Dear Seward Co-op Owners and shoppers,

This is the first in what will be an ongoing series of updates to the co-op’s owners about the co-op’s financial position.

Financial Update

In our most recent quarter (1/1/24 – 3/31/24), the co-op incurred a very large pre-tax loss of over $310,000. This followed an even greater loss of approximately $400,000 in the previous quarter. The Franklin remodel was substantially completed in early November, so this most recent quarter was not affected by the in-store construction that was present in previous months. In this quarter, neither store was impacted by a major outside factor such as the opening of a new competitor or road/highway construction.   The loss was due to the combination of a large increase in labor expense, and sales that were less than we had budgeted.

We reached a tentative agreement on the renewal of our collective bargaining agreement in the Fall, with some aspects–including a new pay scale–implemented retroactively to the contract expiration date of 8/21/23. The co-op’s starting wage for entry level positions that required no previous experience increased from $15.50 to $17.65, well over the 2024 Minneapolis minimum wage of $15.57. This increase of $2.15/hour applied to all pay levels and years-of-service of staff in the union, and will increase to $5/hour over the three-year contract term. This is a real, material increase to incomes for our workers, and we are proud that this has been cited as industry leading pay. And, these pay increases come at a time when the co-op’s sales are not growing. We recently made the very difficult but necessary decision to eliminate 11 positions at the co-op. This was done in conjunction with efforts to grow sales and reduce non-labor expenses described more below.

The budget we have created for the coming fiscal year (7/1/24 – 6/30/25), projects a very modest amount of profit for the year (pre-tax net income of $204,000 on sales of $43 million, or 0.5% of sales). Because we have been experiencing low, sometimes negative, sales growth, we cannot count on strong growth to drive our success. To achieve even that modest level of profitability will require continued improvements in efficiency and additional cost cutting. Being a community-owned business means ensuring our financial health. This allows us to remain a strong resource for food, jobs, and a place for the community to connect.

Operational Updates and Sales Initiatives

We acknowledge how challenging this time has been for everyone involved—in particular the staff members impacted by the layoffs—and want to assure our community that the decision to move forward with layoffs has been part of a holistic approach to reduce expenses, increase sales, and align labor costs with sales revenue.

The leadership team completed a comprehensive expense audit in conjunction with the recent layoffs. We have already taken action to implement changes that will reduce operational expenses by roughly $400,000 in additional annual savings over the next year. As part of this work, we are also working with a broker to explore options for the future of the Creamery building.

As you walk in the door, we hope you’ll take the time to check out the sales cork boards and displays in the front of the stores—there are always great deals peppered throughout the co-op , year round. And of course, one of the perks to being an owner is the quarterly discount. If you have not used yours, stop in before this quarter ends for 10% off your entire purchase.

These are challenging times, and the most important thing our co-op community can do is to continue shopping Seward Co-op stores. It is our sales that support great jobs in our neighborhoods, thriving local farmers, and businesses in our wider communities. If you would like to support at the next level, you have the option to support your co-op by investing with an owner loan or by purchasing Class C Stock. This investment opportunity is an additional benefit of ownership and a way to keep your household’s money local and build community-based resources. You can email invest@seward.coop or call 612-230-5555 to ask questions and learn more.

We want to say thank you to those who completed the annual shopper survey—we value your honest feedback and it will be informing our work as we adapt to our changing economic landscape. And a heartfelt thanks to all whom have supported Seward Co-op over the years and decades.  The last two quarters were extremely challenging, but we also believe it can be a turning point so we can ensure the long-term success of our beloved, community-owned co-op.

Sincerely,

Ray Williams, General Manager

Alex Betzenheimer, Finance Manager