Financial Report

By Elka Malkis, Financial Manager

Sales for the 1st three quarters (July - March) of the fiscal year were $30,243,971. This is a 2.6% increase from the previous year. The increase has been largely driven by increased business at the warehouse. At the retail store, our average daily customer count has been ahead of last year but the "average basket" has been a little lower than last year.

Our cost of goods for this period was 65.1% of sales, a tiny increase compared to last year's 65%. Cost of goods (COGS) is the amount we pay to suppliers for our products. The flip side of COGS is gross profit margin (GPM); COGS and GPM together always equal sales, so they also always equal 100%. COGS being up by .1% means that GPM was down by .1%. Why was the gross profit lower while sales were higher? Because a greater percent of the sales came from the warehouse and, as a wholesaler, the warehouse's profit margin is substantially lower than the store's.

The next largest expense is always payroll (wages, benefits, taxes), and this equaled 22.3% of sales for the period.

Our building costs are low: only 2.2% of sales. This is because we own the building and have paid off the mortgage. This account covers repairs and maintenance on the building, utilities, property tax and trash.

Operating expenses were 5% of sales. This includes telephone, equipment repairs, credit card fees, store supplies and many more things. One of the largest expenses in this category is transportation, which for us means trucking from the warehouse. Half of the total costs in this category are trucking-related.

Administration, governance and promotions came to 3.2% of sales. This is where we show member discounts, the newsletter, CPA and legal fees, board of directors' expenses, advertising, office supplies and food donated to the food shelves. The largest expense in this section is member discounts, which by itself is 1% of sales.

Various items reside in the category of other income and expenses. This can include interest earned, classroom income and gain or loss on sale of assets. These account for a total 2.3% of sales as additional income, not an expense, since more came in than we spent in that category. Our largest expense in this category was income taxes, of which we have paid an estimated $218,000 so far this year.

For this nine month period our net income is 1.3 million dollars, or 4.3% of sales. We look forward to sending our member-owners another significant patronage refund at the end of this year.