirectors

currentlyexpectstocontinueregularquarterlycashdividends,thedeclarationandamountoffuturecashdividendsare

subjecttotheBoard’ssolediscretionandwilldependupon,amongotherthings,ourresultsofoperations,cash

requirements,financialcondition,contractualrestrictionsandotherfactorsthattheBoardmaydeemrelevantinitssole

discretion.

IssuerPurchasesofEquitySecurities

Thefollowingtablecontainsinformationregardingpurchasesofourcommonstockmadeduringthequarter

endedJanuary31,2020byoronbehalfofDollarGeneralorany“affiliatedpurchaser,”asdefinedbyRule10b-18(a)(3)of

theSecuritiesExchangeActof1934:

   TotalNumber  Approximate 

ofShares DollarValue 

Purchased ofSharesthatMay 

TotalNumber Average asPartofPublicly YetBePurchased 

ofShares PricePaid AnnouncedPlans UnderthePlans 

Period Purchased perShare orPrograms(a) orPrograms(a) 

11/02/19-11/30/19  — $ —  — $ 560,822,000

12/01/19-12/31/19  1,940,912 $ 154.87  1,940,912 $ 1,260,241,000

01/01/20-01/31/20  745,100 $ 153.66  745,100 $ 1,145,749,000

Total  2,686,012 $ 154.53  2,686,012 $ 1,145,749,000

(a) OnSeptember5,2012,theCompanyannouncedaprogrampermittingtheCompanytorepurchaseaportionofits

outstandingsharesnottoexceedadollarmaximumestablishedbytheCompany’sBoardofDirectors.Theprogram

wasmostrecentlyamendedonDecember3,2019toincreasetherepurchaseauthorizationby$1.0billion,bringing

thecumulativetotalvalueofauthorizedsharerepurchasesundertheprogramsinceitsinceptionto$8.0billion.Under

theauthorization,purchasesmaybemadeintheopenmarketorinprivatelynegotiatedtransactionsfromtimetotime

subjecttomarketandotherconditions.Thisrepurchaseauthorizationhasnoexpirationdate.

ITEM6. SELECTEDFINANCIALDATA

ThefollowingtablesetsforthselectedconsolidatedfinancialandoperatinginformationofDollarGeneral

Corporationasofthedatesandfortheperiodsindicated.Theselectedhistoricalstatementofincomedataandstatementof

cashflowsdataforthefiscalyearsendedJanuary31,2020,February1,2019,andFebruary2,2018,andbalancesheet

dataasofJanuary31,2020andFebruary1,2019,havebeenderivedfromourhistoricalauditedconsolidatedfinancial

statementsincludedelsewhereinthisreport.Theselectedhistoricalstatementofincomedataandstatementofcashflows

dataforthefiscalyearsendedFebruary3,2017andJanuary29,2016andbalancesheetdataasofFebruary2,2018,

February3,2017,andJanuary29,2016presentedinthistablehavebeenderivedfromauditedconsolidatedfinancial

statementsnotincludedinthisreport.

TableofContents

Theinformationsetforthbelowshouldbereadinconjunctionwith,andisqualifiedbyreferenceto,the

ConsolidatedFinancialStatementsandrelatednotesincludedinPartII,Item8ofthisreportandtheManagement’s

DiscussionandAnalysisofFinancialConditionandResultsofOperationsincludedinPartII,Item7ofthisreport.Certain

financialdisclosuresrelatingtopriorperiodshavebeenreclassifiedtoconformtothecurrentyearpresentation.

(Amountsinmillions,excludingpersharedata,  YearEnded 

numberofstores,sellingsquarefeet,andnetsales January31, February1, February2, February3, January29, 

persquarefoot) 2020 2019 2018 2017(1) 2016 

StatementofIncomeData:

Netsales $ 27,754.0 $ 25,625.0 $ 23,471.0 $ 21,986.6 $ 20,368.6

Costofgoodssold  19,264.9  17,821.2  16,249.6  15,204.0  14,062.5

Grossprofit  8,489.1  7,803.9  7,221.4  6,782.6  6,306.1

Selling,generalandadministrativeexpenses  6,186.8  5,687.6  5,213.5  4,719.2  4,365.8

Operatingprofit  2,302.3  2,116.3  2,007.8  2,063.4  1,940.3

Interestexpense  100.6  99.9  97.0  97.8  86.9

Other(income)expense  —  1.0  3.5  —  0.3

Incomebeforeincometaxes  2,201.7  2,015.4  1,907.3  1,965.6  1,853.0

Incometaxexpense  489.2  425.9  368.3  714.5  687.9

Netincome

$ 1,712.6 $ 1,589.5 $ 1,539.0 $ 1,251.1 $ 1,165.1

Earningspershare—basic $ 6.68 $ 5.99 $ 5.64 $ 4.45 $ 3.96

Earningspershare—diluted  6.64  5.97  5.63  4.43  3.95

Dividendspershare  1.28  1.16  1.04  1.00  0.88

StatementofCashFlowsData:

Netcashprovidedby(usedin):

Operatingactivities $ 2,238.0 $ 2,143.6 $ 1,802.1 $ 1,605.0 $ 1,391.7

Investingactivities  (782.5)  (731.6)  (645.0)  (550.9)  (503.4)

Financingactivities  (1,450.7)  (1,443.9)  (1,077.6)  (1,024.1)  (1,310.2)

Totalcapitalexpenditures  (784.8)  (734.4)  (646.5)  (560.3)  (504.8)

OtherFinancialandOperatingData:

Samestoresalesgrowth(2)  3.9 % 3.2 % 2.7 % 0.9 % 2.8 %

Samestoresales(2) $ 26,374.0 $ 23,854.0 $ 21,871.6 $ 20,348.1 $ 19,254.3

Numberofstoresincludedinsamestoresales

calculation  15,209  14,283  13,150  12,383  11,706

Numberofstores(atperiodend)  16,278  15,370  14,534  13,320  12,483

Sellingsquarefeet(inthousandsatperiod

end)  120,342  113,755  107,821  98,943  92,477

Netsalespersquarefoot(3) $ 237 $ 231 $ 227 $ 229 $ 226

Consumablessales  78.0 % 77.5 % 76.9 % 76.4 % 75.9 %

Seasonalsales  11.7 % 11.9 % 12.1 % 12.2 % 12.4 %

Homeproductssales  5.8 % 5.9 % 6.0 % 6.2 % 6.3 %

Apparelsales  4.5 % 4.7 % 5.0 % 5.2 % 5.4 %

BalanceSheetData(atperiodend):

Cashandcashequivalentsandshort-term

investments $ 240.3 $ 235.5 $ 267.4 $ 187.9 $ 157.9

Totalassets  22,825.1  13,204.0  12,516.9  11,672.3  11,257.9

Long-termdebt(4)  2,912.0  2,864.7  3,006.0  3,211.5  2,970.6

Totalshareholders’equity  6,702.5  6,417.4  6,125.8  5,406.3  5,377.9

(1) ThefiscalyearendedFebruary3,2017wascomprisedof53weeks.

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(2) Same-storesalesarecalculatedbaseduponstoresthatwereopenatleast13fullfiscalmonthsandremainopenatthe

endofthereportingperiod.Weincludestoresthathavebeenremodeled,expandedorrelocatedinoursame-store

salescalculation.Changesinsame-storesalesarecalculatedbasedonthecomparable52calendarweeksinthe

currentandprioryears.

(3) Netsalespersquarefootwascalculatedbasedontotalsalesforthepreceding12monthsasoftheendingdateofthe

reportingperioddividedbytheaveragesellingsquarefootageduringtheperiod,includingtheendofthefiscalyear,

thebeginningofthefiscalyear,andtheendofeachofourthreeinterimfiscalquarters.

(4) Debtissuancecostsarereflectedasadeductionfromthecorrespondingdebtliabilityforallperiodspresented.

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ITEM7. MANAGEMENT’SDISCUSSIONANDANALYSISOFFINANCIALCONDITIONANDRESULTS

OFOPERATIONS

This discussion and analysis should be read with, and is qualified in its entirety by, the Consolidated Financial

Statements and the notes thereto. It also should be read in conjunction with the Cautionary Disclosure Regarding

Forward-Looking Statements and the Risk Factors disclosures set forth in the Introduction and in Item 1A of this report,

respectively.

ExecutiveOverview

WeareamongthelargestdiscountretailersintheUnitedStatesbynumberofstores,with16,368storeslocated

in45statesasofFebruary28,2020,withthegreatestconcentrationofstoresinthesouthern,southwestern,midwestern

andeasternUnitedStates.Weofferabroadselectionofmerchandise,includingconsumableproductssuchasfood,paper

andcleaningproducts,healthandbeautyproductsandpetsupplies,andnon-consumableproductssuchasseasonal

merchandise,homedecoranddomestics,andbasicapparel.Ourmerchandiseincludesnationalbrandsfromleading

manufacturers,aswellasourownprivatebrandselectionswithpricesatsubstantialdiscountstonationalbrands.Weoffer

ourcustomersthesenationalbrandandprivatebrandproductsateverydaylowprices(typically$10orless)inour

convenientsmall-boxlocations.

Webelieveourconvenientstoreformats,locations,andbroadselectionofhigh-qualityproductsatcompelling

valueshavedrivenoursubstantialgrowthandfinancialsuccessovertheyearsandthroughavarietyofeconomiccycles.

Wearemindfulthatthemajorityofourcustomersarevalue-conscious,andmanyhavelowand/orfixedincomes.Asa

result,weareintenselyfocusedonhelpingourcustomersmakethemostoftheirspendingdollars.Ourcorecustomersare

oftenamongthefirsttobeaffectedbynegativeoruncertaineconomicconditionsandamongthelasttofeeltheeffectsof

improvingeconomicconditionsparticularlywhentrendsareinconsistentandofanuncertainduration.Theprimary

macroeconomicfactorsthataffectourcorecustomersincludetheunemploymentandunderemploymentrates,wage

growth,changesinU.S.andglobaltradepolicy(includingpriceincreasesfromtariffs),andchangestocertaingovernment

assistanceprograms,suchastheSupplementalNutritionAssistanceProgram.Additionally,ourcustomersareimpactedby

increasesinthoseexpensesthatgenerallycomprisealargeportionoftheirhouseholdbudget,suchasrent,healthcareand

fuelprices.Finally,significantunseasonableorunusualweatherpatternscanimpactcustomershoppingbehaviors.

Weremaincommittedtothefollowinglong-termoperatingprioritiesasweconsistentlystrivetoimproveour

performancewhileretainingourcustomer-centricfocus:1)drivingprofitablesalesgrowth,2)capturinggrowth

opportunities,3)enhancingourpositionasalow-costoperator,and4)investinginourpeopleasacompetitiveadvantage.

Weseektodriveprofitablesalesgrowththroughinitiativesaimedatincreasingcustomertrafficandaverage

transactionamount.Asweworktoprovideeverydaylowpricesandmeetourcustomers’affordabilityneeds,weremain

focusedonenhancingourmarginsthrougheffectivecategorymanagement,inventoryshrinkreductioninitiatives,private

brandspenetration,distributionandtransportationefficiencies,globalsourcing,andpricingandmarkdownoptimization.

Severalofoursales-drivinginitiativesarealsodesignedtocapturegrowthopportunitiesandarediscussedinmoredetail

below.

Historically,oursalesofconsumables,whichtendtohavelowergrossmargins,havebeenthekeydriversofnet

salesandcustomertraffic,whilesalesofnon-consumables,whichtendtohavehighergrossmargins,havecontributedto

moreprofitablesalesgrowthandanincreaseinaveragetransactionamount.Oursalesmixhascontinuedtoshiftslightly

towardconsumables,and,withinconsumables,slightlytowardlowermargindepartmentssuchasperishables.Whilewe

expectsomesalesmixchallengestopersist,certainofourinitiativesareintendedtoaddressthesetrends,althoughthere

canbenoassurancewewillbesuccessfulinreversingthem.

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Wecontinuetomakeprogressonandinvestincertainstrategicinitiativesthatwebelievewillhelpdrive

profitablesalesgrowthandcapturelong-termgrowthopportunities.Suchopportunitiesincludeleveragingexistingand

developingnewdigitaltoolsandtechnologytoprovideourcustomerswithadditionalshoppingaccesspointsandeven

greaterconvenience.Additionally,ourrefreshedapproachtoournon-consumableproductofferingshasbeenimplemented

inapproximately2,400storesasoftheendof2019.Thismerchandisingstrategy,whichiscontinuingtoevolveandhelp

shapeourapproachtonon-consumablecategoriesthroughoutthechain,offersanew,differentiatedandlimitedassortment

thatwillchangethroughouttheyear.Asweextendthisinitiativemorebroadly,aswellasincorporatecertainrelated

merchandisingeffortsthroughoutourchain,ourgoalistocontinuetoimprovetheshoppingexperiencewhiledelivering

exceptionalvaluewithinkeyareasofournon-consumablecategories.

Wearecontinuingourrolloutofthe“DGFresh”initiative,aself-distributionmodelforfreshandfrozenproducts

thatisdesignedtoenhancesales,reduceproductcosts,improveourin-stockpositionandenhanceitemassortment.We

currentlyoperatefiveDGFreshdistributionfacilities,whichservedmorethan6,000storesasofFebruary28,2020.

TariffsonproductsfromChina,asappliedtobothourdirectimportsanddomesticpurchases,didnothaveanet

materialimpactonourfinancialresultsin2019.Webelievewecanmitigatethepotentialsalesandmarginimpactofsuch

increasedtariffsonourfinancialresultsin2020throughvarioussourcing,merchandisingandpricingefforts.However,as

notedabove,changesintradepolicythatresultinhigherpricesforourcustomersmaynegativelyimpacttheirbudgets,

andconsequently,theirspending,andadditionalincreasesintariffratesorexpansionofproductssubjecttotariffsmay

haveamoresignificantimpactonourfuturebusiness.Therecanbenoassurancewewillbesuccessfulinoureffortsto

mitigatetheimpactsofexistingorfuturetariffsinwholeorinpart,includingbutnotlimitedtoanyimpactsoncustomer

spending.

WehavelimitedinsightintotheextenttowhichourbusinessmaybeimpactedbytheCOVID-19coronavirus

outbreak,andtherearemanyunknowns.Whilewecurrentlyexpectdelaysinthereceiptofcertaingoodsin2020asa

resultofthisoutbreak,wedonotcurrentlyanticipateamaterialimpacttoourfinancialresultsin2020duetothesedelays.

Furtherdelaysinthereceiptofgoods,orotherunanticipatedimpactstooursupplychain,includingondirectimportsor

goodspurchaseddomestically,ourstoresorourcustomers,couldhaveamoresignificantimpactonourfuturebusiness

(includingsales),andwearecontinuingtomonitorthisevolvingsituation.

Tosupportourotheroperatingpriorities,weremainfocusedoncapturinggrowthopportunities.In2019,we

opened975newstores,remodeled1,024stores,andrelocated100stores.For2020,weplantoopenapproximately1,000

newstores,remodelapproximately1,500stores,andrelocateapproximately80storesforatotalof2,580realestate

projects.

Wecontinuetoinnovatewithinourchannelandareabletoutilizethemostproductiveofourvariousstore

formatsbasedonthespecificmarketopportunity.Weexpectthatourtraditional7,300squarefootstoreformatwill

continuetobetheprimarystorelayoutfornewstoresin2020.Weexpectapproximately1,125oftheplanned1,500

remodelsin2020touseahigher-cooler-countstoreformatthatenablesustoofferanincreasedselectionofperishable

items,withthetraditionalstoreformattheprimarystorelayoutfortheremainderoftherealestateprojects.Additionally,

themajorityofbothnewstoresandremodelswillincorporatehigher-capacitycoolers.Theaccelerationofremodelsin

2020andtheincreasedusageofthehigher-cooler-countformatsisexpectedtoallowustocaptureadditionalgrowth

opportunitieswithinourexistingmarkets.Inaddition,oursmallerformatstore(lessthan6,000squarefeet)isexpectedto

allowustocapturegrowthopportunitiesinurbanareas.Wecontinuetoincorporatelessonslearnedfromourvariousstore

formatsandlayoutsintoourexistingstorebasewithagoalofdrivingincreasedcustomertraffic,averagetransaction

amount,same-storesalesandoverallstoreproductivity.

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Tosupportournewstoregrowthanddriveproductivity,wehavecontinuedtomakeinvestmentsinour

traditionaldistributioncenternetworkfornon-refrigeratedmerchandise.Webeganshippingfromourdistributioncenters

inLongview,TexasandAmsterdam,NewYorkinJanuary2019andDecember2019,respectively.

Wehaveestablishedapositionasalow-costoperator,alwaysseekingwaystoreduceorcontrolcoststhatdonot

affectourcustomers’shoppingexperiences.Weplantocontinueenhancingthispositionovertimewhileemploying

ongoingcostdisciplinetoreducecertainexpensesasapercentageofsales.Nonetheless,weseektomaintainflexibilityto

investinthebusinessasnecessarytoenhanceourlong-termprofitability.

Wealsohavelaunched“FastTrack”,aninitiativeaimedatfurtherenhancingourconveniencepropositionand

in-stockpositionaswellasincreasinglaborproductivitywithinourstores.ThefirstphaseofFastTrackinvolvedsorting

processoptimizationwithinourdistributioncenters,aswellasincreasedshelf-readypackaging,toallowforgreaterstore-

levelstockingefficiencies,followedbythesecond-phasepilotofaself-checkoutoptioninalimitednumberofstores.We

havecompletedthesortingprocessoptimizationatallofournon-refrigerateddistributioncenters.Additionally,wehave

launchedtheself-checkoutpilotinaselectnumberofstores.Theseandcertainotherstrategicinitiativeswillrequireusto

incurupfrontexpensesforwhich,insomerespects,theremaynotbeanimmediateoracceptablereturnintermsofsalesor

enhancedprofitability.

Certainofouroperatingexpenses,suchaswageratesandoccupancycosts,havecontinuedtoincreaseinrecent

years,dueprimarilytomarketforces.Whileweexpecttheseincreasestopersist,certainofourinitiativesandplansare

intendedtohelpoffsetthesechallenges,althoughtherecanbenoassurancewewillbesuccessfulinmitigatingthem.

Ouremployeesareacompetitiveadvantage,andweproactivelyseekwaystocontinueinvestinginthem.Our

goalistocreateanenvironmentthatattractsandretainstalentedpersonnel,particularlyatthestorelevel,because

employeeswhoarepromotedfromwithinourcompanygenerallyhavelongertenuresandaregreatercontributorsto

improvementsinourfinancialperformance.Webelieveourinvestmentsincompensationandtrainingforourstore

managershavecontributedtoimprovedcustomerexperiencescores,highersalesandimprovedturnovermetrics.

Tofurtherenhanceshareholderreturns,werepurchasedsharesofourcommonstockandpaidquarterlycash

dividendsthroughout2019.In2020,weintendtocontinueoursharerepurchaseactivity,andtopayquarterlycash

dividends,subjecttoBoarddiscretionandapproval.

Weutilizekeyperformanceindicators(“KPIs”)inthemanagementofourbusiness.OurKPIsincludesame-store

sales,averagesalespersquarefoot,andinventoryturnover.Same-storesalesarecalculatedbaseduponstoresthatwere

openatleast13fullfiscalmonthsandremainopenattheendofthereportingperiod.Weincludestoresthathavebeen

remodeled,expandedorrelocatedinoursame-storesalescalculation.Changesinsame-storesalesarecalculatedbasedon

thecomparable52calendarweeksinthecurrentandprioryears.Netsalespersquarefootiscalculatedbasedontotalsales

forthepreceding12monthsasoftheendingdateofthereportingperioddividedbytheaveragesellingsquarefootage

duringtheperiod,includingtheendofthefiscalyear,thebeginningofthefiscalyear,andtheendofeachofourthree

interimfiscalquarters.Inventoryturnoveriscalculatedbasedontotalcostofgoodssoldfortheprecedingfourquarters

dividedbytheaverageinventorybalanceasoftheendingdateofthereportingperiod,includingtheendofthefiscalyear,

thebeginningofthefiscalyear,andtheendofeachofourthreeinterimfiscalquarters.Eachofthesemeasuresis

commonlyusedbyinvestorsinretailcompaniestomeasurethehealthofthebusiness.Weusethesemeasuresto

maximizeprofitabilityandfordecisionsabouttheallocationofresources.

Acontinuedfocusonourfouroperatingprioritiesasdiscussedabove,coupledwithstrongcashflow

managementandsharerepurchasesresultedinsolidoveralloperatingandfinancialperformancein2019as

TableofContents

comparedto2018,assetforthbelow.Basispoints,asreferredtobelow,areequalto0.01%asapercentageofnetsales.

● Netsalesin2019increased8.3%over2018.Salesinsame-storesincreased3.9%,primarilydueto

increasesinaveragetransactionamountandcustomertraffic.Averagesalespersquarefootin2019

were$237comparedto$231in2018.

● Ourgrossprofitrateincreasedby14basispointsdueprimarilytohigherinitialmarkupsoninventory

purchases.

● SG&Aincreasedby9basispointsprimarilyreflectingourestimateforthesettlementofcertainlegal

matters.

● Operatingprofitincreased8.8%to$2.30billionin2019comparedto$2.12billionin2018.

● Theincreaseintheeffectiveincometaxrateto22.2%in2019from21.1%in2018wasdueprimarilyto

changesinstateincometaxlawsandincometaxbenefitsarisingfromtheTaxCutsandJobsActin

2018thatdidnotreoccurin2019.

● Wereportednetincomeof$1.71billion,or$6.64perdilutedshare,for2019comparedtonetincomeof

$1.59billion,or$5.97perdilutedshare,for2018.

● Wegeneratedapproximately$2.24billionofcashflowsfromoperatingactivitiesin2019,anincrease

of4.4%comparedto2018.

● Inventoryturnoverwas4.4times,andinventoriesincreased7.8%onaperstorebasiscomparedto2018.

● Werepurchasedapproximately8.3millionsharesofouroutstandingcommonstockfor$1.2billion.

Readersshouldrefertothedetaileddiscussionofouroperatingresultsbelowforadditionalcommentson

financialperformanceinthecurrentyearascomparedwiththeprioryearspresented.

ResultsofOperations

Accounting Periods. Thefollowingtextcontainsreferencestoyears2019,2018,and2017,whichrepresentfiscal

yearsendedJanuary31,2020,February1,2019,andFebruary2,2018,respectively.OurfiscalyearendsontheFriday

closesttoJanuary31.Fiscalyears2019,2018and2017wereeach52-weekaccountingperiods.

Seasonality.Thenatureofourbusinessissomewhatseasonal.PrimarilybecauseofsalesofChristmas-related

merchandise,operatingprofitinourfourthquarter(November,DecemberandJanuary)hashistoricallybeenhigherthan

operatingprofitachievedineachofthefirstthreequartersofthefiscalyear.Expenses,andtoagreaterextentoperating

profit,varybyquarter.Resultsofaperiodshorterthanafullyearmaynotbeindicativeofresultsexpectedfortheentire

year.Furthermore,theseasonalnatureofourbusinessmayaffectcomparisonsbetweenperiods.

TableofContents

Thefollowingtablecontainsresultsofoperationsdataforfiscalyears2019,2018and2017,andthedollarand

percentagevariancesamongthoseyears.

2019vs.2018  2018vs.2017

(amountsinmillions,except     Amount  %  Amount  %

pershareamounts) 2019 2018 2017 Change Change Change Change

Netsalesbycategory:

Consumables $ 21,635.9 $ 19,865.1 $ 18,054.8 $ 1,770.8 8.9 %$ 1,810.3 10.0 %

% of net sales 77.96 % 77.52 % 76.92 %

Seasonal  3,258.9  3,050.3  2,837.3  208.6 6.8  213.0 7.5

% of net sales 11.74 % 11.90 % 12.09 %

Homeproducts  1,611.9  1,506.1  1,400.6  105.8 7.0  105.4 7.5

% of net sales 5.81 % 5.88 % 5.97 %

Apparel  1,247.3  1,203.6  1,178.3  43.7 3.6  25.4 2.2

% of net sales 4.49 % 4.70 % 5.02 %

Netsales $ 27,754.0 $ 25,625.0 $ 23,471.0 $ 2,128.9 8.3 %$ 2,154.1 9.2 %

Costofgoodssold  19,264.9  17,821.2  16,249.6  1,443.7 8.1  1,571.6 9.7

% of net sales 69.41 % 69.55 % 69.23 %

Grossprofit  8,489.1  7,803.9  7,221.4  685.2 8.8  582.5 8.1

% of net sales 30.59 % 30.45 % 30.77 %

Selling,generalandadministrative

expenses  6,186.8  5,687.6  5,213.5  499.2 8.8  474.0 9.1

% of net sales 22.29 % 22.20 % 22.21 %

Operatingprofit  2,302.3  2,116.3  2,007.8  186.0 8.8  108.5 5.4

% of net sales 8.30 % 8.26 % 8.55 %

Interestexpense  100.6  99.9  97.0  0.7 0.7  2.8 2.9

% of net sales 0.36 % 0.39 % 0.41 %

Other(income)expense  —  1.0  3.5  (1.0) —  (2.5) —

% of net sales 0.00 % 0.00 % 0.01 %

Incomebeforeincometaxes  2,201.7  2,015.4  1,907.3  186.3 9.2  108.1 5.7

% of net sales 7.93 % 7.87 % 8.13 %

Incometaxexpense  489.2  425.9  368.3  63.2 14.8  57.6 15.6

% of net sales 1.76 % 1.66 % 1.57 %

Netincome $ 1,712.6 $ 1,589.5 $ 1,539.0 $ 123.1 7.7 %$ 50.5 3.3 %

% of net sales

6.17

6.20

6.56

Dilutedearningspershare

$ 6.64 $ 5.97 $ 5.63 $ 0.67 11.2

%

$ 0.34 6.0

%

Net Sales.Thenetsalesincreasein2019reflectsasame-storesalesincreaseof3.9%comparedto2018.In2019,

our15,209same-storesaccountedforsalesof$26.4billion.Theincreaseinsame-storesalesprimarilyreflectsanincrease

inaveragetransactionamountandcustomertrafficcomparedto2018.Theincreaseinaveragetransactionamountwas

drivenbyhigheraverageitemretailprices.Same-storesalesin2019increasedineachoftheconsumables,seasonaland

homeproductsandapparelcategories,comparedto2018.The2019netsalesincreasewaspositivelyaffectedbynew

stores,modestlyoffsetbysalesfromclosedstores.

Thenetsalesincreasein2018reflectsasame-storesalesincreaseof3.2%comparedto2017.In2018,our14,283

same-storesaccountedforsalesof$23.9billion.Theincreaseinsame-storesalesprimarilyreflectsanincreaseinaverage

transactionamountrelativeto2017.Theincreaseinaveragetransactionamountwasdrivenbyhigheraverageitemretail

pricesandtoalesserextent,anincreaseinaverageitemspertransaction,whilecustomertrafficwasessentially

unchanged.Same-storesalesin2018increasedintheconsumables,seasonalandhomeproductscategories,anddeclined

intheapparelcategory,comparedto2017.Same-storesalesresultsin2018forthethreenon-consumablescategories,

whenaggregated,werepositive.The2018netsalesincreasewaspositivelyaffectedbynewstores,modestlyoffsetby

salesfromclosedstores.

Ofourfourmajormerchandisecategories,theconsumablescategory,whichgenerallyhasalowergrossprofit

ratethantheotherthreecategories,isourlargestcategoryandhascontinuedtobecomealargerpercentage

TableofContents

ofourtotalsales.Becauseoftheimpactofsalesmixongrossprofit,wecontinuallyreviewourmerchandisemixand

strivetoadjustitwhenappropriate.

Gross Profit. In2019,grossprofitincreasedby8.8%,andasapercentageofnetsalesincreasedby14basis

pointsto30.6%comparedto2018.HigherinitialmarkupsoninventorypurchasesandalowerLIFOprovisioncontributed

totheincreaseinthegrossprofitrate.Thesefactorswerepartiallyoffsetbyincreaseddistributionandtransportationcosts,

agreaterproportionofsalesofconsumables,whichgenerallyhavealowergrossprofitratethanourotherproduct

categories,andsalesoflowermarginproductscomprisingahigherproportionofconsumablessales,aswellasahigher

rateofinventoryshrinkage.

In2018,grossprofitincreasedby8.1%,andasapercentageofnetsalesdecreasedby32basispointsto30.5%

comparedto2017.Highermarkdowns,agreaterproportionofsalesofconsumables,whichgenerallyhavealowergross

profitratethanourotherproductcategories,andsalesoflowermarginproductscomprisingahigherproportionof

consumablessales,aswellasincreasesintransportationcostsandanincreasedLIFOprovisionreducedthegrossprofit

rate.Thesefactorswerepartiallyoffsetbyanimprovedrateofinventoryshrinkageandhigherinitialmarkupson

inventorypurchases.

SG&A. SG&Aasapercentageofsaleswas22.3%in2019comparedto22.2%in2018,anincreaseof9basis

points.Werecordedexpensesof$31.0millionin2019reflectingourestimateforthesettlementofsignificantlegal

mattersdiscussedinNote7totheconsolidatedfinancialstatements.SG&Ain2019includedadecreaseofapproximately

$22.8millioninhurricaneandotherdisaster-relatedexpensescomparedto2018aswellasanincreaseinretaillaborcosts

ataratelessthantheincreaseinnetsales.

SG&Aasapercentageofsalesdecreasedby1basispoint,roundingto22.2%inboth2018and2017.The2018

amountsreflectareductioninrepairsandmaintenanceexpenseswhichwereoffsetbyoccupancycostsanddepreciation

expenses,eachofwhichincreasedatarategreaterthantheincreaseinnetsales.The2018amountsreflectanincreasein

hurricaneandotherdisaster-relatedexpensesofapproximately$14.3millioncomparedto2017.The2017amounts

includecostsof$24.0millionrelatedtotheclosureof35underperformingstores,primarilyexpensesforremaininglease

liabilities.

Interest Expense.Interestexpenseincreased$0.7millionto$100.6millionin2019comparedto2018,and

increased$2.8millionto$99.9millionin2018comparedto2017.Seethedetaileddiscussionunder“Liquidityand

CapitalResources”regardingthefinancingofvariouslong-termobligations.

Wehadconsolidatedoutstandingvariable-ratedebtof$430.1millionand$373.3millionasofJanuary31,2020

andFebruary1,2019,respectively,andtheremainderofouroutstandingindebtednessasofeachofthosedateswasfixed

ratedebt.

Other (income) expense.Other(income)expensein2018reflectsexpensesassociatedwiththevoluntary

prepaymentofourseniorunsecuredtermloanfacility,andin2017reflectsexpensesassociatedwiththeissuanceand

refinancingoflong-termdebt.

Income Taxes.Theeffectiveincometaxratefor2019was22.2%comparedtoarateof21.1%for2018which

representsanetincreaseof1.1percentagepoints.Theeffectiveincometaxratewashigherin2019primarilyduetoan

increaseinincometaxesresultingfromchangesinstateincometaxlawsandafederalincometaxbenefitarisingfromthe

TaxCutsandJobsAct(the“TCJA”)in2018thatdidnotreoccurin2019.

Theeffectiveincometaxratefor2018was21.1%comparedtoarateof19.3%for2017whichrepresentsanet

increaseof1.8percentagepoints.Theeffectiveincometaxratewashigherin2018primarilyduetotheone-time

remeasurementofthefederalportionofourdeferredtaxassetsandliabilitiesat21%in2017,whichwasoffsetbythe

reductioninthecurrentfederaltaxratefrom33.7%in2017to21%in2018.

TableofContents

Our2017provisionforincometaxesreflectedanestimateduetothechangesinthefederalincometaxlaw

arisingfromtheTCJA,signedintolawonDecember22,2017.Theprovisionaltaxbenefitconsistedof$310.8million

relatedtotheone-timeremeasurementofthefederalportionofourdeferredtaxassetsandliabilitiesatthe21%rateand

$24.2millionrelatedtothereducedstatutorytaxrateof33.7%,comparedto35%inprioryears.Subsequenttothesigning

oftheTCJA,theSecuritiesandExchangeCommissionstaffissuedStaffAccountingBulletinNo.118(“SAB118”),

whichallowedcompaniestorecordprovisionalamountsduringameasurementperiodnottoextendbeyondoneyearafter

theenactmentdatewhiletheaccountingimpactisstillunderanalysis.In2018,weconcludedouranalysisofthe

accountingimpactoftheTCJApursuanttoSAB118andrecordedimmaterialadjustmentsrelatedtoour2017provision

forincometaxes.

OffBalanceSheetArrangements

Wearenotpartytoanymaterialoffbalancesheetarrangements.

EffectsofInflation

In2019and2018,weexperiencedincreasesinproductcostsdueinparttotariffsoncertainitemsimportedfrom

China.Weexperiencedminimaloverallcommoditycostinflationordeflationin2017.

LiquidityandCapitalResources

Current Financial Condition and Recent Developments

Duringthepastthreeyears,wehavegeneratedanaggregateofapproximately$6.2billionincashflowsfrom

operatingactivitiesandincurredapproximately$2.2billionincapitalexpenditures.Duringthatperiod,weexpandedthe

numberofstoresweoperateby2,958,representinggrowthofapproximately22%,andweremodeledorrelocated3,053

stores,orapproximately23%ofthestoresweoperatedasofthebeginningofthethree-yearperiod.In2020,weintendto

continueourcurrentstrategyofpursuingstoregrowth,remodelsandrelocations.

AtJanuary31,2020,wehada$1.25billionunsecuredrevolvingcreditagreement(the“RevolvingFacility”),

$2.5billionaggregateprincipalamountofseniornotes,andacommercialpaperprogramthatmayprovideborrowing

availabilityofupto$1.0billion.AtJanuary31,2020,wehadtotalconsolidatedoutstandingdebt(includingthecurrent

portionoflong-termobligations)of$2.9billion,whichincludescommercialpaperborrowings(“CPNotes”)andsenior

notes,allofwhicharedescribedingreaterdetailbelow.OurborrowingavailabilityundertheRevolvingFacilitymaybe

effectivelylimitedbyourCPNotesasfurtherdescribedbelow.TheinformationcontainedinNote5totheconsolidated

financialstatementscontainedinPartII,Item8ofthisreportisincorporatedhereinbyreference.

Webelieveourcashflowfromoperations,andourexistingcashbalances,combinedwithavailabilityunderthe

RevolvingFacility,CPNotesandaccesstothedebtmarkets,willprovidesufficientliquiditytofundourcurrent

obligations,projectedworkingcapitalrequirements,capitalspendingandanticipateddividendpaymentsforaperiodthat

includesthenexttwelvemonthsaswellasthenextseveralyears.However,ourabilitytomaintainsufficientliquiditymay

beaffectedbynumerousfactors,manyofwhichareoutsideofourcontrol.Dependingonourliquiditylevels,conditions

inthecapitalmarketsandotherfactors,wemayfromtimetotimeconsidertheissuanceofdebt,equityorothersecurities,

theproceedsofwhichcouldprovideadditionalliquidityforouroperations.

Forfiscal2020,weanticipatepotentialcombinedborrowingsundertheRevolvingFacilityandCPNotestobea

maximumofapproximately$800millionoutstandingatanyonetime,includinganyanticipatedborrowingstofund

repurchasesofcommonstock.

TableofContents

Revolving Credit Facility

OnSeptember10,2019,weenteredintotheRevolvingFacilityconsistingofa$1.25billionseniorunsecured

revolvingcreditfacilityofwhichupto$175.0millionisavailablefortheissuanceoflettersofcreditandwhichis

scheduledtomatureonSeptember10,2024.

BorrowingsundertheRevolvingFacilitybearinterestatarateequaltoanapplicableinterestratemarginplus,at

ouroption,either(a)LIBORor(b)abaserate(whichisusuallyequaltotheprimerate).Theapplicableinterestrate

marginforborrowingsasofJanuary31,2020was1.015%forLIBORborrowingsand0.015%forbase-rateborrowings.

Wemustalsopayafacilityfee,payableonanyusedandunusedcommitmentamountsoftheRevolvingFacility,and

customaryfeesonlettersofcreditissuedundertheRevolvingFacility.AsofJanuary31,2020,thefacilityfeeratewas

0.11%.Theapplicableinterestratemarginsforborrowings,thefacilityfeesandtheletterofcreditfeesunderthe

RevolvingFacilityaresubjecttoadjustmentfromtimetotimebasedonourlong-termseniorunsecureddebtratings.

TheRevolvingFacilitycontainsanumberofcustomaryaffirmativeandnegativecovenantsthat,amongother

things,restrict,subjecttocertainexceptions,our(includingoursubsidiaries’)abilityto:incuradditionalliens;sellallor

substantiallyallofourassets;consummatecertainfundamentalchangesorchangeinourlinesofbusiness;andincur

additionalsubsidiaryindebtedness.TheRevolvingFacilityalsocontainsfinancialcovenantsthatrequirethemaintenance

ofaminimumfixedchargecoverageratioandamaximumleverageratio.AsofJanuary31,2020,wewereincompliance

withallsuchcovenants.TheRevolvingFacilityalsocontainscustomaryeventsofdefault.

AsofJanuary31,2020,undertheRevolvingFacility,wehadnooutstandingborrowings,outstandinglettersof

creditof$5.4million,andborrowingavailabilityof$1.24billionthat,duetoourintentiontomaintainborrowing

availabilityrelatedtothecommercialpaperprogramdescribedbelow,couldcontributeincrementalliquidityof$638.4

millionatJanuary31,2020.Inaddition,asofJanuary31,2020wehadoutstandinglettersofcreditof$41.4millionwhich

wereissuedpursuanttoseparateagreements.

Commercial Paper

AsofJanuary31,2020,ourconsolidatedbalancesheetreflectedoutstandingunsecuredCPNotesof$425.2

millionclassifiedaslong-termobligationsduetoourintentandabilitytorefinancetheseobligationsaslong-termdebt.An

additional$181.0millionofoutstandingCPNoteswereheldbyawholly-ownedsubsidiaryandarethereforenotreflected

ontheconsolidatedbalancesheet.Underthisprogram,wemayissuetheCPNotesfromtimetotimeinanaggregate

amountnottoexceed$1.0billionoutstandingatanytime.TheCPNotesmayhavematuritiesofupto364daysfromthe

dateofissueandrankequalinrightofpaymentwithallofourotherunsecuredandunsubordinatedindebtedness.We

intendtomaintainavailablecommitmentsundertheRevolvingFacilityinanamountatleastequaltotheamountofCP

Notesoutstandingatanytime.AsofJanuary31,2020,theconsolidatedoutstandingCPNoteshadaweightedaverage

borrowingrateof1.7%.

Senior Notes

InApril2013weissued$900.0millionaggregateprincipalamountof3.25%seniornotesdue2023(the“2023

SeniorNotes”)atadiscountof$2.4million,whicharescheduledtomatureonApril15,2023.InOctober2015weissued

$500.0millionaggregateprincipalamountof4.150%seniornotesdue2025(the“2025SeniorNotes”)atadiscountof

$0.8million,whicharescheduledtomatureonNovember1,2025.InApril2017weissued$600.0millionaggregate

principalamountof3.875%seniornotesdue2027(the“2027SeniorNotes”)atadiscountof$0.4million,whichare

scheduledtomatureonApril15,2027.InApril2018weissued$500.0millionaggregateprincipalamountof4.125%

seniornotesdue2028(the“2028SeniorNotes”)atadiscountof$0.5million,whicharescheduledtomatureonMay1,

2028.Collectively,the2023SeniorNotes,2025SeniorNotes,2027SeniorNotesand2028SeniorNotescomprisethe

“SeniorNotes”,eachofwhichwereissuedpursuanttoanindentureassupplementedandamendedbysupplemental

indenturesrelatingtoeachseriesofSeniorNotes(asso

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supplementedandamended,the“SeniorIndenture”).Interestonthe2023SeniorNotesandthe2027SeniorNotesis

payableincashonApril15andOctober15ofeachyear.Interestonthe2025and2028SeniorNotesispayableincashon

May1andNovember1ofeachyear.

WemayredeemsomeoralloftheSeniorNotesatanytimeatredemptionpricessetforthintheSenior

Indenture.Upontheoccurrenceofachangeofcontroltriggeringevent,whichisdefinedintheSeniorIndenture,each

holderofourSeniorNoteshastherighttorequireustorepurchasesomeorallofsuchholder’sSeniorNotesatapurchase

priceincashequalto101%oftheprincipalamountthereof,plusaccruedandunpaidinterest,ifany,to,butexcluding,the

repurchasedate.

TheSeniorIndenturecontainscovenantslimiting,amongotherthings,ourability(subjecttocertainexceptions)

toconsolidate,merge,orsellorotherwisedisposeofallorsubstantiallyallofourassets;andourabilityandtheabilityof

oursubsidiariestoincurorguaranteeindebtednesssecuredbyliensonanysharesofvotingstockofsignificant

subsidiaries.

TheSeniorIndenturealsoprovidesforeventsofdefaultwhich,ifanyofthemoccurs,wouldpermitorrequire

theprincipalofandaccruedinterestonourSeniorNotestobecomeortobedeclareddueandpayable,asapplicable.

Rating Agencies

Ourseniorunsecureddebtisrated“Baa2,”byMoody’swithastableoutlookand“BBB”byStandard&Poor’s

withastableoutlook,andourcommercialpaperprogramisrated“P-2”byMoody’sand“A-2”byStandardandPoor’s.

Ourcurrentcreditratings,aswellasfutureratingagencyactions,could(i)impactourabilitytofinanceouroperationson

satisfactoryterms;(ii)affectourfinancingcosts;and(iii)affectourinsurancepremiumsandcollateralrequirements

necessaryforourself-insuredprograms.Therecanbenoassurancethatwewillmaintainorimproveourcurrentcredit

ratings.

Contractual Obligations

Thefollowingtablesummarizesoursignificantcontractualobligationsandcommercialcommitmentsasof

January31,2020(inthousands):

PaymentsDuebyPeriod 

Contractualobligations  Total  <1year  1-3years  3-5years  5+years 

Long-termdebtobligations $ 2,930,095 $ 425,755 $ 1,190 $ 901,300 $ 1,601,850

Interest(a)  558,518  101,257  187,873  135,422  133,966

Self-insuranceliabilities(b)  238,254  106,911 85,160 29,370 16,813

Operatingleaseobligations(c)  10,770,814  1,313,935 2,465,113 2,185,022 4,806,744

Subtotal $ 14,497,681 $ 1,947,858 $ 2,739,336 $ 3,251,114 $ 6,559,373

CommitmentsExpiringbyPeriod 

Commercialcommitments(d)  Total  <1year  1-3years  3-5years  5+years 

Lettersofcredit $ 13,405 $ 13,405 $ — $ — $ —

Purchaseobligations(e)  790,215  790,215  —  —  —

Subtotal $ 803,620 $ 803,620 $ — $ — $ —

Totalcontractualobligationsandcommercial

commitments(f)

$ 15,301,301 $ 2,751,478 $ 2,739,336 $ 3,251,114 $ 6,559,373

(a) Representsobligationsforinterestpaymentsonlong-termdebtandincludesprojectedinterestonvariableratelong-

termdebtusing2019yearendratesandbalances.Variableratelong-termdebtincludestheRevolvingFacility

(althoughsuchfacilityhadabalanceofzeroasofJanuary31,2020),theCPNotes(whichhada

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balanceof$425.2millionasofJanuary31,2020,whichamountisnetof$181millionheldbyawholly-owned

subsidiary),andthebalanceofanoutstandingtaxincrementfinancingof$4.9million.

(b) Weretainasignificantportionoftheriskforourworkers’compensation,employeehealth,generalliability,property

loss,automobile,andthird-partylandlordclaimsexposures.Astheseobligationsdonothavescheduledmaturities,

theseamountsrepresentundiscountedestimatesbaseduponactuarialassumptions.Substantiallyallamountsare

reflectedonanundiscountedbasisinourconsolidatedbalancesheets.

ofcreditforimportmerchandise,andotherinventorypurchaseobligations.

(d) Purchaseobligationsincludelegallybindingagreementsforsoftwarelicensesandsupport,supplies,fixtures,and

merchandisepurchases(excludingsuchpurchasessubjecttolettersofcredit).

(e) Wehavepotentialpaymentobligationsassociatedwithuncertaintaxpositionsthatarenotreflectedinthesetotals.

Wearecurrentlyunabletomakereasonablyreliableestimatesoftheperiodofcashsettlementwiththetaxing

authoritiesforthe$5.1millionofreservesforuncertaintaxpositions.

Share Repurchase Program

Ourexistingcommonstockrepurchaseprogramhadatotalremainingauthorizationofapproximately$1.1billion

atJanuary31,2020.Undertheauthorization,purchasesmaybemadeintheopenmarketorinprivatelynegotiated

transactionsfromtimetotimesubjecttomarketandotherconditions.Theauthorizationhasnoexpirationdateandmaybe

modifiedorterminatedfromtimetotimeatthediscretionofourBoardofDirectors.Formoredetailaboutourshare

repurchaseprogram,seeNote11totheconsolidatedfinancialstatements.

Other Considerations

OnMarch11,2020,theBoardofDirectorsdeclaredaquarterlycashdividendof$0.36persharewhichis

payableonorbeforeApril21,2020toshareholdersofrecordofourcommonstockonApril7,2020.Wepaidquarterly

cashdividendsof$0.32persharein2019.AlthoughtheBoardcurrentlyexpectstocontinueregularquarterlycash

dividends,thedeclarationandamountoffuturecashdividendsaresubjecttotheBoard’ssolediscretionandwilldepend

upon,amongotherfactors,ourresultsofoperations,cashrequirements,financialcondition,contractualrestrictionsand

otherfactorsthatourBoardmaydeemrelevantinitssolediscretion.

Ourinventorybalancerepresentedapproximately55%ofourtotalassetsexclusiveofgoodwill,operatinglease

assets,andotherintangibleassetsasofJanuary31,2020.Ourabilitytoeffectivelymanageourinventorybalancescan

haveasignificantimpactonourcashflowsfromoperationsduringagivenfiscalyear.Inventorypurchasesareoften

somewhatseasonalinnature,suchasthepurchaseofwarm-weatherorChristmas-relatedmerchandise.Efficient

managementofourinventoryhasbeenandcontinuestobeanareaoffocusforus.

AsdescribedinNote7totheconsolidatedfinancialstatements,weareinvolvedinanumberoflegalactionsand

claims,someofwhichcouldpotentiallyresultinmaterialcashpayments.Adversedevelopmentsinthoseactionscould

materiallyandadverselyaffectourliquidity.

Cash Flows

Cash flows from operating activities. Cashflowsfromoperatingactivitieswere$2.24billionin2019,which

representsa$94.4millionincreasecomparedto2018.Changesinaccountspayableresultedina$428.6millionincrease

in2019comparedtoa$375.2millionincreasein2018,dueprimarilytothetimingofreceiptsandpaymentswhichwas

partiallyimpactedbycertainchangesinpaymentterms.Inaddition,netincomeincreasedby$123.1millionin2019over

2018.Theseitemswereoffsetbychangesinmerchandiseinventories

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whichresultedina$578.8milliondecreasein2019ascomparedtoadecreaseof$521.3millionin2018.Changesin

incometaxesin2019comparedto2018areprimarilyduetothetimingofpaymentsforincometaxes.

Cashflowsfromoperatingactivitieswere$2.1billionin2018,whichrepresentsa$341.4millionincrease

comparedto2017.Changesinaccountspayableresultedina$375.2millionincreasein2018comparedtoa$427.9

millionincreasein2017,dueprimarilytothetimingofreceiptsandpaymentswhichwaspartiallyimpactedbycertain

changesinpaymentterms.Inaddition,netincomeincreasedby$50.5millionin2018over2017.Theseitemswereoffset

bychangesinmerchandiseinventorieswhichresultedina$521.3milliondecreasein2018ascomparedtoadecreaseof

$348.4millionin2017.Changesinincometaxesin2018comparedto2017areprimarilyduetothereductioninthe

federalincometaxrateto21%from35%andthetimingofpaymentsforincometaxes.

Onanongoingbasis,wecloselymonitorandmanageourinventorybalances,andtheymayfluctuatefromperiod

toperiodbasedonnewstoreopenings,thetimingofpurchases,andotherfactors.Merchandiseinventoriesincreasedby

14%in2019,by14%in2018andby11%in2017.Inventorylevelsintheconsumablescategoryincreasedby$371.9

million,or14%,in2019,by$320.9million,or14%,in2018,andby$322.9million,or16%in2017.Theseasonal

categoryincreasedby$127.3million,or17%,in2019,by$108.4million,or17%,in2018,andby$14.9million,or2%,

in2017.Thehomeproductscategoryincreasedby$82.8million,or23%,in2019,by$24.0million,or7%,in2018,and

by$10.6million,or3%,in2017.Theapparelcategorydecreasedby$2.1million,or1%,in2019,andincreasedby$34.7

million,or10%,in2018,andby$1.9million,or1%,in2017.

Cash flows from investing activities.Significantcomponentsofpropertyandequipmentpurchasesin2019

includedthefollowingapproximateamounts:$338millionforimprovements,upgrades,remodelsandrelocationsof

existingstores;$217millionfordistributionandtransportation-relatedprojects;$149millionfornewleasedstores,

primarilyforleaseholdimprovements,fixturesandequipment;and$59millionforinformationsystemsupgradesand

technology-relatedprojects.Thetimingofnew,remodeledandrelocatedstoreopeningsalongwithotherfactorsmay

affecttherelationshipbetweensuchopeningsandtherelatedpropertyandequipmentpurchasesinanygivenperiod.

During2019,weopened975newstoresandremodeledorrelocated1,124stores.

Significantcomponentsofpropertyandequipmentpurchasesin2018includedthefollowingapproximate

amounts:$289millionforimprovements,upgrades,remodelsandrelocationsofexistingstores;$242millionfor

distributionandtransportation-relatedprojects;$138millionfornewleasedstores,primarilyforleaseholdimprovements,

fixturesandequipment;and$47millionforinformationsystemsupgradesandtechnology-relatedprojects.During2018,

weopened900newstoresandremodeledorrelocated1,165stores.

Significantcomponentsofpropertyandequipmentpurchasesin2017includedthefollowingapproximate

amounts:$231millionforimprovements,upgrades,remodelsandrelocationsofexistingstores;$203millionfornew

leasedstores,primarilyforleaseholdimprovements,fixturesandequipment;$176millionfordistributionand

transportation-relatedprojects;and$30millionforinformationsystemsupgradesandtechnology-relatedprojects.During

2017,weopened1,315newstoresandremodeledorrelocated764stores.

Capitalexpendituresduring2020areprojectedtobeintherangeof$925millionto$975million.Weanticipate

funding2020capitalrequirementswithacombinationofsomeorallofthefollowing:existingcashbalances,cashflows

fromoperations,availabilityunderourRevolvingFacilityand/ortheissuanceofadditionalseniornotesorCPNotes.We

plantocontinuetoinvestinstoregrowthanddevelopmentofapproximately1,000newstoresandapproximately1,580

storestoberemodeledorrelocated.Capitalexpendituresin2020areanticipatedtosupportourstoregrowthaswellasour

remodelandrelocationinitiatives,includingcapitaloutlaysforleaseholdimprovements,fixturesandequipment;the

constructionofnewstores;coststosupportandenhanceoursupplychaininitiativesincludingnewandexisting

distributioncenterfacilitiesandourprivatefleet;technologyinitiatives;aswellasroutineandongoingcapital

requirements.

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Cash flows from financing activities.In2019,wehadanetincreaseinconsolidatedcommercialpaper

borrowingsof$58.3millionandhadnoborrowingsorrepaymentsundertheRevolvingFacility.Werepurchased8.3

millionoutstandingsharesofourcommonstockin2019atatotalcostof$1.2billion,andpaidcashdividendsof$327.6

million.

In2018,wehadnetproceedsfromtheissuanceofthe2028SeniorNotesof$499.5million,redeemedthe2018

SeniorNotesfor$400.0million,andmadeaprincipalpaymentontheTermFacilityof$175.0million.Wehadanet

decreaseinconsolidatedcommercialpaperborrowingsin2018of$63.3millionandhadnoborrowingsorrepayments

undertheRevolvingFacility.Werepurchased9.9millionoutstandingsharesofourcommonstockin2018atatotalcost

of$1.0billion,andpaidcashdividendsof$306.5million.

In2017,wehadnetproceedsfromtheissuanceofthe2027SeniorNotesof$599.6million,redeemedthe2017

SeniorNotesfor$500.0million,andmadeaprincipalpaymentontheTermFacilityof$250.0million.Wehadanet

decreaseinconsolidatedcommercialpaperborrowingsin2017of$60.3millionandhadnoborrowingsorrepayments

undertheRevolvingFacility.Werepurchased7.1millionoutstandingsharesofourcommonstockin2017atatotalcost

of$579.7million,andpaidcashdividendsof$282.9million.

AccountingStandards

InJanuary2017,theFASBissuedamendmentstoexistingguidancerelatedtothesubsequentmeasurementof

goodwill.Theseamendmentsmodifytheconceptofimpairmentfromtheconditionthatexistswhenthecarryingamount

ofgoodwillexceedsitsimpliedfairvaluetotheconditionthatexistswhenthecarryingamountofareportingunitexceeds

itsfairvalue.Subsequenttoadoption,anentitywillperformitsannual,orinterim,goodwillimpairmenttestbycomparing

thefairvalueofareportingunitwithitscarryingamountandrecognizeanimpairmentchargefortheamountbywhichthe

carryingamountexceedsthereportingunit’sfairvalue.Thisguidanceiseffectiveforpublicbusinessentitiesforfiscal

years,andinterimperiodswithinthoseyears,beginningafterDecember15,2019,andearlyadoptionispermittedfor

interimorannualgoodwillimpairmenttestsperformedontestingdatesafterJanuary1,2017.Theamendmentsshouldbe

appliedonaprospectivebasis.Anentityisrequiredtodisclosethenatureofandreasonforthechangeinaccounting

principleupontransition.Wedonotanticipateamaterialeffectonourconsolidatedresultsofoperations,financial

positionorcashflowstoresultfromtheadoptionofthisguidance.

CriticalAccountingPoliciesandEstimates

ThepreparationoffinancialstatementsinaccordancewithgenerallyacceptedaccountingprinciplesintheUnited

States(“U.S.GAAP”)requiresmanagementtomakeestimatesandassumptionsthataffectreportedamountsandrelated

disclosures.Inadditiontotheestimatespresentedbelow,thereareotheritemswithinourfinancialstatementsthatrequire

estimation,butarenotdeemedcriticalasdefinedbelow.Webelievetheseestimatesarereasonableandappropriate.

However,ifactualexperiencediffersfromtheassumptionsandotherconsiderationsused,theresultingchangescould

haveamaterialeffectonthefinancialstatementstakenasawhole.

Managementbelievesthefollowingpoliciesandestimatesarecriticalbecausetheyinvolvesignificant

judgments,assumptions,andestimates.Managementhasdiscussedthedevelopmentandselectionofthecritical

accountingestimateswiththeAuditCommitteeofourBoardofDirectors,andtheAuditCommitteehasreviewedthe

disclosurespresentedbelowrelatingtothosepoliciesandestimates.SeeNote1totheconsolidatedfinancialstatements

foradetaileddiscussionofourprincipalaccountingpolicies.

Merchandise Inventories.Merchandiseinventoriesarestatedatthelowerofcostormarket(“LCM”)withcost

determinedusingtheretaillastin,firstout(“LIFO”)method.Weusetheretailinventorymethod(“RIM”)tocalculate

grossprofitandtheresultingvaluationofinventoriesatcost,whicharecomputedutilizingacalculatedcost-to-retail

inventoryratioataninventorydepartmentlevel.WeapplytheRIMtothesedepartments,whicharegroupsofproducts

thatarefairlyuniformintermsofcost,sellingpricerelationshipandturnover.The

TableofContents

RIMwillresultinvaluinginventoriesatLCMifpermanentmarkdownsarecurrentlytakenasareductionoftheretail

valueofinventories.InherentintheRIMcalculationarecertainmanagementjudgmentsandestimatesthatmayimpactthe

endinginventoryvaluationatcost,aswellasthegrossprofitrecognized.Thesejudgmentsincludeensuringdepartments

consistofsimilarproducts,recordingestimatedshrinkagebetweenphysicalinventories,andtimelyrecordingof

markdownsneededtosellinventory.

WeperformanannualLIFOanalysiswherebyallmerchandiseunitsareconsideredforinclusionintheindex

formulation.AnactualvaluationofinventoryundertheLIFOmethodismadeattheendofeachyearbasedonthe

inventorylevelsandcostsatthattime.Incontrast,interimLIFOcalculationsarebasedonmanagement’sannualestimates

ofsales,therateofinflationordeflation,andyear-endinventorylevels.Wealsoperformanalysesfordetermining

obsoleteinventory,adjustinginventoryonaquarterlybasistoanLCMvaluebasedonvariousmanagementassumptions

includingestimatedbelowcostmarkdownsnotyetrecorded,butrequiredtoliquidatesuchinventoryinfutureperiods.

Factorsconsideredinthedeterminationofmarkdownsincludecurrentandanticipateddemandbasedonchanges

incompetitors’practices,consumerpreferences,consumerspending,significantweathereventsandunseasonableweather

patterns.Certainofthesefactorsareoutsideofourcontrolandmayresultingreaterthanestimatedmarkdownstoentice

consumerpurchasesofexcessinventory.Theamountandtimingofmarkdownsmayvarysignificantlyfromyeartoyear.

Weperformphysicalinventoriesinvirtuallyallofourstoresonanannualbasis.Wecalculateourshrink

provisionbasedonactualphysicalinventoryresultsduringthefiscalperiodandanaccrualforestimatedshrinkoccurring

subsequenttoaphysicalinventorythroughtheendofthefiscalreportingperiod.Thisaccrualiscalculatedasapercentage

ofsalesateachretailstore,atadepartmentlevel,basedonthestore’smostrecenthistoricalshrinkrate.Totheextentthat

subsequentphysicalinventoriesyielddifferentresultsthantheestimatedaccrual,oureffectiveshrinkrateforagiven

reportingperiodwillincludetheimpactofadjustingtotheactualresults.

WebelieveourestimatesandassumptionsrelatedtotheapplicationoftheRIMresultsinamerchandise

inventoryvaluationthatreasonablyapproximatescostonaconsistentbasis.

Impairment of Long-lived Assets. Impairmentoflong-livedassetsresultswhenthecarryingvalueoftheassets

exceedstheestimatedundiscountedfuturecashflowsgeneratedbytheassets.Ourestimateofundiscountedfuturestore

cashflowsisbaseduponhistoricaloperationsofthestoresandestimatesoffutureprofitabilitywhichencompassesmany

factorsthataresubjecttovariabilityandaredifficulttopredict.Ifourestimatesoffuturecashflowsarenotmaterially

accurate,ourimpairmentanalysiscouldbeimpactedaccordingly.Ifalong-livedassetisfoundtobeimpaired,theamount

recognizedforimpairmentisequaltothedifferencebetweenthecarryingvalueandtheasset’sestimatedfairvalue.The

fairvalueisestimatedbasedprimarilyuponprojectedfuturecashflows(discountedatourcreditadjustedrisk-freerate)or

otherreasonableestimatesoffairmarketvalue.Althoughnotcurrentlyanticipated,changesintheseestimates,

assumptionsorprojectionscouldmateriallyaffectthedeterminationoffairvalueorimpairment.

Insurance Liabilities.Weretainasignificantportionoftheriskforourworkers’compensation,employeehealth,

generalliability,propertyloss,automobileandthird-partylandlordclaimexposures.Theserepresentsignificantcosts

primarilyduetoourlargeemployeebaseandnumberofstores.Provisionsaremadefortheseliabilitiesonan

undiscountedbasis.Certainoftheseliabilitiesarebasedonactualclaimdataandestimatesofincurredbutnotreported

claimsdevelopedusingactuarialmethodologiesbasedonhistoricalclaimtrends,whichhavebeenandareanticipatedto

continuetobemateriallyaccurate.Iffutureclaimtrendsdeviatefromrecenthistoricalpatterns,orotherunanticipated

eventsaffectthenumberandsignificanceoffutureclaims,wemayberequiredtorecordadditionalexpensesorexpense

reductions,whichcouldbematerialtoourfuturefinancialresults.

TableofContents

Contingent Liabilities – Income Taxes.Incometaxreservesaredeterminedusingthemethodologyestablishedby

accountingstandardsrelatingtouncertaintyinincometaxes.Thesestandardsrequirecompaniestoassesseachincometax

positiontakenusingatwo-stepprocess.Adeterminationisfirstmadeastowhetheritismorelikelythannotthatthe

positionwillbesustained,baseduponthetechnicalmerits,uponexaminationbythetaxingauthorities.Ifthetaxposition

isexpectedtomeetthemorelikelythannotcriteria,thebenefitrecordedforthetaxpositionequalsthelargestamountthat

isgreaterthan50%likelytoberealizeduponultimatesettlementoftherespectivetaxposition.Uncertaintaxpositions

requiredeterminationsandliabilitiestobeestimatedbasedonprovisionsofthetaxlawwhichmaybesubjecttochangeor

varyinginterpretation.Ifourdeterminationsandestimatesprovetobeinaccurate,theresultingadjustmentscouldbe

materialtoourfuturefinancialresults.

Lease Accounting.WeadoptednewaccountingguidancerelatedtoleasesasofFebruary2,2019,usingthe

modifiedretrospectiveapproach.Underthisapproach,existingleaseswererecordedattheadoptiondate,andcomparative

periodswerenotrestatedandarepresentedunderpreviouslyexistingguidance.Adoptionoftheleasingstandardresulted

inrightofuseoperatingleaseassetsandoperatingleaseliabilitiesofapproximately$8.0billioneachasofFebruary2,

2019.Significantjudgmentsandestimateswereutilizedincalculatingtheseinitialbalances,includingthedetermination

ofappropriateleasediscountrates.

Manyofourstoresaresubjecttobuild-to-suitarrangementswithlandlords,whichtypicallycarryaprimarylease

termofupto15yearswithmultiplerenewaloptions.Wealsohavestoressubjecttoshorter-termleasesandmanyofthese

leaseshaverenewaloptions.Certainofourstoreshaveprovisionsforcontingentrentalsbaseduponapercentageof

definedsalesvolume.Werecognizecontingentrentalexpensewhentheachievementofspecifiedsalestargetsis

consideredprobable.Werecordsingleleaseexpenseonastraight-linebasisovertheleasetermincludinganyoption

periodsthatarereasonablycertaintoberenewed,commencingonthedatethatwetakephysicalpossessionofthe

propertyfromthelandlordwhichnormallyincludesaperiodpriortostoreopeningtomakenecessaryleasehold

improvementsandinstallstorefixtures.Whenaleasecontainsapredeterminedfixedescalationoftheminimumrent,the

relatedleaseexpenseisrecognizedonastraight-linebasis.Tenantallowances,totheextentreceived,arerecordedasa

reductionoftherightofuseasset.Improvementsofleasedpropertiesareamortizedovertheshorterofthelifeofthe

applicableleasetermortheestimatedusefullifeoftheasset.

Share-Based Payments.OurstockoptionawardsarevaluedonanindividualgrantbasisusingtheBlack-Scholes-

Mertonclosedformoptionpricingmodel.Webelievethatthismodelfairlyestimatesthevalueofourstockoptionawards.

Theapplicationofthisvaluationmodelinvolvesassumptionsthatarejudgmentalinthevaluationofstockoptions,which

affectscompensationexpenserelatedtotheseoptions.Theseassumptionsincludethetermthattheoptionsareexpectedto

beoutstanding,thehistoricalvolatilityofourstockprice,applicableinterestratesandthedividendyieldofourstock.

Otherfactorsinvolvingjudgmentsthataffecttheexpensingofshare-basedpaymentsincludeestimatedforfeitureratesof

share-basedawards.Historically,theseestimateshavebeenmateriallyaccurate;however,ifourestimatesdiffermaterially

fromactualexperience,wemayberequiredtorecordadditionalexpenseorreductionsofexpense,whichcouldbe

materialtoourfuturefinancialresults.

Fair Value Measurements.Accountingstandardsforthemeasurementoffairvalueofassetsandliabilities

establishafairvaluehierarchythatdistinguishesbetweenmarketparticipantassumptionsbasedonmarketdataobtained

fromsourcesindependentofthereportingentity(observableinputsthatareclassifiedwithinLevels1and2ofthe

hierarchy)andthereportingentity’sownassumptionsaboutmarketparticipantassumptions(unobservableinputs

classifiedwithinLevel3ofthehierarchy).Therefore,Level3inputsaretypicallybasedonanentity’sownassumptions,

asthereislittle,ifany,relatedmarketactivity,andthusrequiretheuseofsignificantjudgmentandestimates.Currently,

wehavenoassetsorliabilitiesthatarevaluedbasedsolelyonLevel3inputs.

Ourfairvaluemeasurementsareprimarilyassociatedwithouroutstandingdebtinstruments.Weusevarious

valuationmodelsindeterminingthevaluesoftheseliabilities.Webelievethatinrecentyearsthesemethodologieshave

producedmateriallyaccuratevaluations.

TableofContents

ITEM7A. QUANTITATIVEANDQUALITATIVEDISCLOSURESABOUTMARKETRISK

FinancialRiskManagement

Weareexposedtomarketriskprimarilyfromadversechangesininterestrates,andtoalesserdegreecommodity

prices.Tominimizethisrisk,wemayperiodicallyusefinancialinstruments,includingderivatives.Allderivativefinancial

instrumenttransactionsmustbeauthorizedandexecutedpursuanttoapprovalbytheBoardofDirectors.Asamatterof

policy,wedonotbuyorsellfinancialinstrumentsforspeculativeortradingpurposes,andanysuchderivativefinancial

instrumentsareintendedtobeusedtoreduceriskbyhedginganunderlyingeconomicexposure.Ourobjectiveisto

correlatederivativefinancialinstrumentsandtheunderlyingexposurebeinghedged,sothatfluctuationsinthevalueofthe

financialinstrumentsaregenerallyoffsetbyreciprocalchangesinthevalueoftheunderlyingeconomicexposure.

InterestRateRisk

Wemanageourinterestrateriskthroughthestrategicuseoffixedandvariableinterestratedebtand,fromtime

totime,derivativefinancialinstruments.Ourprincipalinterestrateexposurerelatestooutstandingamountsunderour

RevolvingFacilityaswellasourcommercialpaperprogram.AsofJanuary31,2020,wehadconsolidatedborrowingsof

$425.2millionunderourcommercialpaperprogramandnoborrowingsoutstandingunderourRevolvingFacility.In

ordertomitigateaportionofthevariablerateinterestexposureunderthecreditfacilities,inprioryearswehaveentered

intovariousinterestrateswaps.AsofJanuary31,2020,nosuchinterestrateswapswereoutstandingand,asaresult,we

areexposedtofluctuationsinvariableinterestratesundertheRevolvingFacilityandourcommercialpaperprogram.Fora

detaileddiscussionofourRevolvingFacilityandourcommercialpaperprogram,seeNote5totheconsolidatedfinancial

statements.

Achangeininterestratesonvariableratedebtimpactsourpre-taxearningsandcashflows;whereasachangein

interestratesonfixedratedebtimpactstheeconomicfairvalueofdebtbutnotourpre-taxearningsandcashflows.Based

onourvariablerateborrowinglevelsasofJanuary31,2020andFebruary1,2019,theannualizedeffectofaone

percentagepointincreaseinvariableinterestrateswouldhaveresultedinapretaxreductionofourearningsandcash

flowsofapproximately$4.3millionin2019and$3.7millionin2018.

TableofContents

ITEM8.FINANCIALSTATEMENTSANDSUPPLEMENTARYDATA

ReportofIndependentRegisteredPublicAccountingFirm

TotheShareholdersandtheBoardofDirectorsof

DollarGeneralCorporation

OpinionontheFinancialStatements

WehaveauditedtheaccompanyingconsolidatedbalancesheetsofDollarGeneralCorporationandsubsidiaries(the

Company)asofJanuary31,2020andFebruary1,2019,therelatedconsolidatedstatementsofincome,comprehensive

income,shareholders'equityandcashflowsforeachofthethreeyearsintheperiodendedJanuary31,2020,andthe

relatednotes(collectivelyreferredtoasthe“consolidatedfinancialstatements”).Inouropinion,theconsolidatedfinancial

statementspresentfairly,inallmaterialrespects,thefinancialpositionoftheCompanyatJanuary31,2020andFebruary

1,2019,andtheresultsofitsoperationsanditscashflowsforeachofthethreeyearsintheperiodendedJanuary31,

2020,inconformitywithU.S.generallyacceptedaccountingprinciples.

Wealsohaveaudited,inaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(United

States)(PCAOB),theCompany'sinternalcontroloverfinancialreportingasofJanuary31,2020,basedoncriteria

establishedinInternalControl-IntegratedFrameworkissuedbytheCommitteeofSponsoringOrganizationsofthe

TreadwayCommission(2013framework),andourreportdatedMarch19,2020,expressedanunqualifiedopinion

thereon.

AdoptionofNewAccountingStandard

AsdiscussedinNote1totheconsolidatedfinancialstatements,theCompanychangeditsmethodofaccountingforlease

contractsonFebruary2,2019,duetotheadoptionofASU2016-02Leases(ASC842).Seebelowfordiscussionofour

relatedcriticalauditmatter.

BasisforOpinion

TheseconsolidatedfinancialstatementsaretheresponsibilityoftheCompany'smanagement.Ourresponsibilityisto

expressanopinionontheCompany’sconsolidatedfinancialstatementsbasedonouraudits.Weareapublicaccounting

firmregisteredwiththePCAOBandarerequiredtobeindependentwithrespecttotheCompanyinaccordancewiththe

U.S.federalsecuritieslawsandtheapplicablerulesandregulationsoftheSecuritiesandExchangeCommissionandthe

PCAOB.

WeconductedourauditsinaccordancewiththestandardsofthePCAOB.Thosestandardsrequirethatweplanand

performtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreeofmaterialmisstatement,

whetherduetoerrororfraud.Ourauditsincludedperformingprocedurestoassesstherisksofmaterialmisstatementof

thefinancialstatements,whetherduetoerrororfraud,andperformingproceduresthatrespondtothoserisks.Such

proceduresincludedexamining,onatestbasis,evidenceregardingtheamountsanddisclosuresinthefinancialstatements.

Ourauditsalsoincludedevaluatingtheaccountingprinciplesusedandsignificantestimatesmadebymanagement,aswell

asevaluatingtheoverallpresentationofthefinancialstatements.Webelievethatourauditsprovideareasonablebasisfor

ouropinion.

CriticalAuditMatters

Thecriticalauditmatterscommunicatedbelowaremattersarisingfromthecurrentperiodauditofthefinancialstatements

thatwerecommunicatedorrequiredtobecommunicatedtotheauditcommitteeandthat:(1)relatetoaccountsor

disclosuresthatarematerialtothefinancialstatementsand(2)involvedourespeciallychallenging,subjective,orcomplex

judgments.Thecommunicationofcriticalauditmattersdoesnotalterinanywayour

TableofContents

opinionontheconsolidatedfinancialstatements,takenasawhole,andwearenot,bycommunicatingthecriticalaudit

mattersbelow,providingseparateopinionsonthecriticalauditmattersorontheaccountsordisclosurestowhichthey

relate.

Estimate of Workers’ Compensation and General Liability Reserves

Description of the

Matter

TheCompanyrecordsexpensesandreservesforworkers’compensationmattersrelatedto

allegedwork-relatedemployeeaccidentsandinjuries,aswellasgeneralliabilitymatters

relatedtoallegednon-employeeincidentsandinjuries.AtJanuary31,2020,the

Company’sreservesforself-insuranceriskswere$240.6million,whichincludesworkers’

compensationandgeneralliabilityreserves.AsdiscussedinNote1oftheconsolidated

financialstatements,theCompanyretainsasignificantportionofriskrelatedtoits

workers’compensationandgeneralliabilityexposures.Accordingly,provisionsare

recordedfortheCompany’sestimatesofsuchlosses.Theundiscountedfutureclaimcosts

fortheworkers’compensationandgeneralliabilityexposuresareestimatedusingactuarial

methods.

Auditingmanagement’sassessmentoftherecordedself-insuranceexposurereserveswas

complexandjudgmentalduetothesignificantassumptionsrequiredinprojectingthe

exposureonincurredclaims(includingthosewhichhavenotbeenreportedtothe

Company).Inparticular,theestimatewassensitivetosignificantassumptionssuchasloss

developmentfactors,trendfactors,purelossrates,andprojectedclaimcounts.

How We Addressed

the Matter in Our

Audit

Weobtainedanunderstanding,evaluatedthedesign,andtestedtheoperatingeffectiveness

ofcontrolsovertheCompany’saccountingfortheseself-insuranceexposures.For

example,wetestedcontrolsovertheappropriatenessoftheassumptionsmanagementused

inthecalculationandthecompletenessandaccuracyofthedataunderlyingthereserves.

TotesttheCompany’sdeterminationoftheestimatedrequiredself-insurancereserves,we

performedauditproceduresthatincluded,amongothers,assessingtheactuarialvaluation

methodologiesutilizedbymanagement,testingthesignificantassumptionsdiscussed

above,testingthecompletenessandaccuracyoftheunderlyingdatausedbytheCompany

initsevaluation,andtestingthemathematicalaccuracyofthecalculations.Wealso

comparedthesignificantassumptionsusedbymanagementtoindustryacceptedactuarial

assumptions,reassessedtheaccuracyofmanagement’shistoricalestimatesutilizedinprior

periodevaluations,andutilizedanactuarialvaluationspecialisttoassistinassessingthe

valuationmethodologiesandsignificantassumptionsusedinthevaluationanalysis,aswell

astocomparetheCompany’srecordedreservetoanindependentlydevelopedrangeof

actuarialreserves.

TableofContents

Adoption of New Lease Accounting Standard

Description of the

Matter

AsdescribedaboveandinNote1totheconsolidatedfinancialstatements,theCompany

adoptedASU2016-02,Leases(ASC842),onFebruary2,2019.TheadoptionofASC842

resultedintherecognitionofright-of-useoperatingleaseassetsandleaseliabilitiesof

approximately$8.0billionasofFebruary2,2019.Thecumulativeeffectofadoptingthe

standardresultedinanadjustmenttoretainedearningsof$28.8millionatthesamedate.

Amongtheelementsofmanagementestimationinconnectionwiththeadoptionwasthe

determinationofincrementalborrowingrates(“IBR”)whichwereusedtocalculateits

operatingright-of-useassetsandleaseliabilities.Managementestimatescertain

adjustmentstoobservedborrowingratesinordertoderivetheIBRsthatarerepresentative

oftheratethelesseewouldhavetoborrowonacollateralizedbasisoverasimilartermas

thesubjectlease.

AuditingtheCompany’sadoptionofASC842wascomplexandinvolvedsubjective

auditorjudgementbecausetheCompanyispartytoasignificantnumberofleasecontracts,

andcertainaspectsofadoptingASC842requiredmanagementtoexercisesignificant

judgmentinapplyingASC842toitsportfolioofleasecontracts.Inparticular,auditing

management’sestimateoftheIBRsusedtodeterminetheoperatingright-of-useassetsand

leaseliabilitieswasespeciallychallengingandrequiredtheevaluationofthesignificant

assumptionsutilizedbymanagementincludingtheselectionofappropriateyieldcurves

andadjustmentsforcollateralization.

How We Addressed

the Matter in Our

Audit

Weobtainedanunderstanding,evaluatedthedesign,andtestedtheoperatingeffectiveness

ofcontrolsovertheCompany’saccountingfortheadoptionofASC842.Forexample,we

testedcontrolsovermanagement’sreviewoftheapplicationofaccountingpolicyelections

toitsportfolioofleasesandovermanagement’sreviewoftheestimationoftheIBRs.

TotesttheCompany’sadoptionofASC842,weperformedauditproceduresthatincluded,

amongothers,evaluatingthecompletenessofthepopulationofcontractsthatmeetthe

definitionofaleaseunderASC842,testingtheaccuracyofleasetermsbyagreementof

suchtermstotheoriginalleasecontract,andtestingtheaccuracyoftheCompany’s

calculationsofinitialright-of-useassetsandleaseliabilities.Weinvolvedourspecialistto

assistinourevaluationoftheCompany’smethodology,modelandsignificantassumptions

utilizedindevelopingtheIBRs.WealsocomparedtheCompany’sIBRstoranges

developedbyourspecialistsbasedonindependentlyobserveddata.

/s/Ernst&YoungLLP

WehaveservedastheCompany’sauditorsince2001.

Nashville,Tennessee

March19,2020

TableofContents

DOLLARGENERALCORPORATIONANDSUBSIDIARIES

CONSOLIDATEDBALANCESHEETS

(In thousands, except per share amounts)

 January31,  February1, 

2020 2019 

ASSETS

Currentassets:

Cashandcashequivalents $ 240,320 $ 235,487

Merchandiseinventories  4,676,848  4,097,004

Incometaxesreceivable 76,537 57,804

Prepaidexpensesandothercurrentassets  184,163  272,725

Totalcurrentassets

 5,177,868  4,663,020

Netpropertyandequipment

 3,278,359  2,970,806

Operatingleaseassets

8,796,183 —

Goodwill

 4,338,589  4,338,589

Otherintangibleassets,net

 1,200,006  1,200,217

Otherassets,net

 34,079  31,406

Totalassets

$ 22,825,084 $ 13,204,038

LIABILITIESANDSHAREHOLDERS’EQUITY

Currentliabilities:

Currentportionoflong-termobligations $ 555 $ 1,950

Currentportionofoperatingleaseliabilities 964,805 —

Accountspayable  2,860,682  2,385,469

Accruedexpensesandother  709,156  618,405

Incometaxespayable  8,362  10,033

Totalcurrentliabilities

 4,543,560  3,015,857

Long-termobligations

 2,911,438  2,862,740

Long-termoperatingleaseliabilities

7,819,683 —

Deferredincometaxes

 675,227  609,687

Otherliabilities

 172,676  298,361

Commitmentsandcontingencies

Shareholders’equity:

Preferredstock  — —

Commonstock;$0.875parvalue,1,000,000sharesauthorized,251,936and259,511

sharesissuedandoutstandingatJanuary31,2020andFebruary1,2019,

respectively  220,444  227,072

Additionalpaid-incapital  3,322,531  3,252,421

Retainedearnings  3,162,660  2,941,107

Accumulatedothercomprehensiveloss  (3,135)  (3,207)

Totalshareholders’equity

 6,702,500  6,417,393

Totalliabilitiesandshareholders'equity

$ 22,825,084 $ 13,204,038

Theaccompanyingnotesareanintegralpartoftheconsolidatedfinancialstatements.

TableofContents

DOLLARGENERALCORPORATIONANDSUBSIDIARIES

CONSOLIDATEDSTATEMENTSOFINCOME

(In thousands, except per share amounts)

FortheYearEnded 

 January31,  February1,  February2, 

2020 2019 2018 

Netsales

$ 27,753,973 $ 25,625,043 $ 23,470,967

Costofgoodssold  19,264,912  17,821,173  16,249,608

Grossprofit

 8,489,061  7,803,870  7,221,359

Selling,generalandadministrativeexpenses  6,186,757  5,687,564  5,213,541

Operatingprofit

 2,302,304  2,116,306  2,007,818

Interestexpense  100,574  99,871  97,036

Other(income)expense  —  1,019  3,502

Incomebeforeincometaxes

 2,201,730  2,015,416  1,907,280

Incometaxexpense  489,175  425,944  368,320

Netincome

$ 1,712,555 $ 1,589,472 $ 1,538,960

Earningspershare:

Basic $ 6.68 $ 5.99 $ 5.64

Diluted $ 6.64 $ 5.97 $ 5.63

Weightedaveragesharesoutstanding:

Basic  256,553  265,155  272,751

Diluted

258,053  266,105  273,362

Dividendspershare $ 1.28 $ 1.16 $ 1.04

Theaccompanyingnotesareanintegralpartoftheconsolidatedfinancialstatements.

TableofContents

DOLLARGENERALCORPORATIONANDSUBSIDIARIES

CONSOLIDATEDSTATEMENTSOFCOMPREHENSIVEINCOME

(In thousands)

FortheYearEnded 

January31,  February1,  February2, 

2020 2019 2018 

Netincome

$ 1,712,555 $ 1,589,472 $ 1,538,960

Unrealizednetgain(loss)onhedgedtransactions,netofrelatedincometax

expense(benefit)of$345,$344,and$509,respectively  973  974  809

Comprehensiveincome

$ 1,713,528 $ 1,590,446 $ 1,539,769

Theaccompanyingnotesareanintegralpartoftheconsolidatedfinancialstatements.

TableofContents

DOLLARGENERALCORPORATIONANDSUBSIDIARIES

CONSOLIDATEDSTATEMENTSOFSHAREHOLDERS’EQUITY

(In thousands except per share amounts)

     Accumulated  

Common Additional Other 

Stock Common Paid-in Retained Comprehensive 

Shares Stock Capital Earnings Loss Total 

Balances,February3,2017  275,212 $ 240,811 $ 3,154,606 $ 2,015,867 $ (4,990) $ 5,406,294

Netincome  —  —  —  1,538,960  —  1,538,960

Dividendspaid,$1.04percommonshare — — — (282,941) — (282,941)

Unrealizednetgain(loss)onhedgedtransactions  —  —  —  —  809  809

Share-basedcompensationexpense  —  —  34,323  —  —  34,323

Repurchasesofcommonstock  (7,060)  (6,178)  —  (573,534)  —  (579,712)

Otherequityandrelatedtransactions  581  508  7,533  —  —  8,041

Balances,February2,2018  268,733 $ 235,141 $ 3,196,462 $ 2,698,352 $ (4,181) $ 6,125,774

Netincome  —  —  —  1,589,472  —  1,589,472

Dividendspaid,$1.16percommonshare — — — (306,562) — (306,562)

Unrealizednetgain(loss)onhedgedtransactions  —  —  —  —  974  974

Share-basedcompensationexpense  —  —  40,879  —  —  40,879

Repurchasesofcommonstock  (9,891)  (8,655)  —  (998,839)  —  (1,007,494)

Transitionadjustmentuponadoptionof

accountingstandard(seeNote1) —  —  —  (41,316)  —  (41,316)

Otherequityandrelatedtransactions  669  586  15,080  —  —  15,666

Balances,February1,2019  259,511 $ 227,072 $ 3,252,421 $ 2,941,107 $ (3,207) $ 6,417,393

Netincome  —  —  —  1,712,555  —  1,712,555

Dividendspaid,$1.28percommonshare — — — (327,578) — (327,578)

Unrealizednetgain(loss)onhedgedtransactions  —  —  —  —  973  973

Share-basedcompensationexpense  —  —  48,589  —  —  48,589

Repurchasesofcommonstock  (8,252)  (7,221)  —  (1,193,155)  —  (1,200,376)

Transitionadjustmentuponadoptionof

accountingstandard(seeNote1) —  —  —  28,830  —  28,830

Otherequityandrelatedtransactions  677  593  21,521  901  (901)  22,114

Balances,January31,2020 

251,936 $ 220,444 $ 3,322,531 $ 3,162,660 $ (3,135) $ 6,702,500

Theaccompanyingnotesareanintegralpartoftheconsolidatedfinancialstatements.

TableofContents

DOLLARGENERALCORPORATIONANDSUBSIDIARIES

CONSOLIDATEDSTATEMENTSOFCASHFLOWS

(In thousands)

FortheYearEnded 

 January31,  February1,  February2, 

2020 2019 2018 

Cash flows from operating activities:

Netincome $ 1,712,555 $ 1,589,472 $ 1,538,960

Adjustmentstoreconcilenetincometonetcashfromoperating

activities:

Depreciationandamortization  504,804  454,134  404,231

Deferredincometaxes  55,407  52,325  (137,648)

Lossondebtretirement  —  1,019  3,502

Noncashshare-basedcompensation  48,589  40,879  34,323

Othernoncash(gains)andlosses  8,293  41,851  11,088

Changeinoperatingassetsandliabilities:

Merchandiseinventories  (578,783)  (521,342)  (348,363)

Prepaidexpensesandothercurrentassets  (14,453)  (12,097)  (49,406)

Accountspayable  428,627  375,214  427,911

Accruedexpensesandotherliabilities  100,322  65,857  75,647

Incometaxes  (20,404)  56,390  (156,504)

Other  (6,959)  (152)  (1,633)

Netcashprovidedby(usedin)operatingactivities

 2,237,998  2,143,550  1,802,108

Cash flows from investing activities:

Purchasesofpropertyandequipment  (784,843)  (734,380)  (646,456)

Proceedsfromsalesofpropertyandequipment  2,358  2,777  1,428

Netcashprovidedby(usedin)investingactivities

 (782,485)  (731,603)  (645,028)

Cash flows from financing activities:

Issuanceoflong-termobligations  —  499,495  599,556

Repaymentsoflong-termobligations  (1,465)  (577,321)  (752,676)

Netincrease(decrease)incommercialpaperoutstanding 58,300 (63,300) (60,300)

Costsassociatedwithissuanceandretirementofdebt  (1,675)  (4,384)  (9,524)

Repurchasesofcommonstock  (1,200,376)  (1,007,494)  (579,712)

Paymentsofcashdividends (327,568) (306,523) (282,931)

Otherequityandrelatedtransactions  22,104  15,626  8,033

Netcashprovidedby(usedin)financingactivities

 (1,450,680)  (1,443,901)  (1,077,554)

Netincrease(decrease)incashandcashequivalents

 4,833  (31,954)  79,526

Cashandcashequivalents,beginningofperiod  235,487  267,441  187,915

Cashandcashequivalents,endofperiod

$ 240,320 $ 235,487 $ 267,441

Supplemental cash flow information:

Cashpaidfor:

Interest $ 100,033 $ 98,012 $ 88,749

Incometaxes $ 457,119 $ 313,457 $ 660,510

Supplemental noncash investing and financing activities:

Rightofuseassetsobtainedinexchangefornewoperatinglease

liabilities $ 1,705,988

Purchasesofpropertyandequipmentawaitingprocessingforpayment,

includedinAccountspayable $ 110,248 $ 63,662 $ 63,178

Theaccompanyingnotesareanintegralpartoftheconsolidatedfinancialstatements.

TableofContents

DOLLARGENERALCORPORATIONANDSUBSIDIARIES

NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS

1. Basisofpresentationandaccountingpolicies

Basisofpresentation

Thesenotescontainreferencestotheyears2019,2018,and2017,whichrepresentfiscalyearsendedJanuary31,

2020,February1,2019,andFebruary2,2018,respectively.TheCompany’s2019,2018and2017accountingperiods

wereeachcomprisedof52-weeks.TheCompany’sfiscalyearendsontheFridayclosesttoJanuary31.Theconsolidated

financialstatementsincludeallsubsidiariesoftheCompany,exceptforitsnot-for-profitsubsidiarywhichtheCompany

doesnotcontrol.Intercompanytransactionshavebeeneliminated.

TheCompanysellsgeneralmerchandiseonaretailbasisthrough16,278stores(asofJanuary31,2020)in44

stateswiththegreatestconcentrationofstoresinthesouthern,southwestern,midwesternandeasternUnitedStates.The

Companyowns13andleasesfourdistributioncentersfornon-refrigeratedmerchandise.AtJanuary31,2020,the

Companyalsooperatedoneownedandfourleasedcoldstorageanddistributionfacilities.

Cashandcashequivalents

Cashandcashequivalentsincludehighlyliquidinvestmentswithinsignificantinterestrateriskandoriginal

maturitiesofthreemonthsorlesswhenpurchased.Suchinvestmentsprimarilyconsistofmoneymarketfunds,bank

deposits,certificatesofdeposit,andcommercialpaper.Thecarryingamountsoftheseitemsareareasonableestimateof

theirfairvalueduetotheshortmaturityoftheseinvestments.

Paymentsduefromprocessorsforelectronictendertransactionsclassifiedascashandcashequivalentstotaled

approximately$101.9millionand$99.5millionatJanuary31,2020andFebruary1,2019,respectively.

Investmentsindebtandequitysecurities

TheCompanyaccountsforinvestmentsindebtandmarketableequitysecuritiesasheld-to-maturity,available-

for-sale,ortrading,dependingontheirclassification.Debtsecuritiescategorizedasheld-to-maturityarestatedat

amortizedcost.Debtandequitysecuritiescategorizedasavailable-for-salearestatedatfairvalue,withanyunrealized

gainsandlosses,netofdeferredincometaxes,reportedasacomponentofAccumulatedothercomprehensiveloss.

Tradingsecuritiesarestatedatfairvalue,withchangesinfairvaluerecordedasacomponentofSelling,generaland

administrative(“SG&A”)expense.Thecostofsecuritiessoldisbaseduponthespecificidentificationmethod.

Merchandiseinventories

Inventoriesarestatedatthelowerofcostormarket(“LCM”)withcostdeterminedusingtheretaillast-in,first-

out(“LIFO”)methodasthismethodresultsinabettermatchingofcostsandrevenues.UndertheCompany’sretail

inventorymethod(“RIM”),thecalculationofgrossprofitandtheresultingvaluationofinventoriesatcostarecomputed

byapplyingacalculatedcost-to-retailinventoryratiototheretailvalueofsalesatadepartmentlevel.TheuseoftheRIM

willresultinvaluinginventoriesatLCMifmarkdownsarecurrentlytakenasareductionoftheretailvalueofinventories.

Costsdirectlyassociatedwithwarehousinganddistributionarecapitalizedintoinventory.

TheexcessofcurrentcostoverLIFOcostwasapproximately$110.7millionand$103.7millionatJanuary31,

2020andFebruary1,2019,respectively.CurrentcostisdeterminedusingtheRIMonafirst-in,first-outbasis.Underthe

LIFOinventorymethod,theimpactsofrisingorfallingmarketpricechangesincreaseordecreasecostofsales(theLIFO

provisionorbenefit).TheCompanyrecordedaLIFOprovision(benefit)of$7.0

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millionin2019,$25.2millionin2018,and$(2.2)millionin2017,whichisincludedincostofgoodssoldinthe

consolidatedstatementsofincome.

TheCompanypurchasesitsmerchandisefromawidevarietyofsuppliers.TheCompany’stwolargestsuppliers

eachaccountedforapproximately8%oftheCompany’spurchasesin2019.

Vendorrebates

TheCompanyaccountsforallcashconsiderationreceivedfromvendorsinaccordancewithapplicable

accountingstandardspertainingtosucharrangements.Cashconsiderationreceivedfromavendorisgenerallypresumedto

bearebateoranallowanceandisaccountedforasareductionofmerchandisepurchasecostsasearned.However,certain

specific,incrementalandotherwisequalifyingSG&Aexpensesrelatedtothepromotionorsaleofvendorproductsmaybe

offsetbycashconsiderationreceivedfromvendors,inaccordancewitharrangementssuchascooperativeadvertising,

whenearnedfordollaramountsuptobutnotexceedingactualincrementalcosts.

Prepaidexpensesandothercurrentassets

Prepaidexpensesandothercurrentassetsincludeprepaidamountsformaintenance,businesslicenses,

advertising,andinsurance,andamountsreceivableforcertainvendorrebates(primarilythoseexpectedtobecollectedin

cash)andcoupons.

Propertyandequipment

In2007,theCompany’spropertyandequipmentwasrecordedatestimatedfairvaluesastheresultofamerger

transaction.Propertyandequipmentacquiredsubsequenttothemergerhasbeenrecordedatcost.TheCompanyrecords

depreciationandamortizationonastraight-linebasisovertheassets’estimatedusefullives.TheCompany’spropertyand

equipmentbalancesanddepreciablelivesaresummarizedasfollows:

 Depreciable  January31,  February1, 

(Inthousands) Life 2020 2019 

Land  Indefinite $ 220,228 $ 214,632

Landimprovements  20  86,636  85,093

Buildings  39 - 40  1,290,673  1,219,852

Leaseholdimprovements  (a)  656,234  583,531

Furniture,fixturesandequipment  3 - 10  3,782,016  3,298,594

Constructioninprogress  62,183  117,275

 6,097,970  5,518,977

Lessaccumulateddepreciationandamortization  2,819,611  2,548,171

Netpropertyandequipment

$ 3,278,359 $ 2,970,806

(a) Amortizedoverthelesserofthelifeoftheapplicableleasetermortheestimatedusefullifeoftheasset.

Depreciationexpenserelatedtopropertyandequipmentwasapproximately$500.4million,$454.1millionand

$403.3millionfor2019,2018and2017,respectively.Interestonborrowedfundsduringtheconstructionofpropertyand

equipmentiscapitalizedwhereapplicable.Interestcostsof$2.7million,$3.7million,and$2.0millionwerecapitalizedin

2019,2018and2017,respectively.

Impairmentoflong-livedassets

Whenindicatorsofimpairmentarepresent,theCompanyevaluatesthecarryingvalueoflong-livedassets,

excludinggoodwillandotherindefinite-livedintangibleassets,inrelationtotheoperatingperformanceandfuturecash

flowsortheappraisedvaluesoftheunderlyingassets.Generally,theCompany’spolicyistoreview

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forimpairmentstoresopenmorethanthreeyearsforwhichcurrentcashflowsfromoperationsarenegative.Impairment

resultswhenthecarryingvalueoftheassetsexceedstheundiscountedfuturecashflowsexpectedtobegeneratedbythe

assets.TheCompany’sestimateofundiscountedfuturecashflowsisbaseduponhistoricaloperationsofthestoresand

estimatesoffuturestoreprofitabilitywhichencompassesmanyfactorsthataresubjecttovariabilityanddifficultto

predict.Ifalong-livedassetisfoundtobeimpaired,theamountrecognizedforimpairmentisequaltothedifference

betweenthecarryingvalueandtheasset’sestimatedfairvalue.Thefairvalueisestimatedbasedprimarilyuponestimated

futurecashflowsovertheasset’sremainingusefullife(discountedattheCompany’screditadjustedrisk-freerate)or

otherreasonableestimatesoffairmarketvalue.Assetstobedisposedofareadjustedtothefairvaluelessthecosttosellif

lessthanthebookvalue.

TheCompanyrecordedimpairmentchargesincludedinSG&Aexpenseofapproximately$3.6millionin2019,

$4.1millionin2018and$7.8millionin2017,toreducethecarryingvalueofcertainofitsstores’assets.Suchactionwas

deemednecessarybasedontheCompany’sevaluationthatsuchamountswouldnotberecoverableprimarilydueto

insufficientsalesorexcessivecostsresultinginthecarryingvalueoftheassetsexceedingtheestimatedundiscounted

futurecashflowsgeneratedbytheassetsattheselocations.

Goodwillandotherintangibleassets

Ifnotdeemedindefinite,theCompanyamortizesintangibleassetsovertheirestimatedusefullives.Goodwilland

intangibleassetswithindefinitelivesaretestedforimpairmentannuallyormorefrequentlyifindicatorsofimpairmentare

present.Definitelivedintangibleassetsaretestedforimpairmentifindicatorsofimpairmentarepresent.Impairedassets

arewrittendowntofairvalueasrequired.Noimpairmentofintangibleassetshasbeenidentifiedduringanyoftheperiods

presented.

Inaccordancewithaccountingstandardsforgoodwillandindefinite-livedintangibleassets,anentityhasthe

optionfirsttoassessqualitativefactorstodeterminewhethereventsandcircumstancesindicatethatitismorelikelythan

notthatgoodwilloranindefinite-livedintangibleassetisimpaired.Ifaftersuchassessmentanentityconcludesthatthe

assetisnotimpaired,thentheentityisnotrequiredtotakefurtheraction.However,ifanentityconcludesotherwise,then

itisrequiredtodeterminethefairvalueoftheassetusingaquantitativeimpairmenttest,andifimpaired,theassociated

assetsmustbewrittendowntofairvalueasdescribedinfurtherdetailbelow.

Thequantitativegoodwillimpairmenttestisatwo-stepprocessthatwouldrequiremanagementtomake

judgmentsindeterminingwhatassumptionstouseinthecalculation.Thefirststepoftheprocessconsistsofestimating

thefairvalueofanentity’sreportingunitsbasedonvaluationtechniques(includingadiscountedcashflowmodelusing

revenueandprofitforecasts)andcomparingthatestimatedfairvaluewiththerecordedcarryingvalue,whichincludes

goodwill.Iftheestimatedfairvalueislessthanthecarryingvalue,asecondstepisperformedtocomputetheamountof

theimpairmentbydeterminingan“impliedfairvalue”ofgoodwill.Thedeterminationoftheimpliedfairvalueof

goodwillwouldrequiretheentitytoallocatetheestimatedfairvalueofitsreportingunittoitsassetsandliabilities.Any

unallocatedfairvaluewouldrepresenttheimpliedfairvalueofgoodwill,whichwouldbecomparedtoitscorresponding

carryingvalue.

Thequantitativeimpairmenttestforintangibleassetscomparesthefairvalueoftheintangibleassetwithits

carryingamount.Ifthecarryingamountofanintangibleassetexceedsitsfairvalue,animpairmentlossisrecognizedin

anamountequaltothatexcess.

TheCompany’sgoodwillbalancehasanindefinitelifeandisnotexpectedtobedeductiblefortaxpurposes.

SubstantiallyalloftheCompany’sotherintangibleassetsaretradenamesandtrademarkswhichhaveanindefinitelife.

Otherassets

NoncurrentOtherassetsconsistprimarilyofqualifyingprepaidexpensesformaintenance,beerandwine

licenses,andutility,securityandotherdeposits.

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Accruedexpensesandotherliabilities

Accruedexpensesandotherconsistofthefollowing:

 January31,  February1, 

(Inthousands) 2020 2019 

Compensationandbenefits $ 135,492 $ 121,375

Self-insurancereserves  109,291  107,380

Taxes(otherthantaxesonincome)  192,656  183,941

Other  271,717  205,709

$ 709,156 $ 618,405

Includedinotheraccruedexpensesareliabilitiesforfreightexpense,interest,utilities,andmaintenance.

Insuranceliabilities

TheCompanyretainsasignificantportionofriskforitsworkers’compensation,employeehealth,general

liability,property,automobile,andthird-partylandlordliabilityclaimexposures.Accordingly,provisionsaremadeforthe

Company’sestimatesofsuchriskswhicharerecordedasself-insurancereservespursuanttoCompanypolicy.The

undiscountedfutureclaimcostsfortheworkers’compensation,generalliability,landlordliability,andhealthclaimrisks

arederivedusingactuarialmethodswhicharesensitivetosignificantassumptionssuchaslossdevelopmentfactors,trend

factors,purelossrates,andprojectedclaimcounts.TotheextentthatsubsequentclaimcostsvaryfromtheCompany’s

estimates,futureresultsofoperationswillbeaffectedasthereservesareadjusted.

AshleyRiverInsuranceCompany(“ARIC”),aTennessee-basedwhollyownedcaptiveinsurancesubsidiaryof

theCompany,chargestheoperatingsubsidiarycompaniespremiumstoinsuretheretainedworkers’compensation,

medicalstop-loss,andnon-propertygeneralliabilityexposures.PursuanttoTennesseeinsuranceregulations,ARIC

maintainscertainlevelsofcashandcashequivalentsrelatedtoitsself-insuredexposures.

Leases

Effectivein2019,theCompanyrecordsrightofuseleaseassetsandleaseliabilitiesonitsbalancesheet.Lease

liabilitiesarerecordedatadiscountbasedupontheCompany’sestimatedcollateralizedincrementalborrowingrate.

FactorsincorporatedintothecalculationofleasediscountratesincludethevaluationsandyieldsoftheCompany’ssenior

notes,theircreditspreadovercomparableU.S.Treasuryrates,andanindexofthecreditspreadsforallNorthAmerican

investmentgradecompaniesbyrating.Todetermineanindicativesecuredrate,theCompanyusestheestimatedcredit

spreadimprovementthatwouldresultfromanupgradeofoneratingsclassificationbytenor.

Alsoeffectivein2019,theCompanyrecordssingleleasecostonastraight-linebasisoverthebase,non-

cancelableleasetermcommencingonthedatethattheCompanytakesphysicalpossessionofthepropertyfromthe

landlord,whichmayincludeaperiodpriortotheopeningofastoreorotherfacilitytomakeanynecessaryleasehold

improvementsandinstallfixtures.Anytenantallowancesreceivedarerecordedasareductionoftherightofuseasset.

Leaseswithaninitialtermof12monthsorlessarenotrecordedonthebalancesheetandleaseexpenseforsuchleasesis

recognizedonastraight-linebasisovertheleaseterm.TheCompanycombinesleaseandnonleasecomponents.Many

leasesincludeoneormoreoptionstorenew,andtheexerciseofleaserenewaloptionsisattheCompany’ssolediscretion.

TheCompany’sleaseagreementsdonotcontainanymaterialresidualvalueguaranteesormaterialrestrictivecovenants.

Forperiodspriorto2019,rentexpensewasrecognizedoverthetermofthelease.TheCompanyrecorded

minimumrentalexpenseonastraight-linebasisoverthebase,non-cancelableleasetermcommencing

TableofContents

onthedatethattheCompanytookphysicalpossessionofthepropertyfromthelandlord.Whenaleasecontaineda

predeterminedfixedescalationoftheminimumrent,theCompanyrecognizedtherelatedrentexpenseonastraight-line

basisandrecordedthedifferencebetweentherecognizedrentalexpenseandtheamountspayableundertheleaseas

deferredrent.Tenantallowances,totheextentreceived,wererecordedasdeferredincentiverentandwereamortizedasa

reductiontorentexpenseoverthetermofthelease.Thedifferencebetweenthecalculatedexpenseandtheamountspaid

resultinaliabilitywhichwasclassifiedinotherlong-termliabilitiesintheconsolidatedbalancesheet,totaling

approximately$70.1millionatFebruary1,2019.

TheCompanyrecognizescontingentrentalexpensewhentheachievementofspecifiedsalestargetsisconsidered

probable.TheamountexpensedbutnotpaidasofJanuary31,2020andFebruary1,2019wasapproximately$2.3million

and$2.4million,respectively,andisincludedinAccruedexpensesandotherintheconsolidatedbalancesheets.

Otherliabilities

NoncurrentOtherliabilitiesconsistofthefollowing:

 January31,  February1, 

(Inthousands) 2020 2019 

Self-insurancereserves $ 131,281 $ 130,022

Deferredrent  —  70,139

Deferredgainonsaleleaseback  —  40,303

Other  41,395  57,897

$ 172,676 $ 298,361

Thedeferredrentbalancewasreclassifiedandthedeferredgainonsaleleasebackbalancewaseliminatedon

February2,2019asaresultoftheadoptionofanewleaseaccountingstandarddiscussedingreaterdetailinNote1and

Note4below.

Fairvalueaccounting

TheCompanyutilizesaccountingstandardsforfairvalue,whichincludethedefinitionoffairvalue,the

frameworkformeasuringfairvalue,anddisclosuresaboutfairvaluemeasurements.Fairvalueisamarket-based

measurement,notanentity-specificmeasurement.Therefore,afairvaluemeasurementshouldbedeterminedbasedonthe

assumptionsthatmarketparticipantswoulduseinpricingtheassetorliability.Asabasisforconsideringmarket

participantassumptionsinfairvaluemeasurements,fairvalueaccountingstandardsestablishafairvaluehierarchythat

distinguishesbetweenmarketparticipantassumptionsbasedonmarketdataobtainedfromsourcesindependentofthe

reportingentity(observableinputsthatareclassifiedwithinLevels1and2ofthehierarchy)andthereportingentity’sown

assumptionsaboutmarketparticipantassumptions(unobservableinputsclassifiedwithinLevel3ofthehierarchy).

Level1inputsutilizequotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilitiesthatthe

Companyhastheabilitytoaccess.Level2inputsareinputsotherthanquotedpricesincludedinLevel1thataredirectly

orindirectlyobservablefortheassetorliability.Level2inputsmayincludequotedpricesforsimilarassetsandliabilities

inactivemarkets,aswellasinputsthatareobservablefortheassetorliability(otherthanquotedprices),suchasinterest

rates,foreignexchangerates,andyieldcurvesthatareobservableatcommonlyquotedintervals.Level3inputsare

unobservableinputsfortheassetorliability,whicharebasedonanentity’sownassumptions,asthereislittle,ifany,

observablemarketactivity.Ininstanceswherethefairvaluemeasurementisbasedoninputsfromdifferentlevelsofthe

fairvaluehierarchy,thelevelinthefairvaluehierarchywithinwhichtheentirefairvaluemeasurementfallsisbasedon

thelowestlevelinputthatissignificanttothefairvaluemeasurementinitsentirety.TheCompany’sassessmentofthe

significanceofaparticularinputtothefairvaluemeasurementinitsentiretyrequiresjudgmentandconsidersfactors

specifictotheassetorliability.

TableofContents

Othercomprehensiveincome

TheCompanypreviouslyrecordedalossonthesettlementofderivativesassociatedwiththeissuanceoflong-

termdebtin2013whichwasdeferredtoothercomprehensiveincomeandisbeingamortizedasanincreasetointerest

expenseoverthe10-yearperiodofthedebt’smaturity.

Revenuerecognition

TheCompanyrecognizesretailsalesinitsstoresatthetimethecustomertakespossessionofmerchandise.All

salesarenetofdiscountsandarepresentednetoftaxesassessedbygovernmentalauthoritiesthatareimposedconcurrent

withthosesales.

TheCompanyrecognizesgiftcardsalesrevenueatthetimeofredemption.Theliabilityforgiftcardsis

establishedforthecashvalueatthetimeofpurchaseofthegiftcard.Theliabilityforoutstandinggiftcardswas

approximately$6.0millionand$5.2millionatJanuary31,2020andFebruary1,2019,respectively,andisrecordedin

Accruedexpensesandotherliabilities.Estimatedbreakagerevenue,apercentageofgiftcardsthatwillneverberedeemed

basedonhistoricalredemptionrates,isrecognizedovertimeinproportiontoactualgiftcardredemptions.TheCompany

recordedbreakagerevenueof$1.0million,$0.8millionand$0.6millionin2019,2018and2017,respectively.

Advertisingcosts

Advertisingcostsareexpenseduponperformance,“firstshowing”ordistribution,andarereflectedinSG&A

expensesnetofearnedcooperativeadvertisingamountsprovidedbyvendorswhicharespecific,incrementaland

otherwisequalifyingexpensesrelatedtothepromotionorsaleofvendorproductsfordollaramountsuptobutnot

exceedingactualincrementalcosts.Advertisingcostswere$91.0million,$70.5millionand$68.8millionin2019,2018

and2017,respectively.Thesecostsprimarilyincludepromotionalcirculars,targetedcircularssupportingnewstores,

televisionandradioadvertising,andin-storesignage.Vendorfundingforcooperativeadvertisingoffsetreportedexpenses

by$34.7million,$35.0millionand$33.8millionin2019,2018and2017,respectively.

Share-basedpayments

TheCompanyrecognizescompensationexpenseforshare-basedcompensationbasedonthefairvalueofthe

awardsonthegrantdate.Forfeituresareestimatedatthetimeofvaluationandreduceexpenseratablyoverthevesting

period.Thisestimatemaybeadjustedperiodicallybasedontheextenttowhichactualforfeituresdiffer,orareexpectedto

differ,fromthepriorestimate.Theforfeiturerateistheestimatedpercentageofshare-basedawardsgrantedthatare

expectedtobeforfeitedorcanceledbeforebecomingfullyvested.TheCompanybasesthisestimateonhistorical

experienceorestimatesoffuturetrends,asapplicable.Anincreaseintheforfeitureratewilldecreasecompensation

expense.

Thefairvalueofeachoptiongrantisseparatelyestimatedandamortizedintocompensationexpenseona

straight-linebasisbetweentheapplicablegrantdateandeachvestingdate.TheCompanyhasestimatedthefairvalueof

allstockoptionawardsasofthegrantdatebyapplyingtheBlack-Scholes-Mertonoptionpricingvaluationmodel.The

applicationofthisvaluationmodelinvolvesassumptionsthatarejudgmentalandhighlysensitiveinthedeterminationof

compensationexpense.

TheCompanycalculatescompensationexpenseforrestrictedstock,shareunitsandsimilarawardsasthe

differencebetweenthemarketpriceoftheunderlyingstockorsimilarawardonthegrantdateandthepurchaseprice,if

any.Suchexpenseisrecognizedonastraight-linebasisfortime-basedawardsandonanacceleratedorstraight-linebasis

forperformanceawardsdependingontheperiodoverwhichtherecipientearnstheawards.

TableofContents

Storepre-openingcosts

Pre-openingcostsrelatedtonewstoreopeningsandtherelatedconstructionperiodsareexpensedasincurred.

Incometaxes

Undertheaccountingstandardsforincometaxes,theassetandliabilitymethodisusedforcomputingthefuture

incometaxconsequencesofeventsthathavebeenrecognizedintheCompany’sconsolidatedfinancialstatementsor

incometaxreturns.DeferredincometaxexpenseorbenefitisthenetchangeduringtheyearintheCompany’sdeferred

incometaxassetsandliabilities.

TheCompanyincludesincometaxrelatedinterestandpenaltiesasacomponentoftheprovisionforincometax

expense.

Incometaxreservesaredeterminedusingamethodologywhichrequirescompaniestoassesseachincometax

positiontakenusingatwo-stepprocess.Adeterminationisfirstmadeastowhetheritismorelikelythannotthatthe

positionwillbesustained,baseduponthetechnicalmerits,uponexaminationbythetaxingauthorities.Ifthetaxposition

isexpectedtomeetthemorelikelythannotcriteria,thebenefitrecordedforthetaxpositionequalsthelargestamountthat

isgreaterthan50%likelytoberealizeduponultimatesettlementoftherespectivetaxposition.Uncertaintaxpositions

requiredeterminationsandestimatedliabilitiestobemadebasedonprovisionsofthetaxlawwhichmaybesubjectto

changeorvaryinginterpretation.IftheCompany’sdeterminationsandestimatesprovetobeinaccurate,theresulting

adjustmentscouldbematerialtotheCompany’sfuturefinancialresults.

Managementestimates

Thepreparationoffinancialstatementsandrelateddisclosuresinconformitywithaccountingprinciples

generallyacceptedintheUnitedStatesrequiresmanagementtomakeestimatesandassumptionsthataffectthereported

amountsofassetsandliabilitiesanddisclosureofcontingentassetsandliabilitiesatthedateoftheconsolidatedfinancial

statementsandthereportedamountsofrevenuesandexpensesduringthereportingperiods.Actualresultscoulddiffer

fromthoseestimates.

Accountingstandards

TheCompanyadoptednewaccountingguidancerelatedtoleasesasofFebruary2,2019,usingthemodified

retrospectiveapproach.Underthisapproach,existingleaseswererecordedattheadoptiondate,andcomparativeperiods

werenotrestatedandarepresentedunderpreviouslyexistingguidance.Inaddition,theCompanyelectedthepackageof

practicalexpedientspermittedunderthetransitionguidanceinthestandard,whichamongotherthings,allowedthecarry

forwardofhistoricalconclusionsforleaseidentification,leaseclassification,andinitialdirectcosts.TheCompanyis

accountingforleaseswithatermoflessthanoneyearundertheshort-termpolicyelection.TheCompanyalsoelectedthe

practicalexpedienttonotseparateleasecomponentsfromthenonleasecomponents(typicallyfixedcommon-area

maintenancecostsatitsretailstorelocations)forallclassesofleasedassets.TheCompanychosenottoelectthehindsight

practicalexpedient.Factorsincorporatedintothecalculationofleasediscountratesincludethevaluationsandyieldsof

theCompany’sseniornotes,theircreditspreadovercomparableU.S.Treasuryrates,andanindexofthecreditspreadsfor

allNorthAmericaninvestmentgradecompaniesbyrating.Todetermineanindicativesecuredrate,theCompanyusesthe

estimatedcreditspreadimprovementthatwouldresultfromanupgradeofoneratingsclassificationbytenor.

Adoptionoftheleasingstandardresultedinrightofuseoperatingleaseassetsandoperatingleaseliabilitiesof

approximately$8.0billioneachasofFebruary2,2019.Thecumulativeeffectofapplyingthestandardresultedinan

adjustmenttoretainedearningsof$28.8millionatFebruary2,2019,primarilyforthe

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eliminationofdeferredgainona2013sale-leasebacktransaction.Becausethestandardwasadoptedunderthemodified

retrospectiveapproach,itdidnotimpacttheCompany’shistoricalconsolidatednetincomeorcashflows.

InFebruary2018,theFASBissuednewaccountingguidanceforthereclassificationofcertaintaxeffectsfrom

accumulatedothercomprehensiveincomewhichgivesentitiestheoptiontoreclassifytoretainedearningstaxeffects

relatedtoitemsthathavebeenstrandedinaccumulatedothercomprehensiveincomeasaresultoftheTaxCutsandJobs

Act(“TCJA”).AnentitythatelectstoreclassifytheseamountsmustreclassifystrandedtaxeffectsrelatedtotheTCJA’s

changeinUSfederaltaxrateforallitemsaccountedforinothercomprehensiveincome.Theseentitiescanalsoelectto

reclassifyotherstrandedeffectsthatrelatetotheTCJAbutdonotdirectlyrelatetothechangeinthefederaltaxrate.The

Companyadoptedthisstandardinthefirstquarterof2019andrecordedatransitionadjustmentof$0.9million,whichis

reflectedasareclassificationfromaccumulatedothercomprehensivelosstoretainedearningsintheaccompanying

consolidatedfinancialstatements.

InOctober2016,theFASBissuedamendmentstoexistingguidancerelatedtoaccountingforintra-entity

transfersofassetsotherthaninventory,whichaffectedtheCompany’shistoricalaccountingforintra-entitytransfersof

certainintangibleassets.ThisguidancewaseffectivefortheCompanyin2018.Theamendmentswereappliedona

modifiedretrospectivebasisthroughacumulative-effectadjustmentdirectlytoretainedearningsasofthebeginningofthe

periodofadoption.TheCompanyadoptedthisguidanceeffectiveFebruary3,2018whichresultedinanincreasein

deferredincometaxliabilitiesandadecreaseinretainedearningsof$41.3million.