| SUBMITTED AGENDA ITEMS:
Review of January Financial Statements
· Sales growth
o Sales growth was below expectations for January & February.
o South store didn't decline over January, but the North store did. Is
this a national trend?
o Michele is monitoring labor carefully to be sure that it stays within
the budgeted target as a % of sales.
o Bulk departments in both stores are doing very well and staying within
their sales budget.
o If this decline continues for another month or so, we will need to review
all costs. Currently we are looking at payroll as this is our largest
expense and offering staff the option of leaving early from shifts if
the store is slow and trying not to fill shifts with subs when someone
calls in sick.
o Other options could be to reduce capital spending where possible to
conserve cash.
· Profit & Loss statement for January
o January sales were 31,000 below budget. February sales were 48,000 below
budget.
o January is a non-inventory month, so COGS is estimated.
o In January 2005 we spent $1000 less on utilities than in January 2006
partially due to the cold snap we experienced this year.
o Charge card fee expense has increased due to more people using cards.
§ Can we encourage customers to use debit vs. credit as that option
has lower fees?
o Payroll expenses were below budget at 24.95%, budgeted at 25.04%.
o Non-operating Income & Expense was well below budget, which helped
the overall bottom line for January.
§ Owner Outreach will have a lot of brochures printed soon, which
will increase this expense for the month that that expense occurs in.
o Net Income (Loss) for January actual was a loss at -19,591. The budgeted
loss was -18, 536, a variance of -1,055.
· Balance Sheet
o Line of credit was paid down in January vs. December, but we had to
do another large borrowing in February which will show up on next months
financial statements.
o Total Assets are down, primarily in cash.
o Haven't received the reimbursement yet of $57,000 from the Energy Trust
Fund. This cash amount will be a big help when it arrives.
o Net owner share increase in January was 49.
Discussion of Patronage Dividend Recommendation
Reviewed the letters from Marty Schulz, Dana and Michele each of which
recommend not giving a patronage dividend this year due to business needs.
Discussed the current financial needs of the stores and the current financial
situation.
· Could repeat last year's system for a dividend.
· Suggest we strongly recommend not issuing a dividend this year.
o Suggest that it is important to look at giving a dividend as it's expected.
o There is a lot of frustration with some owners since so much emphasis
is put on a dividend when we can't always give one.
· When we have a loss, the owners don't share in that loss. We
are still recovering from the loss in 2003.
· For as much as a dividend means to owners, it means more to the
co-op as a whole to focus on the co-op's needs and benefiting everyone.
o Could offer the same things as last year and give the option to have
the dividend go back into the co-op. It significantly reduces the amount
of cash out.
o The potential for everyone to cash their dividend is still there.
· If we don't give a dividend this year, cashiers need to know
the reasons behind the decision and be able to explain to owners the benefit
to the strength of the co-op.
· Maybe should put less importance on the dividend in the future
and put it at the bottom of the list of owners' benefits.
· The trust factor with owners is key. We need to live up to what
we promise them. The advertisements we give out should reflect what we
usually do in the way of dividends.
o We need to explain to them that it would actually hurt the store to
give out a dividend this year.
o Customers were more upset at getting a very small dividend last year
and wondered why we bothered to give one at all. "It's not worth
the paper it's printed on".
o Some people would like the option of where the money goes, but the majority
of people just want the co-op to decide where it goes.
§ Owner vote on which schools receive the 'scrip' donation at the
register.
§ Beans for Bags and 1% for Corvallis are the majority of large donations
given. Owners vote on the recipients of the 1% for Corvallis donations
as well.
· Put more emphasis on this to make owners happier about their
impact on decisions the co-op makes?
· Does this committee feel that a dividend would be financially
irresponsible this year?
o Straw poll - 8-0-0 Agreed that it would be financially irresponsible.
§ Available funds to go out would not be a significant enough amount
to satisfy owners or make it worthwhile.
§ We would have to borrow cash to give out a decent dividend. - Not
possible as a whole based on our current financial situation and debt.
Toni will forward the agenda item to the Executive committee recommending
that no patronage dividend be given this year. This will be placed in
the Board packet along with the letters from Michele, Dana, and Marty
Schultz.
Discussion of Market Study Presented by Pete Davis
Pete Davis presented the market study he performed for First Alternative
at the February Board meeting.
· Went over Pete Davis' study.
o Pete's overview is that we will need to expand.
· Incoming car lots in South Corvallis could be very beneficial
as increasing the South store's visibility.
· Growth rate is both beneficial and problematic - There are problems
at the North store, as it cannot increase in size easily.
· Must expand to keep our customers and continue to grow and be
rooted.
o A small group of people prefer to have a smaller store with a smaller
parking lot, etc. The majority of people prefer to have something more
convenient. Which way do we want to grow? Quality or size?
o We want to retain our distinctive qualities to keep us separate and
appeal to people who prefer our current style.
· Owner education about what being an owner means is vital.
o Don't want to grow too large and generalize values to make it very impersonal
to owners.
· Good to change with the times so we don't drown but we don't
want to grow at a different rate than the community.
o Mainstream is becoming more emphasized on health food. Percentage-wise
we need to keep up with the demand.
· In the past we have only skirted Pete's recommendations and not
truly followed them. Best to simply listen?
· Richey's current customer base is a co-op kind of customer base.
· Strong opinion not to close the North store. Good to have it
as a neighborhood location. North's location is almost better than South's.
Meeting adjourned: 6:30
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