From our Chair

FY21 began for our co-op in an unfamiliar place – six days into New Zealand’s Alert Level 4 COVID-19 lockdown.

As New Zealanders faced the unknown, our stores were proud to operate as an essential service and were there for our communities, customers and people through the weeks that followed. We focused on keeping everyone safe, delivering fair prices, and making sure food was available to everyone as we went through this together.

The whole Foodstuffs North Island team rose to this challenge, and the many COVID-19 related challenges and alert level changes that followed throughout the year. As a co-op this made our culture stronger, and it was certainly a year where we saw our values of in it together, courageous, above the line, and think customer truly come to life.

We took our privileged ability to trade seriously and knew COVID-19 would permanently change the way New Zealanders live. Our brands stepped up and evolved to make sure we were delivering what our communities needed and that we were staying true to our purpose of making sure New Zealanders get more out of life.

A highlight for the year was the opening of our new Foodstuffs Landing Drive support centre and distribution centre (DC) in March 2021. This marked the beginning of a new chapter in our co-op by making sure we have an environment for our centre teams that allows them to do meaningful work, be productive, work together and innovate for customers and our stores. Importantly for our customers, our new Landing Drive DC has been designed with safer, smarter, and faster ways of working so we do a better job of giving New Zealanders more of what matters to them on our shelves.

 

Delivering on our customer driven strategy

Despite the continual change in COVID-19 alert levels and needing to adapt our business operations, we continued to deliver strongly on our aspiration to become one of the most customer driven retailers in the world.

Our co-op continued to build our customer driven capability through the beginning of our buying transformation, the introduction of new customer driven range and space tools, and using customer insights in all parts of our business.

In New World we continued strongly with our brand transformation, winning hearts and minds with much loved customer campaigns, and building customer trust in New World pricing with a relentless focus on Fair Value Everyday.

In PAK’nSAVE we continued to stay true to our policy of New Zealand’s lowest food prices. This became even more critical than ever as New Zealanders dealt with the rising cost of living and the continued impact of COVID-19 on household expenditure.

Our Four Squares have always been a key part of our communities. The strong growth we saw in Four Square over the last year shows they became even more important to customers through COVID-19.

In Gilmours, despite a downturn in the hospitality sector we continued strongly with our digital transformation for customers, embedded our partnership with Fresh Connection, and delivered a strong NPS result of 51 – well above the industry average of 30.

Our Own Brands business also hit record sales during FY21, with New Zealanders hunting out value in brands they could trust.

Liquorland was unable to trade through lockdown, but continued to reset and evolve throughout the year to meet New Zealanders’ needs. Despite having to shut temporarily, Liquorland still ended FY21 with double digit revenue growth and 88% customer satisfaction.

 

Financial highlights

Together, we can be proud of another year of strong performance driven by our customer driven transformation, with growth across New World, Four Square and Gilmours and a solid year for PAK’nSAVE.

The Foodstuffs North Island Group’s (Group’s) revenue for the 52-week period of $7,474 million, was $336 million or 5% up on last year on a like for like basis and reflects strong growth across the Group. Reported statutory revenue was $3,719 million, the difference reflects charge through revenue, which is recorded net under the revenue recognition accounting standard.

The Group’s operating profit was $13.2 million down on last year to $205.3 million, mainly caused by additional COVID-19-related costs.

Consistent with prior years, interest rates have remained low and underlying net finance costs remain stable however with the move to Foodstuffs Landing Drive and the entering into new leases for the support centre and the distribution centre caused the overall net finance costs to increase by $3.3 million. Share of profits, mainly from Liquorland, was up by $1.1 million on last year, resulting in the Group’s profit before distribution to members being $155.9 million.

Distribution to members for FY21 is $129 million.

As your Board, we keep a firm eye on the future, and the strength of our balance sheet enables the perpetuity of the co-op so we can continue to serve New Zealanders for the next 100 years.

During the year, total capital spend was $166.4 million, $50.4m lower than last year, due to the acquisitions of the Lee Fish business and minority interest in Fresh Connection Limited last year. We continued implementing our property network strategy, investing $127 million in new stores, refurbishments and our new home at Foodstuffs Landing Drive. In addition, $39.4 million was invested in technology, including continued investment in our warehouse and transport management systems and our digital journey. Under the new accounting standard for leases, you’ll see right of use assets and lease receivable assets of $389.3 million and lease liabilities of $402.3 million on the balance sheet arising from the new leases we have entered into with Auckland Airport for our support centre and distribution centre.

The Group remains in a strong financial position and we are confident that we are in a position to enable our co-op to continue to grow and succeed for the next 100 years and beyond.

 

Here for New Zealand

It is fitting that FY21 was the year we introduced ‘Here for NZ’ as our national social brand, reinforcing the fact we are a New Zealand company working hard to support those who live here.

We published our first comprehensive Corporate Social Responsibility CSR Report, reflecting our growing focus on this space.

The Here for NZ brand is a collaborative effort across Foodstuffs North Island, Foodstuffs South Island, and our national Marketing and Customer Experience team. It’s a way for us to tell our story about what we stand for and how we’ll deliver on these four social promises:

  • We support every New Zealander to access healthy and affordable food.
  • We create meaningful and safe work for our people.
  • We support our local communities to thrive.
  • We are sustainability leaders in our operations and how we source our products.

 

Our outlook

As a co-op we have another challenging year ahead of us as we continue to deliver and adapt to meet the needs and expectations of five generations of shoppers.

We will use customer insights to improve our decision making across the business and continue to deliver on our customer driven transformation in everything we do.

We need to focus harder on accelerating our online offerings and building on the progress we have made in digitally-led marketing and communications.

 

Thank you

Selflessly serving our co-op and working in close partnership with our support centre teams, are our Banner Representation Groups (BRGs). These groups went from strength to strength in FY21, and I would like to personally thank them for their dedication and support to ensure we are making the right customer driven decisions for our brands.

On behalf of your Directors, I would like to sincerely thank Chris Quin and the Foodstuffs North Island Executive team for leading our business through the unpredictable, and ensuring we delivered stronger than ever on our customer driven strategy.

To all our members, thank you for your leadership, commitment to your brands and our co-op, and for your unwavering focus to the do the right thing to keep people safe through COVID-19.

I look forward to working with our members and support centre teams again in FY22 as we continue to demonstrate our Here for NZ commitments and get ready to celebrate our 100th anniversary together.

On behalf of the Board,

Dean Waddell

Chair