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Item 8. Financial Statements and Supplementary Data

2025-03-21 compared with 2024-03-25 · 183 added, 115 removed, 575 unchanged (34% of the section changed)

4 unchanged sentences

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Dollar General Corporation and subsidiaries (the Company) as of February 2, 2024 and February 3, 2023, the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended February 2, 2024, 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 February 2, 2024 and February 3, 2023, and the results of its operations and its cash flows for each of the three years in the period ended February 2, 2024, in conformity with U.S.

We have audited the accompanying consolidated balance sheets of Dollar General Corporation and subsidiaries (the Company) as of January 31, 2025 and February 2, 2024, 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, 2025, 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, 2025 and February 2, 2024, and the results of its operations and its cash flows for each of the three years in the period ended January 31, 2025, 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 February 2, 2024, 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 25, 2024, expressed an unqualified opinion thereon.

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, 2025, 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 21, 2025, expressed an unqualified opinion thereon.

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.

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company’s 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.

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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 February 2, 2024, the Company’s reserves for self-insurance risks were $307.9 million, which includes workers’ compensation and general liability reserves.

At January 31, 2025, the Company’s reserves for self-insurance risks were $334.4 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.

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Common stock;

$ 0.875 par value, 1,000,000 shares authorized, 219,663 and 219,105 shares issued and outstanding at February 2, 2024 and February 3, 2023, respectively

$ 0.875 par value, 1,000,000 shares authorized, 219,939 and 219,663 shares issued and outstanding at January 31, 2025 and February 2, 2024, respectively

Additional paid-in capital

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Operating profit

Interest expense

Interest expense, net

Other (income) expense

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( 2,748,014 )

Excise tax incurred on common stock repurchases

Other equity and related transactions

Balances, January 28, 2022

Balances, February 3, 2023

Dividends paid, $ 2.36 per common share

1 unchanged sentence

Share-based compensation expense

Repurchases of common stock

( 2,737,826 )

( 2,748,014 )

Excise tax incurred on common stock repurchases

Other equity and related transactions

4 unchanged sentences

Other equity and related transactions

Balances, February 2, 2024

Balances, January 31, 2025

The accompanying notes are an integral part of the consolidated financial statements.

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( 2,748,014 )

( 2,549,669 )

Payments of cash dividends

3 unchanged sentences

Net increase (decrease) in cash and cash equivalents

( 1,031,748 )

Cash and cash equivalents, beginning of period

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Basis of presentation

These notes contain references to the years 2023, 2022, and 2021, which represent fiscal years ended February 2, 2024, February 3, 2023, and January 28, 2022, respectively.

These notes contain references to the years 2024, 2023, and 2022, which represent fiscal years ended January 31, 2025, February 2, 2024, and February 3, 2023, respectively.

The Company’s 2024 and 2023 accounting periods were each comprised of 52 weeks, and the 2022 accounting period was comprised of 53 weeks.

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Intercompany transactions have been eliminated.

The Company sells general merchandise on a retail basis through 19,986 stores (as of February 2, 2024) in 48 U.S.

The Company sells general merchandise on a retail basis through 20,594 stores (as of January 31, 2025) in 48 U.S.

states and Mexico with the greatest concentration of stores in the southern, southwestern, midwestern and eastern United States.

As of February 2, 2024, the Company operated 18 distribution centers for non-refrigerated products, ten cold storage distribution centers, and three combination distribution centers which have both refrigerated and non-refrigerated products.

As of January 31, 2025, the Company operated 20 distribution centers for non-refrigerated products, ten cold storage distribution centers, and four combination distribution centers which have both refrigerated and non-refrigerated products.

The Company leases 15 of these facilities and the remainder are owned.

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.

Cash and cash equivalents include highly liquid investments with 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 $ 109.3 million and $ 157.3 million at February 2, 2024 and February 3, 2023, respectively.

Payments due from processors for electronic tender transactions classified as cash and cash equivalents totaled approximately $ 94.4 million and $ 109.3 million at January 31, 2025 and February 2, 2024, respectively.

These receivables typically settle in less than five days with little or no default risk.

Investments in debt and equity securities

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Costs directly associated with warehousing and distribution are capitalized into inventory.

The excess of current cost over LIFO cost was approximately $ 875.1 million and $ 813.6 million at February 2, 2024 and February 3, 2023, respectively.

The excess of current cost over LIFO cost was approximately $ 913.8 million and $ 875.1 million at January 31, 2025 and February 2, 2024, respectively.

Current cost is determined using the RIM on a first-in, first-out basis.

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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.

Substantially all cash consideration received from a vendor 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.

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The Company records depreciation and amortization on a straight-line basis over the assets’ estimated useful lives.

Depreciation and amortization expense is included in SG&A expenses as presented in the accompanying Consolidated Statements of Income, except depreciation and amortization expense related to assets used in the warehousing and distribution of goods which is capitalized into inventory and ultimately included in Cost of goods sold.

Amounts included in the Company’s property and equipment balances and their estimated lives are summarized as follows:

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Net property and equipment

(a) Depreciated over the lesser of the life of the applicable lease term or the estimated useful life of the asset.

(a) Depreciated over the lesser of the applicable lease term or the estimated useful life of the asset.

Depreciation and amortization expense related to property and equipment was approximately $ 963.8 million, $ 839.9 million and $ 717.8 million for 2024, 2023 and 2022, respectively.

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Impairment of long-lived assets

Long-lived assets, including right of use assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable.

The evaluation is performed primarily at the store level, which is the lowest level of identifiable cash flows that are largely independent of cash flows of other

assets and liabilities.

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 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.

Generally, the Company’s policy is to review for impairment of 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.

If an asset group (typically considered a store) is found to be impaired, the amount recognized for impairment is equal to the difference between the carrying value and the asset group’s estimated fair value;

however, no individual asset can be impaired below its individual fair value.

The fair value for stores with ongoing operations is estimated based primarily upon estimated future cash flows over the asset’s remaining useful life, using the income approach (discounted at the Company’s credit adjusted risk-free rate) or other reasonable estimates of fair market value.

The fair value of individual right of use assets which will continue to be utilized in the operations of stores is determined under the market approach using estimated market rent assessments based on market comps and broker quotes.

For stores which will cease operations, fair value is estimated using an income-approach based on management's forecast of future cash flows expected to be derived from the property based on current sublease market rent (discounted at a rate reflective of a typical market participant’s required rate of return for similar properties).

Assets to be disposed of are adjusted to the fair value less the cost to sell if less than the book value.

The determination of fair value under the income approach requires assumptions including forecasts of future cash flows (such as revenue growth rates and operating expenses) and selection of a market-based discount rate.

Estimates of market rent are based on market comps and non-binding broker quotes.

As these inputs are unobservable, they are classified as Level 3 inputs under the fair value hierarchy (see Note 6).

If actual results are not consistent with estimates and assumptions used in estimating future cash flows and asset fair values, the Company may be exposed to additional impairment losses in a future period (see Note 12).

The Company recorded impairment charges included in SG&A expense of approximately $ 226.7 million in 2024, $ 6.7 million in 2023 and $ 2.1 million in 2022, 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.

Impairment charges for 2024 included store asset and right of use asset impairment charges recorded in connection with the store portfolio optimization review as discussed in Note 12.

Such action was deemed necessary based on the Company’s evaluation that such amounts would not be recoverable, 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

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If the fair value of the reporting unit is less than its carrying amount, management would then determine if the difference between the carrying amount and fair value is greater than the carrying amount of goodwill allocated to the reporting unit.

If it is, the impairment recognized would be equal to the total carrying amount of goodwill allocated to the reporting unit, and if not, impairment would be recognized equal to the difference between the carrying amount of the reporting unit and its fair value.

If it is, the impairment recognized would be equal to the

total carrying amount of goodwill allocated to the reporting unit, and if not, impairment would be recognized equal to the difference between the carrying amount of the reporting unit and its fair value.

The quantitative impairment test for intangible assets compares the fair value of the intangible asset with its carrying amount.

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Supply chain finance programs

We utilize supply chain finance programs whereby qualifying suppliers may elect at their sole discretion to sell our payment obligations to designated third party financial institutions.

While the terms of these agreements are between the supplier and the financial institution, the supply chain finance financial institutions allow the participating suppliers to utilize our creditworthiness in establishing credit spreads and associated costs.

The Company utilizes supply chain finance programs whereby qualifying suppliers may elect at their sole discretion to sell the Company’s payment obligations to designated third party financial institutions.

While the terms of these agreements are between the supplier and the financial institution, the supply chain finance financial institutions allow the participating suppliers to utilize the Company’s creditworthiness in establishing credit spreads and associated costs.

The payment terms that the Company has with participating suppliers under these programs generally range up to 150 days .

The Company’s obligations to its suppliers in accounts payable and accrued expenses , including amounts due and scheduled payment dates, are not impacted by suppliers’ decisions to finance amounts under these arrangements.

As of February 2, 2024 and February 3, 2023, the amount of obligations outstanding that the Company has confirmed with the financial institutions under the supply chain finance program were $ 306.8 million and $ 343.6 million, respectively.

As of January 31, 2025 and February 2, 2024, the amount of obligations outstanding that the Company has confirmed with the financial institutions under the supply chain finance program were $ 399.7 million and $ 306.8 million, respectively.

A summary of the Company’s supplier finance program activity is as follows:

(In thousands)

Beginning balance, February 2, 2024

Amounts added

Amounts settled

( 1,192,586 )

Ending balance, January 31, 2025

Insurance liabilities

10 unchanged sentences

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.

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.

4 unchanged sentences

Other liabilities

Other liabilities primarily consists of self-insurance which equaled $ 156.6 million in 2023 and $ 137.8 million in 2022.

Other liabilities primarily consist of self-insurance which equaled $ 169.3 million in 2024 and $ 156.6 million in 2023.

Fair value accounting

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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 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.

2 unchanged sentences

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.

Foreign currency denominated assets and liabilities held by foreign subsidiaries are translated into U.S.

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The effect of exchange rate fluctuations on translation of assets and liabilities is included as a component of shareholders’ equity in accumulated other comprehensive income or loss.

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 was being amortized as an increase to interest expense over the 10-year period of the debt’s maturity, through 2023.

Revenue recognition

3 unchanged sentences

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 $ 13.8 million and $ 10.7 million at February 2, 2024 and February 3, 2023, respectively, and is recorded in Accrued expenses and other liabilities.

The liability for outstanding gift cards was approximately $ 17.4 million and $ 13.8 million at January 31, 2025 and February 2, 2024, 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.

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Advertising costs were $ 122.9 million, $ 130.6 million and $ 126.0 million in 2024, 2023 and 2022, respectively.

These costs primarily include promotional circulars, targeted circulars supporting new stores, digital media support, and in-store signage.

These costs primarily include promotional circulars, digital media support, and in-store signage.

Vendor funding for cooperative advertising offset reported expenses by $ 41.6 million, $ 35.7 million and $ 33.4 million in 2024, 2023 and 2022, respectively.

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Accounting standards

In March 2020 and January 2021, the Financial Accounting Standards Board (“FASB”) issued accounting standards updates pertaining to reference rate reform.

This collective guidance is in response to accounting concerns regarding contract modifications and hedge accounting because of impending rate reform associated with structural risks of interbank offered rates (IBORs), and, particularly, the risk of cessation of LIBOR, related to regulators in several jurisdictions around the world having undertaken reference rate reform initiatives to identify alternative reference rates.

The guidance provides optional expedients and exceptions for applying U.S.

GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

The adoption of this guidance is effective for all entities as of March 12, 2020 through December 31, 2024.

The Company completed its transition from LIBOR to Term SOFR in its credit agreements governing the Facilities in fiscal year 2022 with no material impact to the financial statements.

In September 2022, the FASB issued new required disclosures for supplier finance programs.

In September 2022, the Financial Accounting Standards Board (“FASB”) issued new required disclosures for supplier finance programs.

These disclosures are intended to enhance the transparency about the use of supplier finance programs for investors.

The amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, with the exception of the disclosure of rollforward information, which is effective for fiscal years beginning after December 15, 2023.

The Company adopted the required disclosures for this accounting standard update in fiscal 2023, except for the disclosure of rollforward activity, which will be adopted for fiscal year 2024.

The Company adopted the required disclosures for this accounting standard update in fiscal 2023, except for the disclosure of rollforward activity, which was adopted for fiscal year 2024.

In November 2023, the FASB issued an update to the required disclosures for segment reporting.

The update is intended to improve reportable segment disclosures, primarily through enhanced disclosures about significant segment expenses.

The update is intended to improve reportable segment disclosures, primarily through enhanced disclosures about

significant segment expenses.

The update is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The Company does not expect the adoption of this update to have a material impact on its consolidated results of operations, financial position, or cash flows.

The Company adopted the required disclosures for this update for fiscal year 2024.

In December 2023, the FASB issued an update to the required disclosures for income taxes.

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The Company is currently assessing the impact of the adoption of this required disclosure.

In November 2024, the FASB issued new required disclosures for disaggregated expense information.

The update is intended to improve the disclosures about expenses and address requests from investors for more detailed information about the types of expenses in commonly presented expense captions.

The update is effective for fiscal years beginning after December 15, 2026.

The Company is currently assessing the impact of the adoption of this required disclosure.

Earnings per share

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Jobs credits, net of federal income taxes

The effective income tax rate for 2024 was 21.8 % compared to a rate of 21.6 % for 2023 which represents a net increase of 0.2 percentage points.

The effective income tax rate was higher in 2024 primarily due to a higher state effective tax rate and a decreased benefit from stock-based compensation partially offset by the effect of certain rate-impacting items on lower earnings before taxes.

The effective income tax rate for 2023 was 21.6 % compared to a rate of 22.5 % for 2022 which represents a net decrease of 0.9 percentage points.

The effective income tax rate was lower in 2023 primarily due to the effect of certain rate-impacting items (such as federal tax credits) on lower earnings before taxes and a lower state effective rate resulting from increased recognition of state tax credits.

The effective income tax rate for 2022 was 22.5 % compared to a rate of 21.7 % for 2021 which represents a net increase of 0.8 percentage points.

The effective income tax rate was higher in 2022 primarily due to decreased income tax benefits associated with stock-based compensation compared to 2021.

Deferred taxes reflect the effects of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

8 unchanged sentences

Share based compensation

Interest rate hedges

Tax benefit of income tax and interest reserves related to uncertain tax positions

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The Company has state tax credit carryforwards of approximately $ 16.2 million (net of federal benefit) that will expire beginning in 2028 through 2048.

The Company has approximately $ 8.1 million of state apportioned net

operating loss carryforwards, which will begin to expire in 2032 and will continue through 2042 and approximately $ 31.6 million of foreign net operating loss carryforwards, which will begin to expire in 2032 through 2034.

The Company has approximately $ 2.9 million of state apportioned net operating loss carryforwards, which will begin to expire in 2036 and will continue through 2041 and approximately $ 63.0 million of foreign net operating loss carryforwards, which will begin to expire in 2032 through 2034.

The Company has a valuation allowance for certain state tax credit carryforwards and foreign net operating loss carryforwards and deferred tax assets, in the amount of $ 23.0 million and $ 17.0 million (net of federal benefit) which increased income tax expense by $ 6.0 million and $ 8.0 million in 2024 and 2023, respectively.

5 unchanged sentences

Generally, with few exceptions, the Company’s 2021 and later tax years remain open for examination by the various state taxing authorities.

As of February 2, 2024, accruals for uncertain tax benefits, interest expense related to income taxes and potential income tax penalties were $ 14.4 million, $ 1.0 million and $ 0.0 million, respectively, for a total of $ 15.4 million.

As of January 31, 2025, accruals for uncertain tax benefits, interest expense related to income taxes and potential income tax penalties were $ 11.6 million, $ 1.7 million and $ 0.8 million, respectively, for a total of $ 14.1 million.

1 unchanged sentence

The Company’s reserve for uncertain tax positions is expected to be reduced by $ 3.5 million in the coming twelve months as a result of expiring statutes of limitations or settlements.

As of February 2, 2024 and February 3, 2023, approximately $ 11.5 million and $ 8.0 million, respectively, of the uncertain tax positions would impact the Company’s effective income tax rate if the Company were to recognize the tax benefit for these positions.

As of January 31, 2025 and February 2, 2024, approximately $ 11.6 million and $ 11.5 million, respectively, of the uncertain tax positions would impact the Company’s effective income tax rate if the Company were to recognize the tax benefit for these positions.

The amounts associated with uncertain tax positions included in income tax expense consists of the following:

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Income tax related penalty expense (benefit)

A reconciliation of the uncertain income tax positions from January 29, 2021 through February 2, 2024 is as follows:

A reconciliation of the uncertain income tax positions from January 28, 2022 through January 31, 2025 is as follows:

(In thousands)

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Ending balance

As of February 2, 2024, the Company’s primary leasing activities were real estate leases for most of its retail store locations and certain of its distribution facilities.

Many of the Company’s store locations are subject to

build-to-suit arrangements with landlords which typically carry a primary lease term of up to 15 years .

The Company does not control build-to-suit properties during the construction period.

Store locations not subject to build-to-suit arrangements are typically shorter-term leases.

The Organization of Economic Cooperation and Development has proposed a global minimum tax of 15% on a country-by-country basis (“Pillar Two”).

Pursuant to Pillar Two, some countries have enacted minimum tax rates of 15% effective for the 2024 tax year while other countries have enacted or proposed legislation making the 15% minimum tax rate effective for the 2025 tax year or later.

The Company operates in a country that is currently assessing the enactment of the 15% minimum tax rate beginning in 2025.

If enacted, the Company does not believe it will have a material impact on tax expense.

As of January 31, 2025, the Company’s primary leasing activities were real estate leases for most of its retail store locations and certain of its distribution facilities.

Many of the Company’s store locations carry a primary lease term of up to 15 years .

Certain of the Company’s leased store locations have variable payments based upon actual costs of common area maintenance, real estate taxes and property and liability insurance.

8 unchanged sentences

Finance lease assets are included in net property and equipment, and finance lease liabilities are included in long-term obligations, in the consolidated balance sheets.

At February 2, 2024, the weighted-average remaining lease term for the Company’s leases was 9.5 years, and the weighted average discount rate was 4.3 %.

For 2023, 2022 and 2021, operating lease cost of $ 1.75 billion, $ 1.61 billion and $ 1.49 billion, respectively, and variable lease cost of $ 0.36 billion, $ 0.31 billion and $ 0.28 billion, respectively, were reflected as selling, general and administrative expenses in the consolidated statements of income.

Cash paid for amounts included in the measurement of operating lease liabilities of $ 1.76 billion, $ 1.62 billion and $ 1.5 billion, respectively, were reflected in cash flows from operating activities in the consolidated statements of cash flows for 2023, 2022 and 2021.

At January 31, 2025, the weighted-average remaining lease term for the Company’s leases was 9.4 years, and the weighted average discount rate was 4.5 %.

For 2024, 2023 and 2022, operating lease cost of $ 1.89 billion, $ 1.75 billion and $ 1.61 billion, respectively, and variable lease cost of $ 0.39 billion, $ 0.36 billion and $ 0.31 billion, respectively, were reflected as SG&A expenses in the Consolidated Statements of Income.

Cash paid for

amounts included in the measurement of operating lease liabilities of $ 1.91 billion, $ 1.76 billion and $ 1.62 billion, respectively, were reflected in cash flows from operating activities in the Consolidated Statements of Cash Flows for 2024, 2023 and 2022.

The scheduled maturities of the Company’s operating lease liabilities are as follows:

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Revolving Facility

At February 2, 2024, the existing senior unsecured revolving credit facility (the “Revolving Facility”) had a commitment of $ 2.0 billion that provides for the issuance of letters of credit up to $ 100.0 million and is scheduled to mature on December 2, 2026.

Borrowings under the Revolving Facility bear interest at a rate equal to an applicable interest rate margin plus, at the Company’s option, either (a) Adjusted Term SOFR (which is Term SOFR (as published by CME Group Benchmark Administration Limited) plus a credit spread adjustment of 0.10 %) or (b) a base rate (which is usually equal to the prime rate).

The applicable interest rate margin for borrowings as of February 2, 2024 was 1.015 % for Adjusted Term SOFR borrowings and 0.015 % for base-rate borrowings.

On September 3, 2024, the Company entered into an amended and restated credit agreement which provides for a $ 2.375 billion unsecured five-year revolving credit facility (the “Revolving Facility”) and allows for a subfacility for letters of credit of up to $ 100 million, of which $ 70 million is currently committed.

The Revolving Facility is scheduled to mature on September 3, 2029.

Benchmark Administration Limited) plus a credit spread adjustment of 0.10 %) or (b) a base rate (which is usually equal to the prime rate).

The applicable interest rate margin for borrowings as of January 31, 2025 was 1.015 % for Adjusted Term SOFR borrowings and 0.015 % for base-rate borrowings.

The Company is also required to 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 February 2, 2024, the facility fee rate was 0.11 %.

As of January 31, 2025, 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 the Company’s long-term senior unsecured debt ratings.

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The credit agreement governing the Revolving Facility also contains financial covenants which require the maintenance of a minimum fixed charge coverage ratio and a maximum leverage ratio.

As of February 2, 2024, the Company was in compliance with all such covenants.

On February 13, 2024, the Company amended the credit agreement governing the Revolving Facility to increase the maximum leverage ratio for the four quarters of fiscal 2024.

As of January 31, 2025, the Company was in compliance with all such covenants.

On March 11, 2025, the Company amended the credit agreement governing the Revolving Facility to increase the maximum leverage ratio and decrease the minimum fixed charge ratio until January 30, 2026, or earlier at the Company’s option upon achieving certain financial covenant milestones (“Covenant Relief Period”).

During the Covenant Relief Period, the Company is restricted from repurchasing shares and the ability to incur certain additional liens and subsidiary debt is reduced.

The credit agreement governing the Revolving Facility also contains customary events of default.

As of February 2, 2024, the Company had no outstanding borrowings, no outstanding letters of credit, and borrowing availability of $ 2.0 billion under the Revolving Facility that, due to its intention to maintain borrowing availability related to the commercial paper program described below, could contribute liquidity of $ 1.8 billion.

addition, the Company had outstanding letters of credit of $ 45.9 million which were issued pursuant to separate agreements.

As of January 31, 2025, the Company had no outstanding borrowings, no outstanding letters of credit, and borrowing availability of $ 2.375 billion under the Revolving Facility that, due to its intention to maintain borrowing availability related to the commercial paper program described below, could contribute liquidity of $ 2.18 billion.

In addition, the Company had outstanding letters of credit of $ 50.9 million which were issued pursuant to separate agreements.

364-Day Revolving Facility

The Company had a 364-day $ 750 million unsecured revolving credit facility (the “364-Day Revolving Facility”) which expired on January 30, 2024.

Borrowings under the 364-Day Revolving Facility bore interest at a rate equal to an applicable interest rate margin plus, at the Company’s option, either (a) Adjusted Term SOFR (which is Term SOFR, as published by CME Group Benchmark Administration Limited, plus a credit spread adjustment of 0.10 %) or (b) a base rate (which is usually equal to the prime rate).

The Company was also required to pay a facility fee to the lenders under the 364-Day Revolving Facility for any used and unused commitments.

Prior to its expiration, the applicable interest rate margin for Adjusted Term SOFR loans was 1.035 % and the facility fee rate was 0.09 %.

The applicable interest rate margins for borrowings and the facility fees under the 364-Day Revolving Facility were subject to adjustment from time to time based on the Company’s long-term senior unsecured debt ratings.

Commercial Paper

As of February 2, 2024, the Company had a commercial paper program under which the Company may issue unsecured commercial paper notes (the “CP Notes”) from time to time in an aggregate amount not to exceed $ 2.0 billion outstanding at any time.

As of January 31, 2025, the Company had a commercial paper program under which the Company may issue unsecured commercial paper notes (the “CP Notes”) from time to time in an aggregate amount not to exceed $ 2.0 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 the Company’s other unsecured and unsubordinated indebtedness.

The Company intends 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 February 2, 2024, the Company’s consolidated balance sheet reflected no outstanding CP Notes.

As of January 31, 2025, the Company’s consolidated balance sheet reflected no outstanding CP Notes.

CP Notes totaling $ 195.0 million were held by a wholly-owned subsidiary of the Company and are therefore not reflected on the consolidated balance sheets.

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The July 2028 Senior Notes are scheduled to mature on July 5, 2028, and the 2033 Senior Notes are scheduled to mature on July 5, 2033.

Interest on the July 2028 Senior Notes and the 2033 Senior Notes is payable in cash on January 5 and July 5 of each year, commencing on January 5, 2024.

Interest on the July 2028 Senior Notes and the 2033 Senior Notes is payable in cash on January 5 and July 5 of each year.

The Company incurred $ 12.4 million of debt issuance costs associated with the issuance of the July 2028 Senior Notes and the 2033 Senior Notes.

On September 20, 2022, the Company issued $ 750.0 million aggregate principal amount of 4.25 % senior notes due 2024 (the “2024 Senior Notes”), net of discount of $ 0.7 million, $ 550.0 million aggregate principal amount of 4.625 % senior notes due 2027 (the “November 2027 Senior Notes”), net of discount of $ 0.5 million, $ 700.0 million aggregate principal amount of 5.0 % senior notes due 2032 (the “2032 Senior Notes”), net of discount of $ 2.4 million, and $ 300.0 million aggregate principal amount of 5.50 % senior notes due 2052 (the “2052 Senior Notes”), net of discount of $ 0.3 million.

The 2024 Senior Notes are scheduled to mature on September 20, 2024, the November 2027 Senior Notes are scheduled to mature on November 1, 2027, the 2032 Senior Notes are scheduled to mature on November 1, 2032 and the 2052 Senior Notes are scheduled to mature on November 1, 2052.

Interest on the 2024 Senior Notes is payable in cash on March 20 and September 20 of each year, commencing on March 20, 2023.

Interest on the November 2027 Senior Notes, the 2032 Senior Notes and the 2052 Senior Notes is payable in cash on May 1 and November 1 of each year, commencing on May 1, 2023.

The Company incurred $ 16.5 million of debt issuance costs associated with the issuance of the 2024 Senior Notes, November 2027 Senior Notes, 2032 Senior Notes and 2052 Senior Notes.

Collectively, the Company’s Senior Notes maturing between 2024 and 2052 (collectively, 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 supplemented and amended, the “Senior Indenture”).

The Company may redeem some or all of its Senior Notes at any time at redemption prices set forth in the Senior

In September 2024, the Company redeemed $ 750.0 million aggregate principal amount of outstanding

4.25 % senior notes due September 2024.

There was no gain or loss associated with the redemption.

Collectively, the Company’s Senior Notes mature between 2024 and 2052 (collectively, 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 supplemented and amended, the “Senior Indenture”).

The Company may redeem some or all of its 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 the Senior Notes has the right to require the Company 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.

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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 the Senior Notes to become or to be declared due and payable, as applicable.

During the second quarter of 2021, the Company entered into interest rate swaps on a portion of the 2030 Senior Notes.

These interest rate swaps are being accounted for as fair value hedges, with the derivative asset or liability offset by a corresponding adjustment to the carrying value of the 2030 Senior Notes.

Such arrangements are not material to the Company’s consolidated financial statements.

Scheduled debt maturities at February 2, 2024 for the Company’s fiscal years listed below are as follows:

Scheduled debt maturities at January 31, 2025 for the Company’s fiscal years listed below are as follows:

(In thousands)

Assets and liabilities measured at fair value

The following table presents the Company’s assets and liabilities required to be measured at fair value as of February 2, 2024, aggregated by the level in the fair value hierarchy within which those measurements are classified.

The following table presents the Company’s assets and liabilities required to be measured at fair value as of January 31, 2025, aggregated by the level in the fair value hierarchy within which those measurements are classified.

Quoted Prices

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The carrying amounts reflected in the consolidated balance sheets for cash, cash equivalents, short-term investments, receivables and payables approximate their respective fair values.

The Company does not have any recurring fair value measurements using significant unobservable inputs (Level 3) as of February 2, 2024.

The Company does not have any recurring fair value measurements using significant unobservable inputs (Level 3) as of January 31, 2025.

Certain assets and liabilities are measured at fair value on a nonrecurring basis.

These include assets for which impairments were recorded.

The Company reviewed store assets for indicators of impairment.

These measures of fair value, and related inputs, are considered a Level 3 approach under the fair value hierarchy.

Refer to Note 1 and Note 12 for further information regarding the impairment charges recorded.

Commitments and contingencies

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The Edmonds matter was voluntarily dismissed on January 19, 2024.

Currently pending are multiple applications to serve as the lead plaintiff and counsel in the Washtenaw County matter.

On April 4, 2024, the court appointed lead plaintiffs and lead counsel in the Shareholder Securities Litigation .

On June 17, 2024, lead plaintiffs filed a consolidated amended complaint, adding a claim that lead plaintiffs and certain members of the putative class purchased shares of the Company’s common stock contemporaneously with common stock sales by certain individual defendants.

On October 17, 2024, lead plaintiffs filed a second consolidated amended complaint, expanding the putative class period to cover May 28, 2020 to August 28, 2024.

On November 15, 2024, Defendants moved to dismiss the second consolidated amended complaint, and briefing on Defendants’ motion has been completed.

At this time, it is not possible to estimate the value of the claims asserted in the Shareholder Securities Litigation or the potential range of loss in this matter, and no assurances can be given that the Company will be successful in its defense on the merits or otherwise.

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Caliguiri Inh Ira Bene Of Catherine Sugarbaker v.

3:24-cv-00117) ( “Caliguiri” ) (collectively, the “Shareholder Derivative Litigation” ).

3:24-cv-00117) ( “Caliguiri” ) (collectively, the “Federal Court Shareholder Derivative Litigation” ).

The Silva complaint also alleges certain of the Company’s current and former officers and directors violated federal securities laws and aided and abetted breach of fiduciary duty and that Mr.

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The Dunn and Caliguiri complaints additionally allege that certain of the Company’s officers and directors violated their fiduciary duties by recklessly or negligently disregarding workplace safety practices, and that Mr.

Garratt and Ms.

Vasos, John Garratt and Patricia Fili-Krushel violated their fiduciary duties

by misusing material, non-public information.

The plaintiffs in the Federal Court Shareholder Derivative Litigation seek both non-monetary and monetary relief for the benefit of the Company.

On April 2, 2024, the court consolidated the Silva, Dunn, and Caliguiri actions.

On May 2, 2024, the Silva action was dismissed.

On May 22, 2024, the court entered an order staying the Dunn and Caliguiri actions pending resolution of the defendants’ anticipated motion to dismiss in the Shareholder Securities Litigation .

On March 26, 2024 and March 28, 2024, respectively, the following shareholder derivative actions were filed in the Chancery Court for Davidson County, Tennessee:

Todd Hellrigel v.

24-0392-I) ( “Hellrigel" );

Steve Southwell v.

Todd Vasos, et al.

24-0379-I) ( “Southwell” ) (collectively, the “State Court Shareholder Derivative Litigation” ).

The claims in the State Court Shareholder Derivative Litigation include allegations that certain of the Company’s current and former officers and directors (i) violated their fiduciary duties by misrepresenting the impact of alleged store labor, inventory pricing and other practices on the Company’s financial results, prospects, and reputation, as well as creating a risk of adverse regulatory action;

(ii) were unjustly enriched;

and (iii) that Mr.

Garratt, Warren Bryant, and Ms.

Fili-Krushel violated their fiduciary duties by misusing material, non-public information.

The plaintiffs in the Shareholder Derivative Litigation seek both non-monetary and monetary relief for the benefit of the Company.

Currently pending is an application to consolidate the Shareholder Derivative Litigation cases and appoint lead counsel.

The relief sought is substantially the same as the relief sought in the Federal Court Derivative Shareholder Litigation .

On May 20, 2024, the court entered an agreed order consolidating the Hellrigel and Southwell actions, appointing lead counsel, and staying the State Court Shareholder Derivative Litigation pending resolution of defendants’ anticipated motion to dismiss the Shareholder Securities Litigation .

Based on information currently available, the Company believes that its pending legal matters, both individually and in the aggregate, will be resolved without a material adverse effect on the Company’s consolidated financial statements as a whole.

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On May 26, 2021, the Company’s shareholders approved the Dollar General Corporation 2021 Stock Incentive Plan (“2021 Plan”), which replaced the Company’s 2007 Stock Incentive Plan (“2007 Plan”).

The Plans allow the granting of stock options, stock appreciation rights, and other stock-based awards or dividend equivalent rights to key employees, directors, consultants or other persons having a service relationship with the Company, its subsidiaries and certain of its affiliates.

allow the granting of stock options, stock appreciation rights, and other stock-based awards or dividend equivalent rights to key employees, directors, consultants or other persons having a service relationship with the Company, its subsidiaries and certain of its affiliates.

Upon the effective date of the 2021 Plan, no new awards may be granted under the 2007 Plan.

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With limited exceptions, the performance share unit and restricted stock unit awards are payable in shares of common stock on the vesting date.

The weighted average for key assumptions used in determining the fair value of all stock options granted in the years ended February 2, 2024, February 3, 2023, and January 28, 2022, and a summary of the methodology applied to develop each assumption, are as follows:

The weighted average for key assumptions used in determining the fair value of all stock options granted in the years ended January 31, 2025, February 2, 2024, and February 3, 2023, and a summary of the methodology applied to develop each assumption, are as follows:

Expected dividend yield

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An increase in the expected term will increase compensation expense.

A summary of the Company’s stock option activity during the year ended February 2, 2024 is as follows:

A summary of the Company’s stock option activity during the year ended January 31, 2025 is as follows:

(Intrinsic value amounts reflected in thousands)

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Canceled or expired

Balance, February 2, 2024

Exercisable at February 2, 2024

Balance, January 31, 2025

Exercisable at January 31, 2025

The weighted average grant date fair value per share of options granted was $ 42.06 , $ 44.97 and $ 52.06 during 2024, 2023 and 2022, respectively.

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The number of performance share unit awards earned is based upon the Company’s financial performance as specified in the award agreement.

A summary of performance share unit award activity during the year ended February 2, 2024 is as follows:

A summary of performance share unit award activity during the year ended January 31, 2025 is as follows:

(Intrinsic value amounts reflected in thousands)

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Converted to common stock

Balance, February 2, 2024

All performance share unit awards at February 2, 2024 are unvested, and the number of such awards which will ultimately vest will be based in part on the Company’s financial performance in future years.

Balance, January 31, 2025

All performance share unit awards at January 31, 2025 are unvested, and the number of such awards which will ultimately vest will be based in part on the Company’s financial performance in future years.

The weighted average grant date fair value per share of performance share units granted was $ 154.21 , $ 208.13 and $ 214.25 during 2024, 2023 and 2022, respectively.

A summary of restricted stock unit award activity during the year ended February 2, 2024 is as follows:

A summary of restricted stock unit award activity during the year ended January 31, 2025 is as follows:

(Intrinsic value amounts reflected in thousands)

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Converted to common stock

Balance, February 2, 2024

Balance, January 31, 2025

The weighted average grant date fair value per share of restricted stock units granted was $ 130.78 , $ 193.78 and $ 223.51 during 2024, 2023 and 2022, respectively.

At February 2, 2024, the total unrecognized compensation cost related to unvested stock-based awards was $ 69.6 million with an expected weighted average expense recognition period of 2.0 years.

At January 31, 2025, the total unrecognized compensation cost related to unvested stock-based awards was $ 85.5 million with an expected weighted average expense recognition period of 1.9 years.

The fair value method of accounting for share-based awards resulted in share-based compensation expense (a component of SG&A expenses) and a corresponding reduction in income before and net of income taxes as follows:

(In thousands)

Year ended January 31, 2025

Year ended February 2, 2024

Year ended February 3, 2023

Year ended January 28, 2022

Segment reporting

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See Note 1 for a brief description of the Company’s business.

As of February 2, 2024, the Company’s retail store operations were primarily located within the United States, with three retail stores in Mexico.

As of January 31, 2025, the Company’s retail store operations were primarily located within the United States, with eight retail stores in Mexico.

Certain product sourcing and other operations are located outside the United States, which collectively are not material with regard to assets, results of operations or otherwise to the consolidated financial statements.

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Home products

The Company’s Chief Operating Decision maker (“CODM”) is the Chief Executive Officer.

The measure of profit or loss utilized by the CODM in assessing segment performance and allocating resources is net income as presented on the Company’s Consolidated Statements of Income.

The measure of segment assets is reported on the balance sheet as total consolidated assets.

Net income is used to evaluate income generated from the use of segment assets which aids in the determination of the allocation of Company resources.

Net income is also utilized to monitor budget versus actual results.

The following is a reconciliation of segment revenue and significant segment expenses to net income, the measure of profit or loss:

(in thousands)

Shrink included in cost of goods sold

Cost of goods sold, excluding shrink(b)

Interest expense, net

Income tax expense

Other segment items (a)(b)

Consolidated net income

(a) Other segment items include all remaining SG&A expenses and other (income) expense as disclosed in the Consolidated Statements of Income which were not deemed individually significant for disclosure.

These expense items include rent expense as disclosed in Note 4 as well as advertising costs and impairment expense as disclosed in Note 1.

(b) Depreciation and amortization expense included in Cost of goods sold and SG&A expenses was approximately $ 971.7 million, $ 848.8 million and $ 724.9 million for 2024, 2023 and 2022.

Common stock transactions

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The repurchase authorization has no expiration date and allows repurchases from time to time in open market transactions, including pursuant to trading plans adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, or in privately negotiated transactions.

The timing, manner and number of shares repurchased will depend on a variety of factors, including price, market conditions, compliance with the covenants and restrictions under the Company’s debt agreements, cash requirements, excess debt capacity, results of operations, financial condition and other factors.

The timing, manner and number of shares repurchased will depend on a variety of factors, including price, market conditions, compliance with the covenants and restrictions under the Company’s debt

agreements, cash requirements, excess debt capacity, results of operations, financial condition and other factors.

Repurchases under the program may be funded from available cash or borrowings including under the Company’s Revolving Facility and issuance of CP Notes discussed in further detail in Note 5.

During the years ended February 2, 2024, February 3, 2023, and January 28, 2022, the Company repurchased no shares of its common stock, approximately 11.6 million shares of its common stock at a total cost of $ 2.7 billion, and approximately 12.1 million shares of its common stock at a total cost of $ 2.5 billion, respectively, pursuant to its common stock repurchase program.

During the years ended January 31, 2025 and February 2, 2024, the Company repurchased no shares of its common stock.

During the year ended February 3, 2023, the Company repurchased 11.6 million shares of its common stock at a total cost of $ 2.7 billion, pursuant to its common stock repurchase program.

In March 2025, the Company’s Board of Directors declared a quarterly cash dividend of $ 0.59 per share, which is payable on or before April 22, 2025 to shareholders of record on April 8, 2025.

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The amount and declaration of future cash dividends is subject to the sole discretion of the Company’s Board of Directors and will depend upon, among other things, the Company’s results of operations, cash requirements, financial condition, contractual restrictions, excess debt capacity and other factors that the Board may deem relevant in its sole discretion.

Store Portf olio Optimization, Impairment and Related Charges

During the fourth quarter of 2024, the Company initiated a store portfolio optimization review which involved identifying stores with indicated impairment and identifying stores for closure based on an evaluation of current market conditions and individual store performance, among other factors.

The following table provides a summary of the impairment costs included in the consolidated statements of operations:

(In thousands)

Store closure impairment

Impairment of long-lived assets

Total store portfolio optimization and impairment charges

Store closures .

As a result of the fourth quarter store portfolio optimization review, the Company determined it would permanently close 141 stores ( 96 Dollar General and 45 pOpshelf stores) in the first quarter of fiscal 2025.

Accordingly, the Company recognized impairment charges in SG&A expenses in the Consolidated Statements of Income and in Other noncash (gains) and losses in Consolidated Statements of Cash Flows.

The impairment charges reduced the carrying value of the assets to their estimated fair value.

The operating lease right of use asset impairment does not relieve the Company of its monthly cash payment obligations under the lease.

Fair value was estimated using an income-approach based on management's forecast of future cash flows expected to be derived from the property based on current sublease market rent.

In addition, the Company recorded $ 17.9 million of inventory markdowns within Cost of goods sold in the accompanying Consolidated Statements of Income for the stores expected to close in the first quarter of fiscal 2025.

Impairment of long-lived tangible and right-of-use assets .

As a result of the impairment analysis performed in the fourth quarter, the Company recognized impairment charges related to certain retail stores, mostly related to pOpshelf stores.

for the fiscal year ended January 31, 2025.

These impairment charges were primarily driven by lower projected future revenues and lower market rate assessments.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data