Treasurer’s Report Summer 2024

John Cleary

by John Cleary, Board Treasurer

With the purchase of Plainfield Hardware and relocation of the Co-op to Route 2, the financial position of the Co-op is changing dramatically. For the first time in its history, the Co-op is acquiring significant assets (real estate, inventory, business value) and taking on significant debt. While there is risk that comes with this type of business growth, it also provides a path to sustainability for the long term future of the Co-op. This is a bold move, but it will address all of the structural challenges that we have discussed in the recent financial reports—declining annual sales, limited cash reserves, high wage costs as a percentage of sales, and lack of investment in the business. Gross sales will be dramatically higher, increasing the gross margin and allowing the business to bring total labor costs back into line, while potentially increasing staff wages. The project budget includes adequate operating cash to allow the business to invest in new equipment and gradually expand. When the new store is purchased, the financing package will allow all of our current vendors to be paid in full and we will set up new operating systems to better manage margins, inventory and expenses. The business will be in a solid position and will be poised for growth. The strength of the current Plainfield Hardware business combined with the passion and mission of our Co-op as we expand the grocery section is a recipe for success. We expect that many new community members will join the Co-op as they shop at the new location.

The increased debt that the Co-op is taking on is balanced across a diverse group of lenders that support the mission of the Co-op. Primary financing is coming from the Cooperative Fund of the Northeast (CFNE) and the Vermont Economic Development Authority (VEDA). They will now hold a mortgage on both Co-op owned buildings and have provided financing at rates lower than available from commercial banks. There is some owner financing, demonstrating that the current owners of Plainfield Hardware believe the project will be successful. The remaining funds are coming from Co-op members through our member loan and donation campaign. Co-op members have been tremendously generous and excited to support the expansion. CFNE and VEDA see this large number of small loans as a type of member equity to balance the investment they are making. It demonstrates that there is strong community support for the Co-op. The project budget below details the sources and uses of funds.

use of funds

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