Strong Growth, Sales Lead to Financial Success for New Pioneer

Annual Report - Fall 2010

Henry T. Madden, Treasurer

The miserable U.S. economy not withstanding, New Pioneer Food Co-op improved both sales and profits in the fiscal year ending June 30, 2010. It appears that the message of eating healthy, fresh, organic foods purchased at two clean, pleasant, and friendly co-op stores is broadening in our community. Sales in FY 2010 were $21.642 million, a 4.0% increase over FY 2009. Profits were up significantly also at $644,733.

Our balance sheet remains very strong, even after paying the balance of the debt accrued from the purchase of the office condominium on Linn Street in Iowa City. We have a balance of nearly $1.5 million cash and short term investments and zero long term debt. Again, as last year, we paid for all renovations of the Iowa City store from current income.

Gross margins remained very close to last year’s numbers at 37.7%. Gross margin (GM), for your recollection, is the selling price less the cost of goods sold, and GM percentage is the percent of the difference between the two. Our National Cooperative Grocer’s Association (NCGA) peer average is 39.5%, which means that we are selling our goods for nearly two percent less than the average for the one hundred and thirty-two co-op stores in the U.S.

Because of our good financial results, we were able to continue, for the sixth year in a row, to pay dividends, a total of $66,504, to those members who spent more than $500 at New Pi.

You might ask, “Why do we continue to add to our cash when we already have accumulated more than $1 million?” As mentioned both in the Catalyst and at our member meeting in July, we are considering purchasing the Coralville store and have been studying what to do to alleviate the crowded conditions and flood problems at the Iowa City store. Therefore, we are trying to accumulate cash to accomplish either or both of these events.

You may be interested in the fact that we continue to measure significantly above the median among our peers in the NCGA in sales growth, net income growth, annual return on assets and equity, and inventory turns. These are measurements by which the Board of Directors assesses the performance of our management team.

Finally, I would be remiss if I did not mention that the Board is very conscious of our reliance upon our conscientious employees, and that we attempt to reward them by remunerating them above local grocery store averages both in pay and benefits. Just recently the Board voted to raise the 401K matching contribution from 4% to 5% to encourage our employees to save for retirement.