2011 Patronage Letter to all Member-Owners

April 23, 2012

Dear Sevananda Member-Owner;
As you know, Sevananda is a co-operative, so profits may be returned to you as a patronage dividend. While we strive to generate enough profit to cover our operating costs and reserve against future uncertainties, we operate, especially in this tough economy, with the goal of being able to lower the costs of our products to our member-owners. At Sevananda, we have a system of member discounts, which allows for members to take a 10% discount on of their entire purchase, once per month. In addition, we offer a working member program, which provides a 20% discount on all purchases, for any member-owner who works 3 hours per in a week for our coop.
By doing this, we are providing the benefit of more affordable pricing to our members, without asking them to wait until the end of the year for a dividend. We believe it is a sign of success that in 2009 and 2010 our members benefited from over $150,000 in discounts and in 2011 we provided over $142,000 in member discounts! However, we have provided this upfront discount at the expense of our bottom line, and have a net unaudited loss for 2011. Therefore, unfortunately, there are not any additional savings to be passed along to the cooperative owners in the form of a patronage dividend.
Our 2010 audited financials were released in fall of 2011 and showed it to be another challenging year. Our total revenues were slightly less than those in 2009 and showed a better than expected net loss of approximately $46,000. In April of 2011, after a nearly yearlong GM search, we hired Thomas Pawlenko. Our net loss in 2011 is partly attributable the expense of the GM search and transition in management, as well as to necessary efforts and initiatives by our new GM, on three major fronts. First, while we operated in 2010 under an interim GM team, expenses were kept, at board direction, at a drastically reduced and unsustainable level.
Our new GM has attended to the resulting deferred maintenance and upgrades, which is reflected in the 2011 spending figures. Secondly, Tom’s vigilance has brought about the cleanup of a tax matter not attended to by our previous GM with additional fees to pay. Thirdly, our 2011 revenues had dropped below the nine million dollar benchmark, so he initiated an aggressive and expensive marketing campaign in the fall of 2011, the fruits of which were beginning to sprout by year end. The resulting unaudited net loss for 2011 added up to approximately $157,000.
We are actively correcting Sevananda’s financial course. In addition to the above, our GM discovered that we were paying more for the products we sell, but were not passing the increase on to our customers, and is working to adjust pricing and margins in all departments to better reflect our costs.
The GM has also worked to secure new discounts from a major supplier, which will reduce our costs every month for the products you love. We have increased our membership to a record 3,935, and are continuing to benefit from the 2011 marketing campaign, which is reflected in the rising sales for the past three months! The board is doing its part, as well, and is carefully monitoring its expenses, with a goal of a more than 30% reduction in expenditures over 2011. Lastly, we are happy to announce that this year we will repay our loan for the 1999 move and expansion. While our 2011 results were not what we had hoped for, 2012 is showing some impressive progress. All of us at Sevananda are deeply grateful to our members who continue to support their co-op by shopping here, instead of at our competitors. By doing this, you are sustaining the vision of Sevananda, which was created to empower the community to improve its health and well-being.
For those members who would like to review our financial information in more detail, our audited financials are available to be reviewed in-store. Due to the confidential nature of the information, and our extremely competitive market, no member will be allowed to take this financial information from the store, and will be asked to sign a form stating that they understand the confidential nature of the information and will not release it to others. Please contact Pat Jackson, Sevananda’s accountant, to make an appointment. We also invite you to attend our May 6th spring Member meeting for the annual treasurer’s report.
In closing, we want to thank you again for your support of Sevananda Natural Foods Market. Like you, we look forward to a vibrant and successful cooperative for decades to come!
In Cooperation,
Jeanne Macuch Kato
Board Treasurer