General Manager's Report
Annual Meeting - April 22, 2008
It is indeed a pleasure and a privilege to present this report on behalf of your General Manager, Larry Parks, and the rest of the management team. I have been pinch-hitting for Larry since last August, and I must say it has been a most enjoyable experience working with all the staff and management at Red Deer Co-op. You truly have a great group of people working for this organization.
Total sales for 2007 reached $107 million, up $13 million or 16.4% over the previous year. The strong local economy continued to drive our sales growth. However, we did see a slight downturn in our economy as we neared the end of our 2007 fiscal year. The positive sales increases experienced in 2007 were the result of strong marketing programs, good customer service, excellent support from our members and of course, the opening of our Taylor gas bar.
Total local net savings from operations was $2.75 million, an increase of $220,000 over last year. All of our operating divisions experienced strong local earnings in 2007. This was the result of strong margins and good expense control, combined with the positive sales growth. Our strong loss prevention program also contributed greatly to our bottom line results.
I am also pleased to report that our patronage refund from Federated Co-operatives Ltd. was up more than $1.1 million to $4.6 million. When this is added to our local earning, the total net savings for 2007 was over $7.3 million. I want to take this opportunity to congratulate and thank staff and management for achieving these impressive results. You should all be very proud of your accomplishment.
From these earnings, your Board of Directors has approved an allocation to member equity of $4,000,000 on 2007 member purchases, an increase of $1,000,000 or 33% over last year. Patronage refund rates by commodity will be as follows:
2007 |
2006 |
|
| Food / Pharmacy / Liquor | 3.10% |
2.70% |
| Bulk Fuel - Clear | 8.50% |
7.50% |
| Bulk Fuel - Dyed | 13.50% |
9.70% |
| Hardware / Building Materials | 3.83% |
3.50% |
| Gas Bar Fuels | 8.50% |
7.50% |
| Gas Bar Non-Fuels | 3.10% |
2.70% |
The total cash repayment to members in May will be $2.1 million.
Further distribution of savings include corporate income tax of $1,056,925 and transfer to retained savings of $2,300,598.
With continued strong support from our members, Red Deer Co-op is committed to making significant annual cash repayments to our membership. By the end of 2008, Red Deer Co-op members will have received more than $5.7 million in cash over the last three years and more than $16.0 million in the last ten years. Along with cash back, our members also receive equity. At the end of fiscal 2007, our member ownership sat at 69.1%, with total assets being $38.4 million.
We are also committed to an ongoing program of facility improvement and modernization, as well as new development. In June 2007, we opened our new Taylor Plaza Gas Bar & Cash Wash and I am very pleased to report that our average weekly volume is surpassing expectations and the car wash is also doing very well after some early hiccups. Our Home & Garden Centre completed a remerchandising of their sales floor and added a second greenhouse to the garden centre operation. Some of the major capital projects you will see in 2008 include the installation of a self-serve salad bar at our Plaza Deli and the replacement of much of the refrigeration equipment at Deer Park, including new produce display cases and new dairy cases, which will include the installation of a new rear-fill milk cooler. We are also very excited about the acquisition of property on the east side of Lacombe where we plan to build a cardlock that should be open for business sometime this fall. We have also committed to the purchase of a new fuel truck, which is due to arrive in October. We will also continue to look for new opportunities to expand the operations of Red Deer Co-op.
The challenges we have experienced the past couple of years concerning staff turnover continued in 2007. For the second consecutive year, we hired more than 400 new employees during the year. Fortunately, we have been able to retain our core group of long-term management and non-management employees with most of the turnover happening at the entry level positions. Although the turnover remains high, we have found in recent months that we are receiving more job applications, which makes it easier to fill vacancies. It is, however, extremely difficult to fill management vacancies, as well as skilled positions such as bakers and meat cutters. Plans are being put in place to identify, develop and retain employees who will be prepared to fill key management and non-management positions in the future. We must continue to work on succession plans to ensure we have qualified candidates to fill future vacancies.
Financially, Red Deer Co-op is in a very strong position. Our facilities and equipment are in excellent condition and we have very little long-term debt. We have a great core group of experienced, hard working employees and a strong management team to lead the organization. Having these key components in place will enable Red Deer Co-op to successfully face the challenges of the future.
Thank you for your attention.
Frank Gallagher,
Interim General Manager
