Accounting restatement dogs Dollar General

GOODLETTSVILLE, TN — At its annual meeting of shareholders last week, Dollar General found itself laboring under two shadows: the one related to its restatement of results for the last three fiscal years and the darker pall of the Enron scandal, which has made shareholders of all stripes especially jittery.

"The restatement of our financial results for 1998, 1999 and 2000 has been unquestionably the most disappointing circumstance in the 62-year history of Dollar General," chairman and ceo Cal Turner Jr. told shareholders. "Dollar General will operate and report consistently with its fundamental values."

Eleven months ago, the extreme-value retailer notified the Securities and Exchange Commission that it had uncovered some accounting irregularities. In January, it announced that inaccuracies in its accounting for the cost of goods sold, expenses, leases and taxes would cause it the chain to restate net income for 1998, 1999 and 2000 by approximately $199.2 million.

As a result of the restatement process, Dollar General execs provided information under a host of SEC restrictions. Among the highlights of remarks to shareholders:

• Average sales per store have increased from $447,000 in 1990 to $910,000 in 2000. The average sales per store in 2001 were $957,000.
• Consumable and highly consumable merchandise accounted for 61 percent of total sales through the third quarter of 2001.
• The company will test automated replenishment programs this year and may start rollout by early 2003.

"Our results for 2001 suggest that our strategy is right and that our niche is compelling, especially in the current economic environment," Turner said.

The company will issue its official report on fiscal year results March 18.