January 14, 2002

Dollar General Reports Increased Sales and Earnings for the 39-Week Period

GOODLETTSVILLE, Tennessee - January 14, 2002 - Dollar General Corporation (NYSE: DG) today reported that net income for the 39-week period ended November 2, 2001, increased 7.1 percent to $110.1 million, or $0.33 per diluted share, compared with $102.8 million, or $0.31 per diluted share, for the 39-week period ended October 27, 2000.

"Despite the demands of the restatement process, our results year-to-date reflect our employees' dedication to serving our customers and operating our stores well. Our 39-week period same-store sales increase of 7.6 percent is a result of better in-stocks of consumable basic merchandise, more effective merchandise flow and a better presentation of seasonal merchandise resulting from last year's store layout changes," said Cal Turner, Chairman and CEO. "In addition to generating strong sales increases, this year we have:

  • installed new satellite technology in approximately 2,500 stores and new registers in approximately 2,200 stores to improve the quality and consistency of data transmission;
  • established UPC inventories in approximately 500 stores, positioning the foundation for better store inventory management;
  • opened a new distribution center in April in Zanesville, Ohio which now serves approximately 740 stores;
  • created a B2B website to communicate with suppliers and transportation providers, improving product flow and distribution center in-stock levels;
  • begun a process to sell through aged inventory and improve inventory turn.
Our strategy is right; our niche is compelling, especially in the current economic environment; and our employees are more excited than ever about our prospects."

Total sales for the 39-weeks ended November 2, 2001, increased 20.2 percent to $3.74 billion from $3.11 billion for the 39-week period ended October 27, 2000. For the 39-week calendar period ended November 2, 2001, same-store sales increased 7.6 percent. As of November 2, 2001, the Company had opened 523 new stores and closed 38 stores.

Gross profit increased 18.6 percent to $1.03 billion, or 27.7 percent of sales, compared with $0.87 billion, or 28.0 percent of sales, in the prior year. The reduction in gross margin was due in part to the continued shift in the Company's sales to lower margin consumable basic items.

Selling, General and Administrative Expenses ("SG&A") were $823.2 million, or 22.0 percent of sales, versus $672.3 million, or 21.6 percent of sales, during the comparable period in the prior year, an increase of 22.4 percent. The Company recorded $18.3 million in expenses, primarily professional fees, in the current year period related to the restatement of certain previously released financial data. Excluding the restatement related expenses, SG&A would have been $804.9 million, or 21.5 percent of sales, an increase of 19.7 percent over the prior year.

Interest expense decreased 1.4 percent to $35.0 million, or 1.0 percent of sales, compared with $35.5 million, or 1.1 percent of sales, in the prior year.

The Company's effective tax rate was 37.4 percent in the current year period and 37.3 percent in the prior year period.

Net income, including restatement-related expenses, increased 7.1 percent to $110.1 million, or $0.33 per diluted share compared with $102.8 million, or $0.31 per diluted share during the comparable period in the prior year. Excluding restatement-related expenses, net income for the 39-week period ended November 2, 2001, increased 18.2 percent to $121.5 million, or $0.36 per diluted share.

LIFO merchandise inventories increased 12.7 percent to $1.25 billion at November 2, 2001, from $1.11 billion at October 28, 2000.

Dollar General currently operates approximately 5,550 neighborhood stores in 27 states with distribution centers in Florida, Kentucky, Mississippi, Missouri, Ohio, Oklahoma and Virginia.

This press release contains historical and forward-looking information. The words "believe," "anticipate," "project," "plan," "expect," "estimate," "objective," "forecast," "goal," "intend," "will likely result," or " will continue" and similar expressions 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 in the forward-looking statements. The factors that may result in actual results differing from such forward-looking information include, but are not limited to: the Company's ability to maintain adequate liquidity through its cash resources and credit facilities, including its ability to refinance or replace such facilities on favorable terms at the maturity thereof; the Company's ability to comply with the terms of the Company's credit facilities (or obtain waivers for non-compliance); general transportation and distribution delays or interruptions; inventory risks due to shifts in market demand; changes in product mix; interruptions in suppliers' businesses; fuel price and interest rate fluctuations; a deterioration in general economic conditions caused by acts of war or terrorism; temporary changes in demand due to weather patterns; delays associated with building, opening and operating new stores; the results of the Company's restatement and audit process; and the impact of the litigation and regulatory proceedings related to the restatement of the Company's financial statements, including the funding of the settlement of such litigation and the risk that the conditions to the effectiveness of such settlements, including the results of the plaintiffs' confirmatory discovery and the approval by the courts, may not be realized.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. The Company undertakes no obligation to publicly update or revise any forward-looking statements contained herein to reflect events or circumstances occurring after the date of this release or to reflect the occurrence of unanticipated events.

                            DOLLAR GENERAL CORPORATION
                           UNAUDITED INCOME STATEMENTS
                                     (000's)
                                          ---For the First Quarter Ended---
                                                       (restated)  (restated)
                                                       April 28,   April 30,
                                          May 4, 2001     2000        1999
    Sales                                  $1,202,504    $997,079    $844,593
    Cost of Sales                             881,079     727,672     615,397
    Gross Margin                              321,425     269,407     229,196
    Selling, General & Administrative
     Expense                                  251,990     213,341     173,990

    Operating Income                           69,435      56,066      55,206
    Interest Expense                           11,600       9,263       4,540
    Pre-Tax Income                             57,835      46,803      50,666
    Taxes                                      21,602      17,468      18,590
    Net Income                                $36,233     $29,335     $32,076
                                              =======     =======     =======

    Diluted earnings per share                  $0.11       $0.09       $0.10
    Weighted average diluted shares           335,184     334,293     337,309

                                             ---For the Second Quarter Ended---
                                                       (restated)  (restated)
                                           August 3,    July 28,    July 30,
                                              2001        2000        1999

    Sales                                  $1,225,254  $1,017,418    $915,210
    Cost of Sales                             893,971     733,368     665,292
    Gross Margin                              331,283     284,050     249,918
    Selling, General & Administrative
     Expense                                  276,069     226,988     188,388

    Operating Income                           55,214      57,062      61,530
    Interest Expense                           11,957      12,732       6,254
    Pre-Tax Income                             43,257      44,330      55,276
    Taxes                                      16,157      16,544      20,257
    Net Income                                $27,100     $27,786     $35,019
                                              =======     =======     =======

    Diluted earnings per share                  $0.08       $0.08       $0.10
    Weighted average diluted shares           335,402     333,038     339,615

                                            ---For the Third Quarter Ended---
                                                       (restated)  (restated)
                                          November 2, October 27, October 29,
                                              2001        2000        1999

    Sales                                  $1,309,125  $1,094,360    $950,419
    Cost of Sales                             927,944     776,016     675,449
    Gross Margin                              381,181     318,344     274,970
    Selling, General & Administrative
     Expense                                  295,103     231,933     198,507

    Operating Income                           86,078      86,411      76,463
    Interest Expense                           11,480      13,537       8,312
    Pre-Tax Income                             74,598      72,874      68,151
    Taxes                                      27,861      27,198      24,976
    Net Income                                $46,737     $45,676     $43,175
                                              =======     =======     =======

    Diluted earnings per share                  $0.14       $0.14       $0.13
    Weighted average diluted shares           334,857     334,097     338,390


                                           ---For the Year-To-date Ended---
                                                       (restated)  (restated)
                                          November 2, October 27, October 29,
                                              2001        2000        1999

    Sales                                  $3,736,883  $3,108,857  $2,710,222
    Cost of Sales                           2,702,994   2,237,056   1,956,138
    Gross Margin                            1,033,889     871,801     754,084
    Selling, General & Administrative
     Expense                                  823,162     672,262     560,885

    Operating Income                          210,727     199,539     193,199
    Interest Expense                           35,037      35,532      19,106
    Pre-Tax Income                            175,690     164,007     174,093
    Taxes                                      65,620      61,210      63,823
    Net Income                               $110,070    $102,797    $110,270
                                             ========    ========    ========

    Diluted earnings per share                  $0.33       $0.31       $0.33
    Weighted average diluted shares           335,148     333,809     338,438


                            DOLLAR GENERAL CORPORATION
                                  BALANCE SHEETS
                                     ($000's)

                                                 (unaudited)
                                                  November 2        February 2
                                                     2001              2001
    Assets
    Current Assets:
      Cash and cash equivalents                     $74,819          $162,310
      Merchandise inventories                     1,133,215           896,235
      Deferred income taxes                          90,307            21,514
      Other current assets                           48,600            44,868
            TOTAL CURRENT ASSETS                  1,346,941         1,124,927

    Property & equipment, at cost                 1,454,268         1,339,554
    Less:  Accumulated depreciation                 456,478           366,460

                                                    997,790           973,094

    Merchandise inventories                         116,000           116,000
    Other assets, net                                 8,535            68,441

    TOTAL ASSETS                                 $2,469,266        $2,282,462
                                                 ==========        ==========

    Liabilities & Shareholders' Equity
    Current Liabilities
      Current portion of long-term
       obligations                                 $391,089            $9,035
      Accounts payable                              381,843           297,262
      Accrued expenses and other                    223,508           214,192
      Income taxes                                   10,492            17,446
      Litigation settlement payable                 162,000                 0

            TOTAL CURRENT LIABILITIES             1,168,932           537,935

    Long-Term obligations                           347,174           720,764
    Litigation settlement payable                         0           162,000
    TOTAL LIABILITIES                             1,516,106         1,420,699

    Shareholders' Equity:
      Common stock                                  166,302           165,646
      Additional paid-in capital                    300,622           283,925
      Accumulated other comprehensive loss           (3,552)                0
      Retained earnings                             492,473           414,318
      Less:  Common stock purchased by
       employee
        deferred compensation trust                   2,685             2,126
    TOTAL SHAREHOLDERS' EQUITY                      953,160           861,763

    TOTAL LIABILITIES AND
    SHAREHOLDERS' EQUITY                         $2,469,266        $2,282,462
                                                 ==========        ==========


                            DOLLAR GENERAL CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                     (000's)
                                   (Unaudited)

                                             ---For the 39-Weeks Ended---
                                                                 (restated)
                                           November 2, 2001   October 27, 2000
    Cash flows from  operating activities:
     Net income                                   $110,070           $102,797
     Adjustments to reconcile net income
      to net cash
         provided by (used in) operating
          activities
      Depreciation and amortization                 92,104             83,737
      Deferred income taxes                         (5,795)           (12,792)
      Tax benefit from
       stock option exercises                        5,243             15,021
      Change in operating assets and
       liabilities:
         Merchandise inventories                  (236,980)          (155,814)
         Other Current Assets                       (3,732)             2,517
         Accounts payable                           84,581            (45,479)
         Accrued expenses and other                  5,759              7,449
         Income taxes                               (6,954)           (14,626)
         Other                                      (2,549)               537

            Net cash provided by (used
             in) operating activities               41,747            (16,653)

    Cash flows from investing activities:
     Purchase of property and equipment           (100,184)          (193,315)
     Proceeds from sale of property and
      equipment                                        230             97,535

            Net cash provided by (used
             in) investing activities              (99,954)           (95,780)

    Cash flows from financing activities:
     Issuance of short-term borrowings                   0            221,369
     Repayments of short-term borrowings                 0           (160,000)
     Issuance of long-term obligations                   0            199,584
     Repayments of long-term obligations            (8,925)          (109,472)
     Payments of cash dividend                     (31,910)           (29,522)
     Proceeds from exercise of stock
      options                                       11,557             29,239
     Repurchase of common stock                          0            (65,549)
     Purchase of common stock for
      deferred compensation plan                        (6)                 0

            Net cash provided by (used
             in) financing activities              (29,284)            85,649

    Net decrease in cash and
     cash equivalents                              (87,491)           (26,784)
    Cash and cash equivalents beginning

     of period                                     162,310             54,742
    Cash and cash equivalents end of
     period                                        $74,819            $27,958

    Supplemental schedule of noncash
     investing and financing activities:
     Purchase of property and equipment
      under capital lease obligations              $17,393           $110,114


                           DOLLAR GENERAL CORPORATION
                              KEY OPERATIONAL DATA
                                     (000's)

                                      ---For the First Quarter Ended---
                                             May 4        April 28
                                               2001          2000     % Chg

    Sales by Category:
       Highly Consumable                     $721,292      $545,633    32.2%
       Hardware and Seasonal                 $168,804      $137,695    22.6%
       Basic Clothing                        $130,632      $120,910     8.0%
       Home Products                         $181,776      $192,841    -5.7%
         TOTAL SALES                       $1,202,504      $997,079    20.6%


                                      ---For the Second Quarter Ended---
                                              August 3     July 28
                                               2001         2000      % Chg

    Sales by Category:
       Highly Consumable                     $737,778      $583,003    26.5%
       Hardware and Seasonal                 $185,082      $143,120    29.3%
       Basic Clothing                        $131,200      $120,320     9.0%
       Home Products                         $171,194      $170,975     0.1%
         TOTAL SALES                       $1,225,254    $1,017,418    20.4%

                                       ---For the Third Quarter Ended--- 
                                            November 2    October 27

                                               2001          2000     % Chg
    Sales by Category:
       Highly Consumable                     $796,271      $638,372    24.7%
       Hardware and Seasonal                 $185,028      $148,415    24.7%
       Basic Clothing                        $148,617      $133,818    11.1%
       Home Products                         $179,209      $173,756     3.1%
         TOTAL SALES                       $1,309,125    $1,094,361    19.6%

                                           ---For 39 Weeks Ended---
                                          November 2    October 27
                                             2001          2000       % Chg
    Sales by Category:
       Highly Consumable                   $2,255,342    $1,767,008    27.6%
       Hardware and Seasonal                 $538,913      $429,230    25.6%
       Basic Clothing                        $410,448      $375,048     9.4%
       Home Products                         $532,180      $537,571    -1.0%

         TOTAL SALES                       $3,736,883    $3,108,857    20.2%

                                             ---For 39-Weeks Ended---
                                             November 2    October 27
    New Store Activity:                          2001          2000

       Beginning Store Count                    5,000         4,294
       New Store Openings                         523           646
       Store Closings                              38            46
       Net New Stores                             485           600
       Ending Store Count                       5,485         4,894
       Total Selling Square Footage      37.1 million  33.1 million

For the 39-weeks ended November 2, 2001, the average customer purchased approximately 6 items at a total cost of $8.25.

                                                 1Q     2Q     3Q    YTD

    Same-store Customer Transactions            5.1%   4.5%   7.0%   5.5%
    Average Customer Purchase                 $8.22  $8.17  $8.35  $8.25
                               

CONTACT:
Investor Contact,
Kiley Fleming, CFA,
+1-615-855-5525,
or
Media Contact,
Andrea Turner,
+1-615-855-5209,
both of Dollar General Corporation


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