As shown in these financial reports nearby, we are not in great shape.
The primary reason is the persistent decline in sales volume, brought about by the rapid expansion in the number, type and size of grocery stores in the area. Inflationary pressures caused erosion in margins as we tried to manage the cost increases in house by increasing efficiencies rather than passing them onto you as higher prices. Finally, as you all know, the market for labor is unsettled. We are short-staffed in several key areas despite offering competitive wages. This inability has translated to lost sales and profit in areas such as the bakery. Efforts to retain current staff have triggered higher labor costs, diminishing profit margin. On the positive side, our cash position is strong with over $1.3 million in the bank. We also have generally reported positive cash flow from operations, meaning that we are not about to run out of cash anytime soon. (However, this position is not sustainable long term, as we need to reinvest to maintain ourselves as a going concern.)
The Board has tasked management to initiate programs that allow us deploy resources in a targeted fashion and in areas that show immediate financial results. We have shied away from making longer-term investments in capacity resources. Indeed, we are trying to unlock the capital invested in our office building; the demand for this space has declined due to “work from home” practices, and we can accommodate essential staff within the stores. The Board is optimistic that we will return to you with more positive news next year.
Yours in friendship,
Treasurer, New Pi Cooperative Society