Hello Co-op members!
I have officially hit my three-month mark here with the Co-op and I am really enjoying working with all of my colleagues. In this short period of time, I have heard a lot of feedback from our team members across locations about desired improvements to our organization’s culture. I am excited about the DEI work going on with Deo Mwano’s team, a re-commitment to open book management, and the efforts going into cross-location communication. While the “cure” cannot happen all at once, I am confident we are moving in the right direction.
Something else I’ve heard from many people across the organization—both members and employees—is the desire to hear more about our financial position and results, including learning more about the reasons behind those results. With that being said, let’s talk about finances!
This time last year, we were budgeting for the year ahead, and we knew it was going to be a tough one. The primary reason, of course, is inflation. With inflation, we expected costs to rise, which of course we didn’t want to entirely pass along to customers. One, it’s the right thing to do. Two, it’s bad business, and would price us out of the market.
So taking inflation into account, this time last year we budgeted for a loss of approximately $336k. The good news is that as we enter the fourth quarter, the loss is nowhere near what we’ve budgeted for.
For the nine months ended October 1, 2022, our consolidated loss (the loss across all business units) was approximately $138k, putting us $198k ahead of our budget. There are a few things contributing to this, as detailed below:
Wages and Benefits Expense
While our sales are lower than budget, our wage and benefits expense is also lower than budget due to our staffing issues. Let me be clear—this is not a good thing! We want to be fully staffed and incurring all of our budgeted wage and benefits expense. However, in the unique position we are in with such a tight labor market this year, the savings in personnel costs are a large part of why we are doing better than we expected.
The way that staff have worked harder and smarter this year to do more with less is nothing short of miraculous, and it is very appreciated. More to come on ways we are planning on recognizing staff in Q4 for going above and beyond.
General & Administrative costs
Savings on resource center costs—we have incurred $204k less than our budgeted costs within the resource center thanks to our various departments carefully watching their spending.
We received money back from a vendor to compensate us for all of the supply chain issues that affected us in 2021.
At this moment, we are working on the budget for 2023. While it seems this is said every year, 2023 is going to be a particularly tough year. Inflation is expected to increase an additional 10% in 2023 (on top of the unprecedented inflation experienced in 2022). As mentioned previously, not all of those price increases on the products we purchase can be passed on to our customers/members.
As a result, margins will be thinner in 2023, and we will have to reduce expenses accordingly. We are working to find creative ways to reduce costs without affecting our ability to invest in our greatest asset—our people!
If you have any questions at all, please do not hesitate to reach out—you can call me at (603) 643-2667 extension 2851, or send me an email at firstname.lastname@example.org.
Thank you to all of our members!
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