From our Chair
The last twelve months in our co-op is certainly a chapter that none of us will forget. We navigated everything from COVID-19, to significant weather events to a cost-of-living crisis. Through it all, our Owner Operators and teams have risen to the challenges and our commitment to being here for New Zealand.
As the cost-of-living crisis in New Zealand worsened, our business has continued to step up and deliver value for all New Zealanders through initiatives like the Price Rollback campaign and by staying laser focused on delivering value within the 19 cents of every dollar on shelf we’re directly responsible for.
We know we must stay focused on this in the months ahead and will continue to do everything in our power to fight inflation by buying well, finding efficiencies in our business, and not adding unnecessary costs.
Foodstuffs North Island has embraced the findings of the Commerce Commission’s final Market Study report and we have made significant progress in the last twelve months to deliver on our commitments. We have worked fast to improve our pricing and promotional practices and ensure our loyalty programmes are simple and easy to understand, to end the use of restrictive land covenants and exclusivity provisions in leases, develop a wholesale supply solution for non-member retailers, and do our part to support the development of a mandatory Grocery Code of Conduct.
A key highlight of the year was our 100-year celebrations. This gave our co-op Members (past and present) and teams, the chance to come together, take a trip down memory lane and reflect on the progress we have made in the last ten decades to make sure our brands are a much-loved part of New Zealanders’ lives.
Celebrating 100 years also gave us an opportunity to reflect on what we want to stand for as a business, and how we will achieve our aspiration to become one of the most customer driven retailers in the world, as we begin our next 100 years together.
Over the last year, we made good strides to deliver on our strategy with strong progress on our customer driven range reviews, the opening of six new stores for New Zealand communities, the opening of our new Hastings Cross Dock and Transport Depot in Whangārei, the launch of our Precision Media business, and strong performance in our Foodstuffs Own Brands including the launch of over 140 new, customer-driven, private-label products to give more great value options for customers.
We are determined to make sure we continue to earn our social licence and live our four social promises to provide affordable and healthy food for all New Zealanders, provide meaningful and safe work for our people, be leaders in sustainability, and support our local communities to thrive.
In FY23 our focus around providing affordable and healthy food for all New Zealanders became even more important and we were proud to expand our social supermarket partnerships across the North Island to four new locations including 155 Whare Kai (Whangārei), The Ōtūmoetai Social Supermarket, Tokoroa Social Supermarket, and Te Hiku Pātaka (Kaitaia).
In late December 2022, after seven years of operation, Eat My Lunch closed its ‘Buy One Give One’ business. With the demand for workplace catering significantly declining after COVID-19, the model was no longer commercially viable. The sale of substantially all of the assets of Eat My Lunch Limited to Montana Catering Auckland Limited completed on 4 January 2023. Eat My Lunch provided more than 1.8 million lunches to Kiwi kids and Foodstuffs is very proud to have been part of the Eat My Lunch journey, including as a minority shareholder since 2017.
Financial highlights
As your Board, we are pleased to report a year of strong financial performance, while we continued to work together, pulling out all the stops during and after the Auckland floods and Cyclone Gabrielle, keeping our people safe and keeping the shelves stocked for New Zealanders.
This result positions us well to ensure our grocery co-operative continues to have the strength and resilience to invest in and support our local grocery retailers in every community, so they can best serve their customers now and for the next 100 years.
The results for FY23 represent trading for 52 weeks, compared to 53 weeks in the prior year.
For FY23 our Member store revenue of $9.8b was $297m up compared to the 53 weeks in the prior year.
The Foodstuffs North Island (FSNI) consolidated FY23 Statements cover the perimeter of the Foodstuffs North Island Group only, and do not cover the financial results of our Member stores. The Foodstuffs North Island Group’s statutory revenue (which reflects gross Member purchases directly from FSNI Distribution Centres and net Member charge through purchases), for the 52-week period of $4,299 million, was $279 million, or 7% up compared to 53 weeks in the prior year.
The Foodstuffs North Island Group’s EBIT for FY23 of $268.9 million was down $4.7 million, and is made up of the following components:
- Deferred Rebate Voucher (DRV) Member funding of $126.2m (up $4.1m)
- Supplier Repatriate Rebates for FY23 of $24.8m (down $3m)
- Group Project Levy Member funding of $31.7m (down $11.3m)
- Property & Investment portfolio EBIT of $101m (up $15m)
The Board is pleased to announce the distribution to Members of the DRV and Supplier Repatriate Rebates totalling $151m. The Group Project Levy Member funding and Property & Investment profit are retained by FSNI to enable the co-operative to continue to invest in IT, Digital and Property assets.
As a Board, we keep a close eye on our current performance and future outlook, to ensure the co-operative remains relevant and financially sustainable.
In this fiscal year, the overall capital expenditure amounted to $172.2 million, representing an increase of $60.9m compared to the previous year, largely driven by significant investments in Chilled & Frozen Distribution Centre (DC) as well as new stores.
Additionally, a sum of $31.6 million was allocated to technology investments, with a predominant focus on SAP S4 Hana upgrade, and the Gilmours warehouse management system.
The year ahead
We have a clear plan and priorities to deliver customer driven efficiency so that we can invest strategically into the things that matter most to our customers. We know that top of the list for New Zealanders right now is price and value, ease and convenience, and improving the digital experience.
In the year ahead we will be building our e-commerce capabilities with a focus on ease and convenience so that customers are getting a seamless experience no matter where or how they shop.
To achieve our customer driven aspiration, our co-op culture will be critical to providing our people with a safe environment where they can be their best selves and move faster on the things that matter most to our customers.
Over the last 18 months we have done a lot of work to understand what our cultural strengths are and where we can continue to grow.
In FY24, we will start on the next part of our culture journey with initiatives such as our new Member Commitments, revamped Co-op Awards, re-energising our values, and culture leadership training. I look forward to seeing this come to life in our co-op.
Thank you
I would like to thank Chris Quin and the Foodstuffs North Island Leadership team for leading our co-operative through another challenging but successful year and for the resilient leadership you have shown over the last few years. Our business has gone from strength to strength with you at the helm, and your resolute focus on our people and customers has positioned us strongly to deliver on the next part of our customer driven aspiration.
We look forward to you continuing to challenge our business to bring our Here for NZ social promises to life in every decision we make.
I would also like to acknowledge the commitment of the leaders in our Banner Representation Groups (BRGs). I admire the passion you bring to your role as a BRG member and your unwavering focus on making our brands stronger, through a strong partnership with our Support Centre teams.
Finally, to our core, I’d like to thank our Members for your dedication to our brands, stores, and the local communities that we are all so proud to be part of.
On behalf of the Board,
Dean Waddell
Chair