Saturday, May 10, 2014

Dividend At The Weave - 2014

I don't think I have ever, ever found myself writing two posts about Weaver Street Market Co-operative on the same day. But I made a mistake. I know, I know. Made you choke on your muesli and prunes. But that is where the good news ends.

I do all this worker-owner advocating within WSM, trying to get management and the WSM Board to comply with co-op policy, and involve owners and workers in decision-making, I do all of this on my own time. And the post earlier today I wrote on a half-hour work break. And I missed a whole wedge of info tucked away in some 3rd Quarter figures.

It starts with three figures. Our profit to date, after three Quarters, is only $47,324, compared to $509,119 for last year. Well, that's two figures to start with. But it brings me to one of the points I missed earlier.

We have been told with much fanfare over the past few weeks that our sales are doing fabulously well. Hmm. So, why is our profit so bad? For the reason I've been trying to make with equal fanfare over the same period of time. Sales matter for squat if you're deeply discounting product. It's profit that matters, not sales.

But let's leave that point on one side for a moment. Where the heck has a whole $500,000 in profit gone to? The answer to that is found in the third figure. Our asset value has increased by $541,975.

How come? Well, because we can add the cost of the Carrboro Refit (including its overrun) to our asset position. And the cost of the Refit (to date) is some $983,000. And leaving aside some depreciation and the cost of closing Panzanella, we are left with that net increase in asset value of $541,975.

Well, that's good isn't it? Not really. You see it is no co-incidence that it almost matches the amount by which our profit is down. You see, we are told that the capital fund only paid for about $600,000 of the Carrboro Refit. The overrun came from ... guess where? ... yup, our operations budget. In other words, our profit.

So. Er. Who cares? I care. And you should too. Our worker-owner annual dividend comes from the profit. Do you want me to say that again?

However good our 4th Quarter may be, it won't be better than last year, and we will be heading into that 4th Quarter with $500,000 less for our dividend than we had last year.

Senior management carefully omitted to tell us that in this week's 'Market Messenger.' And I missed it first time round.

But. It gets worse. You see management are all happy-clappy about the huge sales being generated by WOW (some $400,000 - $500,000 to date). But remember, even though we have that sales cash in hand, we have yet to pay for the stuff we sold.

Think about that carefully. If our profit margin is about 40%, we still have bills to come of about $300,000. Which raises questions as to whether or not we are technically even making a profit.

Which brings me to the next missed point. Well, misinterpreted point. The table suggesting we were increasing profit with WOW. Leaving aside all of the above, I checked the table again. It doesn't say Profit Improvement (my bad). It very clearly says Margin Improvement.

Sigh. There is no way any sales event ever invented caused an improvement in Margin. It's impossible.

I'm going to be generous, and assume it was a mistake. But it goes to the general tenor of the manner in which we are being made aware of matters important to us.

So. Again. Who cares? Hmm. Time and again, I have had people (usually managers) ... er ... take me to task for being negative. Look, they say, senior management know what they are doing, they make good decisions, they make us a profit, and they pay us a big dividend. Who cares about democracy and conversation?

Well. Leaving aside the fact that it is we workers who make the co-op's profit. Leaving aside the fact that co-op policy demands that we workers be involved in major decision-making, including the setting of our dividend. Leaving all that on one side, what if senior management are making bad decisions? Which cause our profit to fall? Which affects our dividend? Would you want a conversation then? Would you be glad someone is fighting to ensure that conversation is taking place? Hmm ... ??