DG

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How DG rewrote its risk factors

10-K ITEM 1A · FY2025 → FY2026

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New in FY2026

Our trademark registrations have various expiration dates; however, assuming that the trademark registrations are properly renewed, they have a perpetual duration. Human Capital Resources At Dollar General, a foundational element in how we operate is exemplified in our fourth operating priority – Investing in the growth and development of our teams.
Based on a talent philosophy of “Attract, Develop, and Retain”, whether an individual works in a store, a distribution center, our private fleet, our store support center or our international offices, over the last 85+ years, we have helped millions of individuals start and progress in their careers, providing employees with numerous opportunities to gain new skills and develop their talents, supported by our award-winning training and development programs. Attract We seek to provide market competitive compensation and benefits packages that attract talent to the organization and then retain and incent employees for performance.
To help measure the success of our overall employee compensation and benefits programs, and our ability to attract qualified employees, we monitor employee applicant flow and staffing levels across the organization, as well as employee turnover, particularly at the store manager level.
In 2025, we estimate we invested over four million training hours in our employees to promote their education and development. We enhance our development programs each year based on the current needs of our employees and the business.
We offer a variety of differentiated programs, including mentorship, cohorts, and experiential opportunities to ensure there is a path of development for all employees. Our internal placement rate helps us measure the success of our development programs.
As of February 27, 2026, we employed approximately 194,000 full-time and part-time employees, including divisional and regional managers, district managers, store managers, other store employees, and distribution center, fleet and administrative employees.
As of the end of 2025, more than 70% of store managers and thousands of additional employees, including the majority of our senior leadership, have been placed from within our organization. Retain We strive to create an environment where our employees feel respected, safe, empowered, and valued.
We regularly monitor retention and engagement levels across the organization through a variety of means, working to understand what is important to our employees and how we can best continue to meet their evolving needs. Compliance with Governmental Regulations Our operations are subject to the applicable federal, state, local and foreign laws, rules, and regulations of the jurisdictions in which we operate or conduct business, which relate to, among other things, the sale of products, including without limitation, product and food safety, marketing and labeling; information security and privacy; labor and employment; employee wages, salary levels and benefits; health and safety; licensing; real property; public accommodations; bribery, money-laundering and anti-corruption; financial reporting and disclosure, including disclosures related to environmental, social and governance matters; pricing; antitrust and fair competition; distribution; transportation; imports and customs; intellectual property; taxes; climate change and environmental compliance. We routinely incur significant compliance-related costs, both direct and indirect, including those related to store standards and labor, including wages, benefits and staffing.
Although we may incur additional material compliance-related costs in the future, to date, other than the expenses related to the items listed above, compliance with these laws, rules and regulations has not had a material effect on our capital expenditures, earnings or competitive position.
Additionally, if significant changes in the federal, state or foreign corporate tax rates or laws occur in the future, such change could adversely affect our overall effective tax rate and earnings.
We make available on or through this website, free of charge, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as soon as reasonably practicable after we electronically file them with or furnish them to the Securities and Exchange Commission (the “SEC”).
You should carefully consider the risks described below together with all other information included or incorporated in this report and other filings that we make from time to time with the SEC, including but not limited to our consolidated financial statements and accompanying notes and the information included under the headings “Business” included in Part I, Item 1, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Part II, Item 7.
However, the risks that we face are not limited to those described below and those set forth in our SEC filings.
References to past events are provided by way of example only and are not intended to be a complete listing or a representation as to whether such factors have occurred in the past or their likelihood of occurring in the future.
Factors that could reduce, and in many cases have reduced, our customers’ disposable income include but are not limited to high unemployment or underemployment levels or decline in real wages; inflation; pandemics; higher fuel and energy costs (including those related to the conflict in the Middle East); healthcare, housing and product costs; higher interest rates, consumer debt levels, and tax rates; lack of available credit; tax law changes that negatively affect credits and refunds; and decreases in, or elimination of, government assistance programs or subsidies such as unemployment and food/nutrition assistance programs (for example, changes to the work requirement minimum standards for qualification enacted in 2025, and beginning in January 2026, certain states’ exclusion of historically covered product categories), student loan repayment forgiveness, health insurance subsidies, and economic stimulus payments.
Many of the economic factors listed above, as well as commodity rates; transportation, lease and insurance costs; wage rates (including the possibility of increased federal and further increased state and/or local minimum wage rates); foreign exchange rate fluctuations; measures that create barriers to or increase the costs of international trade (including, if we are not able to mitigate them, sustained higher import duties or tariffs on both the products that we sell and those that we use in our business); changes in applicable laws and regulations (including tax laws related to the corporate tax rate and the expiration of the Work Opportunity Tax Credit (“WOTC”)); 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 and building 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. While accelerating levels of inflation in the United States have moderated since 2023, inflation remains elevated in certain areas, including food.
If food inflation (and in particular, “food at home,” which moderately accelerated in 2025) rapidly accelerates again, we may not be able to adjust prices sufficiently to offset the effect without negatively impacting customer demand or our overall gross margin.
While we saw slight improvement in our sales mix in 2025 as compared to the prior year, our sales mix remains heavily weighted towards consumables, and there is no guarantee that these initiatives will continue to improve our sales mix.
Additionally, factors negatively affecting our customers’ disposable income and consumer sentiment, such as the economic factors discussed above, can have a larger negative impact on non-consumables sales results than consumables sales results and on our pOpshelf concept.
We compete with discount stores and, to varying degrees, other retailers, including mass merchandise, convenience, variety, drug, grocery, warehouse club, online retailers, and certain specialty stores.
Furthermore, if our competitors or third parties incorporate artificial intelligence into their businesses more quickly or more successfully than us, it could impair our ability to compete effectively and adversely affect our results of operations, or if our use of artificial intelligence is inaccurate or ineffective, our competitive position could be adversely affected.
We currently do not offer traditional online shopping to a significant degree and have seen a greater willingness of our customers to adopt online shopping generally.
While we continued to experience certain of these factors at historically heightened levels in 2025, to date, they have not materially impaired our ability to complete our planned real estate projects or growth, and thus, have not had a material adverse effect on our financial performance.
In the first quarter of 2025, we closed 45 pOpshelf stores and converted an additional six to Dollar General stores, as well as incurred significant impairment charges, the majority of which relate to the pOpshelf stores.
Although we took focused action in 2025 to improve the performance of pOpshelf stores and will continue to do so in 2026, there can be no assurances that our efforts will be successful.
In addition, sustained high rates of inventory shrink at certain stores have historically contributed, and inventory shrink and/or damages may contribute, to the closure of certain stores and the impairment of long-term assets in the future.
Our inventory balance represented approximately 44% of our total assets exclusive of goodwill, operating lease assets, and other intangible assets as of January 30, 2026.
Further, we pay interchange and other processing fees related to our acceptance of debit and credit card payments, and these fee amounts could continue to increase over time, as a result of customers shifting their payments from cash to credit/debit card and/or our fee rates rising, thereby raising our operating costs.
Additionally, costs and complexities of securing our systems against failure or attack continue to increase.
There are also risks associated with our continued integration of artificial intelligence and machine learning within our technology systems (for example, if the types of information that applications with embedded artificial intelligence assist in producing are or are alleged to be deficient, inaccurate, or biased, our business, financial condition, and results of operations may be adversely affected).
In addition, costs and delays for any reason associated with the implementation of new or upgraded systems and technology, including our current migration of applications to the cloud, modernization of legacy systems (including our Finance and Human Resources enterprise resource planning system and our inventory replenishment system) and our new point of sale system, 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 or lost sales, cause business interruptions, inhibit our ability to innovate, and affect our ability to meet business and reporting requirements and adversely affect our profitability.
In 2025, our two largest suppliers accounted for approximately 11% and 8% respectively, of our purchases.
We directly imported approximately 4% of our purchases (measured at cost) in 2025, but many of our domestic vendors directly import their products or components of their products.
In 2025, the U.S. administration imposed additional tariffs across many of our global trading partners, including China, the European Union, Canada, India, and various countries located in Southeast Asia.
These and other factors affecting our suppliers and our access to products, if we are not able to offset them, could adversely affect our business and financial performance.
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 and salary levels (including the possibility of increased federal and further increased state and/or local minimum wage rates/salary thresholds), health and other insurance costs, changes in employment and labor laws or other workplace regulations (including those relating to employee benefit programs such as health insurance and paid leave programs), employee expectations and productivity, employee activism, employee safety issues, and our reputation and relevance within the labor market.
In addition, to the extent a significant portion of our employee base unionizes, or attempts to unionize, our labor and other costs could increase, and if the federal government adopts or imposes regulatory or other changes to existing law that could facilitate union organizing or otherwise restrict employer actions, it could have an adverse effect on our business.
Natural disasters and unusual or extreme weather conditions (whether or not caused by climate change), pandemic outbreaks or other health crises, political or civil unrest, acts of war, violence or terrorism, and disruptive global political events could disrupt business, affect consumer sentiment or shopping patterns, and result in lower sales and/or profitability and otherwise adversely affect our financial performance.
The occurrence of one or more natural disasters, such as hurricanes, fires, floods, tornadoes and earthquakes, unusual or extreme weather conditions, pandemic outbreaks or other health crises, political or civil unrest, acts of war, violence or terrorism (including within our stores, distribution centers or other Company property), or disruptive global political events (for example, the political tensions involving China, the conflict between Russia and Ukraine and the conflict in the Middle East) or similar disruptions could adversely affect our business, financial performance and reputation.
These events also could affect consumer sentiment or 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 (including those related to the conflict in the Middle East), fuel shortage(s), new 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 or access technology needed to effectively run our business, disruption of our utility services or information systems, and damage to our reputation.

and 24 more.

Gone since FY2025

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, 2032. Human Capital Resources At Dollar General, a foundational element in how we operate is exemplified in our fourth operating priority – Investing in the growth and development of our teams.
Based on a talent philosophy of “Attract, Develop, and Retain”, whether an individual works in a store, a distribution center, our store support center or our international offices, over the last 85+ years, we have helped millions of individuals start and progress in their careers, providing employees with numerous opportunities to gain new skills and develop their talents, supported by our award-winning training and development programs. Attract We seek to provide market competitive compensation and benefits packages that attract talent to the organization and then retain and incent employees for performance.
To help measure the success of our overall employee compensation and benefits programs, we monitor employee applicant flow and staffing levels across the organization, as well as employee turnover, particularly at the store manager level.
In 2024, we estimate we invested over four million training hours in our employees to promote their education and development. We enhance our development programs each year based on the current needs of our employees and the business.
We offer a variety of differentiated programs, including mentorship, cohorts, and leader-led and experiential opportunities to ensure there is a path of development for all employees. Our internal placement rate helps us measure the success of our development programs.
As of February 28, 2025, we employed approximately 194,200 full-time and part-time employees, including divisional and regional managers, district managers, store managers, other store employees, and distribution center, fleet and administrative employees.
As of the end of 2024, more than 70% of store managers and thousands of additional employees, including the majority of our senior leadership, have been placed from within our organization. Retain We strive to create an environment where our employees feel respected, safe, empowered, and valued.
We regularly monitor retention and engagement levels across the organization through a variety of means, working to understand what is important to our employees and how we can best continue to meet their evolving needs. Compliance with Governmental Regulations Our operations are subject to the applicable federal, state, local and foreign laws, rules, and regulations of the jurisdictions in which we operate or conduct business.
These laws, rules and regulations relate to, among other things, the sale of products, including without limitation, product and food safety, marketing and labeling; information security and privacy; labor and employment; employee wages and benefits; health and safety; real property; public accommodations; anti-bribery; financial reporting and disclosure, including disclosures related to environmental, social and governance matters; pricing; antitrust and fair competition; anti-money laundering; distribution; transportation; imports and customs; intellectual property; taxes; and environmental compliance. We routinely incur significant compliance-related costs, both direct and indirect, including those related to store standards and labor.
Although we may incur additional material compliance-related costs in the future, to date, other than the expenses referenced above, compliance with these laws, rules and regulations has not had a material effect on our capital expenditures, earnings or competitive position.
Additionally, if significant changes in the federal, state or foreign corporate tax rates occur in the future, such change could adversely affect our overall effective tax rate and earnings.
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 any amendments to those reports, as well as proxy statements and annual reports to shareholders, and, from time to time, registration statements and other documents pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
These documents are available free of charge to investors on or through the Investor Information section of our website (https://investor.dollargeneral.com) as soon as reasonably practicable after we electronically file them with or furnish them to the SEC.
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.
These risks are not the only risks we face.
Factors that could reduce, and in many cases have reduced, our customers’ disposable income include but are not limited to high unemployment or underemployment levels or decline in real wages; inflation; pandemics; higher fuel, energy, healthcare, housing and product costs; higher interest rates, consumer debt levels, and tax rates; lack of available credit; tax law changes that negatively affect credits and refunds; and decreases in, or elimination of, government assistance programs or subsidies such as unemployment and food/nutrition assistance programs, student loan repayment forgiveness and economic stimulus payments.
Many of the economic factors listed above, as well as commodity rates; transportation, lease and insurance costs; wage rates (including the possibility of increased federal and further increased state and/or local minimum wage rates); foreign exchange rate fluctuations; measures that create barriers to or increase the costs of international trade (including increased import duties or tariffs, some of which have been announced and are expected to begin in 2025); changes in applicable laws and regulations (including tax laws related to the corporate tax rate); 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 and building 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. While accelerating levels of inflation in the United States moderated in 2023 and 2024, inflation remains elevated in certain areas, including food.
If food (and in particular, “food at home”) inflation accelerates again, we may not be able to adjust prices sufficiently to offset the effect without negatively impacting customer demand or our overall gross margin.
Despite these initiatives, our sales mix continued to shift from non-consumables toward consumables in 2024, and our consumables sales as a percentage of total sales is currently at historical highs.
Additionally, factors negatively affecting our customers’ disposable income can have (and we believe recently have had) a larger negative impact on non-consumables sales results than consumables sales results and on our pOpshelf concept.
We compete with discount stores and many other retailers, including mass merchandise, warehouse club, grocery, drug, convenience, variety, online retailers, and certain specialty stores.
We currently do not offer traditional online shopping to a significant degree and have seen a greater willingness of our customers to adopt online shopping.
While we continued to experience certain of these factors at heightened levels in 2024, to date, they have not materially impaired our ability to complete our planned real estate projects or growth, and thus, have not had a material adverse effect on our financial performance.
We recently announced our plans to close 45 pOpshelf stores and convert an additional six to Dollar General stores in the first quarter of 2025, as well as our incurring of significant impairment charges, the majority of which relate to the pOpshelf stores.
Although we are taking focused action in 2025 to improve the performance of pOpshelf stores, there can be no assurances that our efforts will be successful.
During 2024, our inventory shrink and damages levels remained significantly elevated and materially impacted our results.
In addition, sustained high rates of inventory shrink at certain stores have contributed, and may continue to contribute, to the closure of certain stores and the impairment of long-term assets.
Our inventory balance represented approximately 47% of our total assets exclusive of goodwill, operating lease assets, and other intangible assets as of January 31, 2025.
Additionally, costs of securing our systems against failure or attack continue to rise.
There are also risks associated with our continued integration of artificial intelligence and machine learning within our technology systems.
In addition, costs and delays for any reason associated with the implementation of new or upgraded systems and technology, including our current migration of applications to the cloud, modernization of legacy systems (including our Finance and Human Resources enterprise resource planning system) and implementation of our new point of sale system, 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 or lost sales, cause business interruptions, inhibit our ability to innovate, and affect our ability to meet business and reporting requirements and adversely affect our profitability.
In 2024, our two largest suppliers accounted for approximately 11% and 8% respectively, of our purchases.
We directly imported approximately 4% of our purchases (measured at cost) in 2024, but many of our domestic vendors directly import their products or components of their products.
Duties increased on certain products imported from China and Southeast Asian countries in 2024, and the current U.S. administration has imposed tariffs and could further significantly increase tariffs on goods from China, Mexico, Canada and other countries.
These and other factors affecting our suppliers and our access to products could adversely affect our business and financial performance.
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 and salary levels (including the heightened possibility of increased federal and further increased state and/or local minimum wage rates/salary thresholds), health and other insurance costs, changes in employment and labor laws or other workplace regulations (including those relating to employee benefit programs such as health insurance and paid leave programs), employee expectations and productivity, employee activism, employee safety issues, and our reputation and relevance within the labor market.
In addition, to the extent a significant portion of our employee base unionizes, or attempts to unionize, our labor and other costs could increase, and it is possible that the federal government may adopt or impose regulatory or other changes to existing law that could facilitate union organizing or otherwise restrict employer actions.
Natural disasters and unusual or extreme weather conditions (whether or not caused by climate change), pandemic outbreaks or other health crises, political or civil unrest, acts of war, violence or terrorism, and disruptive global political events could disrupt business and result in lower sales and/or profitability and otherwise adversely affect our financial performance.
The occurrence of one or more natural disasters, such as hurricanes (such as those occurring in the third quarter of 2024), fires, floods, tornadoes and earthquakes, unusual or extreme weather conditions, pandemic outbreaks or other health crises, political or civil unrest, acts of war, violence or terrorism (including within our stores, distribution centers or other Company property), or disruptive global political events (for example, the political tensions involving China, the conflict between Russia and Ukraine and the conflict in the Middle East) or similar disruptions could adversely affect our business, financial performance and reputation.

and 24 more.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2025 ↗, FY2026 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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