Paul

State of the Co-op, October 2020

A Letter from the Co-op General Manager

To Our Community,

Last night, I met with the Co-op Board of Directors for our regularly scheduled monthly meeting. During these meetings, I share a report with our directors that presents a high-level snapshot of our business. Today I would like to share this information with you as well.

Big Picture. In quick summary, our Co-op continues to have experienced an increase in total sales, items sold, gross margin, and basket size. Although these levels remain higher than the levels pre-COVID, they have begun to level off over the past several months. What we do not know is: What happens to shopper behavior if the recent uptick in COVID cases continues? There is concern nationally of pantry-stocking again ahead of the winter months. We must remain vigilant on this front too and look for any sign of supply-chain pressures that could disrupt our ability to feed the community. I am happy to say that our teams are not seeing disruptions at this point. They are on the lookout.

Nonetheless, this puts our business in a strong position as we go into an unpredictable fourth-quarter holiday season.

Financials. For the year to date period ending September 30, the average shopper’s basket size—meaning the price paid for their food—was greater than the same period last year. Gross margins (sales minus cost of sales) were also greater than the same period last year. 

Sales. We continue to experience strong overall sales growth, led by Grocery, Meat, Produce, Dairy, and Frozen Foods. Members accounted for approximately 78.0% of sales during this period versus 76.5% for the same period last year.

Experience. Our emphasis on safety and transparent communication has built trust and, by extension, loyalty. Customers are shopping less frequently but are purchasing more per visit. Inventory levels have remained strong compared to our competitors, meaning our shoppers can find what they need in one location.

Workforce Planning. The number of open and/or available positions remains higher than anticipated. We are undertaking a very rigorous look at our workforce planning as we progress through the 2021 budget process. Creative and innovative recruitment strategies have enabled us to fill some key positions. While applications are increasing, the challenge still remains to find qualified applicants.  

Web Cart. September saw significant progress in our Made to Order menu for custom sandwiches, burgers, and some hot foods. We are now working on systems-testing as we get closer to rolling out this highly requested feature to our members.

Gasoline. Savings from Operations from gas sales are positive and ahead of budget, in spite of the fact that gas sales nationwide continue to decline. On a year-to-date basis, we have pumped 207,570 fewer gallons at an average price of $0.36 less per gallon compared to the same period last year. Fewer gallons sold means fewer gallons need to be purchased to restock inventory.

Wrap Up

In summary, more good news—a strong testament to our shoppers’ support and to our employees’ hard work and professionalism.

Along those lines, I’d like to close with an important reminder to all of our shoppers. COVID cases are on the rise all around us, a fact illustrated by New Hampshire’s COVID-19 Schools Dashboard and Vermont’s Cross State Travel Information. The current guidance from the Vermont Department of Health now restricts all non-essential travel to all New Hampshire locations. Any non-essential travel falls under quarantine guidelines.

To help us do our part and reduce the potential spread of COVID-19, please continue to follow our social-distancing policies diligently, and show your support for the employees tasked with communicating and enforcing these policies. This includes abiding by all recommended signs in stores, being patient as our employees sanitize work spaces between customer interactions, staying at least six feet away from others, and of course, wearing masks, including face shields for those who cannot wear a mask for medical reasons.

No mask, no entry, no exceptions.

Why am I writing about this policy again? Last weekend we had a very unpleasant situation occur in one of our stores. A shopper engaged in a rather infantile exchange with another shopper and several of our employees who tried to deescalate the situation. I understand that some shoppers have strong feelings about not wearing face coverings. Regardless, our policy is clear. The Co-op will not tolerate anyone directing their frustrations at our employees or other shoppers. Anyone caught will be told to leave the store on their own or they will be escorted out by the police, if necessary. We have a zero-tolerance policy for swearing, taunting, body shaming, or anything else that compromises someone’s ability to simply work and shop in peace. It is very sad that people feel they can treat others with such callus disrespect. Well, not at our Co-op.

Thank you to our community and 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, and we will see you in our stores and at the curbside.

Onward and upward,

Thanks,

Paul

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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.

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