SunTrust Robinson Humphrey April 7, 2003

A customer-driven distributor of consumable basics

SunTrust Robinson HumphreyApril 7, 2003

Dollar General Corporation

Don ShafferPresident and Chief Operating Officer


Forward-Looking InformationOur comments today will contain historical and forward-looking information. The forward-looking information includes, but is not limited to, information regarding the 2003 Company outlook, including without limitation, annual sales and earnings guidance, growth targets, capital expenditures and key goals. The words “believe,” “anticipate,” “plan,” “project,” “expect,” “estimate,” “objective,” “forecast,” “ goal,” “intend,” “will likely result,” or “will continue” and similar expressions generally identify forward-looking statements. The forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company believes the assumptions underlying these forward-looking statements are reasonable; however, any of the assumptions could be inaccurate, and therefore, actual results may differ materially from those projected by or implied in the forward-looking statements. A number of factors may result in actual results differing from such forward-looking information, including, but not limited to the factors set out in our most recent Annual Report on Form 10K.

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this presentation. The Company disclaims any obligation to publicly update or revise any forward-looking statements contained herein to reflect events or circumstances occurring after the date of this presentation or to reflect the occurrence of unanticipated events.

In this presentation we refer to certain non-GAAP financial information, specifically net income, earnings per share and S,G&A expenses, excluding restatement-related items. We have made these disclosures in an effort to clarify, for our investors, our normalized operating results on a comparable basis. The compensation committee of our board of directors may use this information for compensation purposes to ensure that no person is inappropriately penalized or rewarded as a result of unusual items affecting our financial statements. Management also may use this information to better understand the underlying ongoing operations of the company. A reconciliation to GAAP is included in this presentation as well as on the accompanying slides, which can be found on our website at www.dollargeneral.com


Our Strategy

A customer-driven distributor

of consumable basics


Our Niche

Small store convenienceand

everyday low price


Our Customer

• Primarily low and fixed income customers; attracting more affluent customers

• 76% female; increasing male shoppers

• 66% Caucasian, 27% African-American ; 7% Hispanic


2002 Key Accomplishments

• Opened 622 stores • Completed rollout of new registers and

VSAT • Converted Fulton DC to dual sortation• Opened our Florida Import Center in Alachua • Implemented the “Seven Habits of a Highly

Effective Dollar General Store”• Reduced excess inventories


2002 Key Accomplishments

(Continued)• Completed UPC inventories in all stores• Launched aggressive shrink control program• Installed Arthur merchandising system• Added coolers to 956 stores• Thoroughly tested store auto replenishment

system• Opened 18 training centers


As of 1/31/03


Distribution Center Initiatives

• Converted Fulton DC to dual sortation equipment

• Opened Florida Import Center at Alachua DC


Perpetual Inventory

• Completed item inventories in all stores

• Opportunities– For auto replenishment– Proper allocation of seasonal inventory– Improve in-stock position– Increase sales– Increase inventory turnover


The Seven Habits

• Ordering

• Stocking

• Receiving

• Presentation

• Selling

• Staffing

• Support


Inventory Shrink Initiatives

• 28 person loss prevention team located in high shrink areas

• Exception reporting software• Installed 415 closed circuit TV’s in 2002; plan to

add 1,000 in 2003• Installed 1,900 security alarms in 2002; plan to add

1,600 in 2003• Shrink tip hotline• Shrink committee headed by senior director of

internal audit


Arthur Merchandising System

• Provides a single source for merchandising data• Sales and receipts loaded daily from POS and

warehouse system data • 2003 merchandising plan for sales, receipts,

inventory and IMU by week by class• Analysis and planning by groups of similar stores• Ability to cluster stores based on sales trends• 2003 planned by week for 500 classes


Cooler Program

• Includes milk, eggs, cheese, sandwich items, frozen foods, ice cream

• Inventory managed by vendors• Coolers in 1,367 stores in five states as of January 31• Plan to add 1,000 stores and four additional states in

2003• Average ticket with cooler transaction is $13.00 vs

$8.50 without cooler transaction– 40% of the increase is non-cooler product

• Allows the store to accept federal food stamps (EBT)


Auto Replenishment

• Automatic replenishment of 13% of SKUs in all stores – includes cough and cold, vitamins, family core apparel, insecticides

• Tested auto replenishment on all core merchandise in select stores for over 3 years

• Utilized in 175 stores in two regions since mid-year– Higher in-stocks and lower inventory levels– More even workflow at stores and distribution centers

• Currently in over 350 stores; plan to expand to up to 2,500 stores in 2003


Store Manager Training

• Curriculum– Week 1 – Classroom training - 7 Habits

– Weeks 2 and 3 – in-store training

– Week 4 – Classroom training - Role of the Manager

• 23 training centers open • Total of 35 before summer• Currently only new managers; goal is to have all

managers attend


2003 Initiatives

• Open 650 new stores, remodel or relocate 145, close 50-70

• Continued implementation of the “Seven Habits”• Continued emphasis on shrink reduction• Addition of coolers to 1,000 stores• Implementation of auto replenishment in up to

2,500 stores• Testing of debit, credit and EBT cards• Search for new distribution center site


Financial Review

Jim HaganExecutive Vice President and

Chief Financial Officer


Q4 Earnings Results and Reconciliation to GAAP

January 31, 2003 February 1, 2002

Net Income: (Dollars are in millions except per share data)

As reported $108.1 $97.4Restatement-related expenses in S,G&A 1.0 10.1Tax effect of restatement-related items 0.2 (3.5)

Excluding restatement-related items $109.3 $104.0

Diluted EPS:As reported $0.32 $0.29Excluding restatement-related items $0.33 $0.31

S,G&A Expenses:As reported $350.4 $312.6

Restatement-related items 1.0 10.1Excluding restatement-related items $349.4 $302.5

S,G&A as a % to sales:As reported 19.9% 19.7%Excluding restatement-related items 19.9% 19.1%


Q4 Statements of Income

Amount% of Net

Sales Amount% of Net

SalesNet sales 1,759.6$ 100.0% 1,586.0$ 100.0%Cost of goods sold 1,231.6 70.0% 1,110.5 70.0%Gross profit 528.0 30.0% 475.5 30.0%Selling, general and administrative expenses 350.4 19.9% 312.6 19.7%Operating profit 177.5 10.1% 162.9 10.3%Interest expense 9.3 0.5% 10.8 0.7%Income before taxes on income 168.2 9.6% 152.1 9.6%Provision for taxes on income 60.1 3.4% 54.7 3.5%Net income 108.1$ 6.1% 97.4$ 6.1%

Diluted earnings per share 0.32$ 0.29$



(Dollars in millions except per share amounts)

Amount% of Net








Amount% of Net







(Dollars in millions except per share amounts)(Dollars in millions except per share amounts)

Amount% of Net








Amount% of Net







FY 2002 Earnings Results and Reconciliation to GAAP


Net Income: (Dollars in millions except per share amount)

As reported $264.9 $207.5Litigation settlement and related proceeds (29.5)Restatement-related expenses in S,G&A 6.4 28.4Tax effect of restatement-related items 9.1 (10.4)

Excluding restatement-related items $250.9 $225.5

Diluted EPS:As reported $0.79 $0.62Excluding restatement-related items $0.75 $0.67

S,G&A Expenses:As reported $1,296.5 $1,135.8

Restatement-related items 6.4 28.4Excluding restatement-related items $1,290.1 $1,107.4

S,G&A as a % to sales:As reported 21.3% 21.3%

Dollar General Corporation:

Dollar General Corporation:Dollar General

Corporation:

Dollar General Corporation:


(Dollars in millions except per share amounts)FY 2002 Statements of Income

Amount% of Net


SalesNet sales 6,100.4$ 100.0% 5,322.9$ 100.0%Cost of goods sold 4,376.1 71.7% 3,813.5 71.6%Gross profit 1,724.3 28.3% 1,509.4 28.4%Selling, general and administrative expenses 1,296.5 21.3% 1,135.8 21.3%Litigation settlement and related proceeds (29.5) -0.5% - - Operating profit 457.3 7.5% 373.6 7.0%Interest expense 42.6 0.7% 45.8 0.9%Income before taxes on income 414.6 6.8% 327.8 6.2%Provision for taxes on income 149.7 2.5% 120.3 2.3%Net income 264.9$ 4.3% 207.5$ 3.9%





Amount% of Net





FY 2002 Statements of Income


(Dollars in millions except per share amounts)(Dollars in millions except per share amounts)FY 2002 Statements of Income

Amount% of Net







Amount% of Net







Amount% of Net






(Dollars in millions)


Cash $121.3 $261.5Inventories 1,123.0 1,131.0Total Assets 2,333.2 2,552.4Debt 346.5 735.1Total Liabilities 1,045.1 1,510.7Shareholders' Equity 1,288.1 1,041.7

Net Debt $225.2 $473.6Capital Expenditures 134.3 125.4Inventory Turns 3.6X 3.2X

Balance Sheet Summary($ in millions)


• 13% - 15% total sales growth• 4% - 6% same store sales growth• Net income growth of 11%-15%, excluding

restatement-related items• 650 new stores, 145 remodels or relocations, 50-70

closings• Planning shrink improvement• No significant lowering of S,G&A to sales rate• Tax rate of 36.4%• Capital expenditures of $165 million

2003 Financial Guidance


Miscellaneous Topics of Interest

• Share repurchase program – 12 million shares authorized through March 2005

• Increased quarterly dividend from $0.032 to $0.035

• David Perdue named as CEO last week• SEC investigation continues


Our Mission

Serving OthersFor Customers…A Better Life

For Shareholders…A Superior ReturnFor Employees…Respect and Opportunity

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SunTrust Robinson Humphrey April 7, 2003

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