State of the Co-op: February 2021

To Our Community,

Last night at the Co-op Board of Directors meeting, I presented a brief overview of the Co-op’s operations for the month ending January 2021. Below are the highlights. In addition, the Co-op’s auditors presented to the Board, for their review, a draft copy of our audited financial statements.

Big Picture
Our Co-op continues to experience strong and consistent growth in:

  • Consolidated Food Store Sales
  • The Number of Individual Items Sold
  • Gross Margin
  • Shopper Basket Size

This is especially pleasing as (fiscal month) December 2020 had two major tailwinds contributing to its approximately $9.9 million in sales: the year-end holiday season and 6 weeks rather than the normal 5 weeks for the last month of the quarter. (We follow a 4-4-5-week quarterly convention for a 52-week year. In a 53-week year, the extra week is allocated to December.) The graph below highlights these data.

Other topics of interest include the following:

Sales.
Our Grocery, Meat, Produce, Dairy, and Frozen Foods departments continue to provide strong sales growth. Members accounted for approximately 80.2% of January’s sales versus 77.2% of last January’s sales.

Financials
For the year-to-date period ending January 31, 2021, the average shopper’s basket size—meaning the price paid for their food—was once again greater than the same period last year. Gross margins (sales minus cost of sales) were also greater than the same period last year.

Gasoline.
Gas prices nationwide have risen over the past several weeks. Despite this increase, our average price of $0.19 less per gallon compared to the same period last year. For the month of January, we pumped close to 29,000 fewer gallons than the same period last year. Our non-gas business was ahead of budget for the month.

Local.
Co-op staff recently assisted officials with the Vermont Department of Agriculture regarding new local labeling laws for the state. This is particularly important as the definition of “local” continues to be
watered down by the industry.

Lebanon Store Remodel
Quotes for the new refrigerated and frozen units are under review by our Merchandising and Operations teams. Construction is on track to begin in the spring.

Pennies for Change
Our popular round-up program nearly broke the million-dollar mark in January and is expected to break it in February. Teams are working this month to prepare for the launch of a celebratory campaign in March.

Audited Financial Statements
As I mentioned at the outset of this note, the Board received a draft of our 2020 audited financial statements last night. As you know from my prior writing, 2020 was a complex year given the impact COVID-19 had on the business, in particular the loan we received under the Payroll Protection Program (PPP) from the Small Business Administration (SBA). The PPP loan was intended to be a forgivable loan provided the recipients spent at least 70% of the loan proceeds on employee compensation (e.g, payroll).

We met the criteria and applied for forgiveness on September 30, 2020, and await the SBA’s granting our request for forgiveness. The amount of the loan we are seeking forgiveness is accounted for as other income (not operating income), as it is unrelated to the day-to-day business of the Co-op and therefore does not meet the criteria for income available for patronage refund. Currently in draft form, and until the Board accepts the audited statements, the Co-op expects to report income before taxes of approximately $1.9 million.

Wrap Up

Thank you to our members and shoppers for the continued loyalty and support. As always, I welcome your comments and questions. Please reach out to me anytime. In the meantime, remember to be kind to one another and to yourselves. We look forward to serving you in our stores and at the curbside.

Onward and upward,

Thanks,

Paul

The following two tabs change content below.
Paul Guidone

Paul Guidone

Paul Guidone, CFA, spent the better part of four decades in the investment management business here and abroad. He held positions ranging from analyst through Deputy Chairman and Group CEO, at organizations such as Citigroup (US) and The HSBC Group (London and Hong Kong). He joined the Co-op in 2016 as the CFO and in 2018 became Strategic Advisor to the General Manager. Paul was appointed by the Co-op Board as interim General Manager in March 2020 and General Manager in September 2020. To contact, email PGuidone@coopfoodstore.com.