Dear Community,
As we approach the halfway point of our fiscal year, we would like to share this financial update with our owners and staff.
Our previous fiscal year, which ended June 30th, was very challenging from a financial perspective. The co-op incurred an after-tax loss for the year of $811,978. Our summary financial statements for the fiscal year, along with a brief explanation of each, can be found in our Scorecard & Annual report. The Scorecard was officially released at our annual owner meeting in October, and includes updates from the General Manager, Board of Directors, and other co-op staff, along with measures of the co-op’s positive impacts from the past year. Hard copies can be found near the customer service kiosks at each store.
While last fiscal year was difficult from a financial perspective, we did end the year with an operationally profitable quarter in April, May, and June). We also achieved positive net income in the first quarter of our new fiscal year, July through September. While the first quarter results showed a modest net income of just over $20,000, that amount was greater than budget, which was a positive start to the fiscal year. This is especially encouraging since the first quarter is typically our lowest sales volume quarter of the year.
We also recently concluded Thanksgiving week, which is a major operational undertaking for us each year. We achieved positive sales growth at both stores. The shopping experience at the Franklin store was notably smoother than last year, when we had just completed the store remodel. We are very grateful to store teams for all of their teamwork and positivity during one of the busiest weeks of the year.
As we move into the new calendar year, we have a number of initiatives underway to continue this progress. In the first quarter of 2023, the co-op’s Leadership Team established five strategic priorities: grow sales, achieve financial sustainability, keep it simple, cultivate a culture of inclusion and belonging, and strengthen our connection to community. We have begun a number of projects supporting each of these strategic priorities and will provide regular reports to co-op staff on our progress.
Another major factor for 2025 is the pending sale of the Creamery building. While the Creamery played an important role in supporting the co-op’s growth for several years, the sale of the building is the best financial path forward for the co-op at this time. The sale is currently scheduled to close in early January. While we will net some cash from the sale, the amount will not be a major windfall for the co-op. The sale will, however, pay down a substantial amount of debt, and will meaningfully reduce expenses going forward. These savings will build on the expense reduction work we completed over the past year across all aspects of the co-op.
As the natural foods industry has matured, we, along with food co-ops across the country, have been faced with much lower sales growth than was common a decade ago. Expenses continue to rise, especially with the impact of inflation over the past few years, which makes achieving financial sustainability on a consistent basis more difficult. Managing expenses in a period of low growth is a fundamental challenge for us at this time. The operational improvements we have made, progress on our strategic priorities, and the sale of the Creamery, are all essential to meeting that challenge. Ultimately, of course, we cannot do any of this without the support of our owners. The next few weeks are some of the most important of the year for any grocery store, and we encourage you to come out and continue your support of Seward Co-op. With your help, we can improve on the profitability we achieved last quarter, and launch into 2025 on a high note.
In cooperation,
Alex Betzenheimer, Director of Finance