BY JOSH RESNIK, Wedge Community Co-op, CEO
In an effort to keep owners informed, we want to share our financial results from the first half of FY2017 (July–December 2016). Simply put, the first half of the fiscal year has been very challenging financially. During the summer and early fall, we saw bigger-than-expected sales declines at Lyndale, attributable to the remodel and the increasingly competitive Minneapolis grocery market. Compounding these sales declines, margins have tightened, and we have seen a modest increase in wage and benefit costs—driven by low unemployment and a tight job market. As a result, we have a net loss for the first half of the fiscal year.
While sales have increased by about 14 percent since we completed the remodel at the beginning of November, we expected bigger increases. Unless we see a very large spike in sales and profits in the last four months of the year, we will likely end the year with a loss. Unfortunately, if we are not profitable for the year, we will be unable to pay patronage refunds.
The good news is that the Wedge has a strong balance sheet and cash position, and we are able to fund these losses. But we take these losses very seriously, and have worked hard to develop a plan to get back to profitability over the next two quarters of FY17. With a return to profitability, we can continue investing in our community with patronage refunds to owners, profit sharing with employees and donations/grants to community organizations.
Despite the losses in the first half of the year, there are many reasons for optimism. We have a beautiful, newly remodeled (and fully functioning) Lyndale store that is much more efficient than before. Ratio-wise, almost four of five active Wedge owners have shopped at the store since the remodel, and their reviews have been overwhelmingly positive. The sales for our new items, which came straight from owner requests—the hot bar, salad bar, rotisserie chickens, deli sliced meat—have been excellent. And we are seeing success in our other business units, too. Co-op Partners Warehouse continues its strong record of growth with a 6.4 percent increase in sales in the first half. We continue to expand our reach in building a strong food community by adding new customers and products in our distribution base, and have added new technology upgrades to do it more efficiently. The Wedge Table is becoming a real hub for meetings, events, casual meals, and quick grocery trips on Eat Street—and sales have grown 13.8 percent in the first half of the year. Our fastest growth has come from our burgeoning Wedge Catering business where we have grown 55 percent—on top of 70 percent growth last year. We have developed a real market for delivering delicious, healthy meals using high quality ingredients, and have created a strong following—over 60 percent of our business is from repeat customers.
Thank you for your ongoing support of the Wedge. We’ll continue to keep you updated on the co-op’s financial performance.
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