Financial Report

Sales for the first quarter of fiscal year 2002/03 were $6,137,595. The first quarter is July, August and September. This is a growth rate of 9.2% over the same quarter last year. Though I don't have all the numbers yet for the second quarter, we are running between 9 and 10% growth for that quarter, too.

Our Cost of Goods Sold (COGS) was 62.59%. This means that our Gross Margin was 37.41%. That's upa smidgen over the same quarter last year. Gross Margin tells us what portion (margin) of each dollar in sales was profit. Gross Margin and COGS always add up to 100% of sales. So, a margin of 37.41% means that after we pay our vendors (COGS) for the food they delivered, we have 37.41 cents left to pay all our other expenses.

The largest expense after paying for the food is payroll. In the first quarter, payroll expense was 24.86%of sales. While this is lower than last quarter's payroll expense, it still places us in the ranks of Natural Foods Co-ops with the highest payroll expenses. For comparison, in 2001 the average payroll cost in co-ops was 23.1%.

Building expenses are up a little from last quarter, to 2.5% of sales. The increase is due to higher depreciation costs, after finally booking all the costs associated with our bakery expansion. Still, we do very well in this area compared to co-ops nationally, which spend an average of 4.5% on occupancy costs.

Our Operating expense is also up a little to, 4.5% of sales. The increase is due mostly to vehicle costs, associated with the warehouse, and supply costs. In this category, we run higher than the co-op average, by about 1.5%.

Administration expenses were up, too, over last quarter, to .7%. This was due to the June 30th year-end audit, which was conducted and billed in the first quarter. Here we operate lower than the national average, which is .9%.

Governance expenses are stable, at 1.3% of sales. The average for co-ops is 1.4%.

Promotions expenses were downa little to .5% of sales. This seems to be related to the timing of the newsletter. We are below the average of 1.1% in this category, probably because we don't do much advertising.

We overestimated our tax liability last fiscal year, so we overpaid our taxes. The good news is that we did not need to make any estimated payments this quarter. When all is said and done for this first quarter, we show a profit of $338,700, or 5.5%of sales.