Foodstuffs South Island raked in an extra $267 million in revenue during its 2024 financial year, which the co-operative says was driven by rising food prices and a surge in domestic and international tourism.
But according to the co-op’s recently released 2024 annual report, its full-year net profit for the financial year ended 29 February 2024 went in the opposite direction to its soaring revenue.
Foodstuffs South Island (FSSI) reported a net loss after tax of $11.5 million in the 2024 financial year – a big slump from the $6.9 million net profit after tax FSSI reported last year. FSSI's annual report doesn't say why profit fell. Interest.co.nz is asking the co-operative.
The co-op’s extra $267 million revenue this year boosted its full-year net revenue to $3.62 billion, up 8% from the $3.23 billion reported in 2023.
FSSI Chairman Russell Mckenzie says in the annual report the 8% revenue increase was primarily driven by food price inflation, “but also by the continued growth of domestic and international tourism.”
The co-op’s full-year net revenue has risen over $434 million since 2022 and since 2020, annual net revenue has shot up by almost $653.2 million.
Operating expenses rose to $353.3 million in the 2024 financial year, up 19.6% from $295.4 million in operating expenses during the 2023 financial period.
Mckenzie, who is also the owner-operator of New World St Martins in Christchurch, says FSSI has continued to maintain its strong financial position.
He says 14,000 people are employed across the co-op and FSSI has seen 13 changes of ownership take place and welcomed eight new owner-operators this year.
According to figures from the annual report, members of the South Island co-op now own 193 PAK’nSAVE, New World, Four Square, On the Spot and Raeward Fresh stores as well as six Trents branches.
Mckenzie described the proposed merger of FSSI and Foodstuffs North Island (FSNI) into one entity as a “significant milestone”.
“A nationwide Foodstuffs co-operative would also continue to have significant operations and leadership capabilities in the South Island,” he says. “What would change is the way we’re governed and operated.”
The Commerce Commission which has been tasked with either clearing or denying the merger, pushed out its decision date for a second time this year on Friday, setting down a new decision deadline of October 1st because of unresolved issues with the application.
Chief Executive Mary Devine says the South Island co-op remained “future-focused.” Devine has been the CEO of FSSI since 2021 and was previously the Managing Director of fashion retailer Hallenstein Glasson.
She says New World’s revenue had risen 8.9% from a year ago while PAK’nSAVE’s revenue “finished the year strongly” and jumped an even higher 13.1%.
This was up from PAK’nSAVE’s 10.4% revenue increase in 2023, and Devine says the rise demonstrated the importance of delivering value to customers.
A return of tourism contributed to a 10% increase at Four Square. The full-year revenue of Trents and On the Spot increased by 0.3% and 5.4%, respectively.
Raeward Fresh’s revenue dipped 1% which Devine says was caused by “changing customer trends”.
FSSI’s report only provides the percentage changes in revenue for each of the co-op’s store chains, and didn’t include the actual revenue figures.
Devine says two new On the Spot stores had been opened in the 2024 financial year and work was wrapping on PAK’nSAVE Papanui in Christchurch, which is due to be opened in early 2025.
“We drove hard to increase efficiency this year, progressing a number of projects to simplify and reduce cost across the value chain from our suppliers to our customers,” she says.
Foodstuffs North Island has yet to release its 2024 annual report but last year reported revenue had risen by $278.5 million to $4.33 billion.
24 Comments
Devine says ... work was wrapping on PAK’nSAVE Papanui in Christchurch, which is due to be opened in early 2025.
It opened in March this year. Been shopping there for months now. Am I just imagining it, or do these people not know what is happening in their company?
Pity they can't enforce mandatory benefits for all their employees out of that profit and share the love a little.
Most, that seems to be at the discretion of the franchise owner.
Such as:
•Private Health insurance
•5% discount on NW/PnS/4 Square purchases up to a $300 spend ($15 saved)
•Access shop and Gilmours (which is generally a B2B wholesaler)
•Free flu shots
•Access to a internal superannuation fund, which generally performs far better than kiwisaver
•Special fuel card (for store fuel stations and Z) which provides a discount on fuel for personal use (no requirement for you to be driving as part of your job, any employee can get it)
•Lots of social events/supplier showcases at the office where you can get free samples/food/other goodies ( every week)
Profit = Revenue - Expenses.
No matter what Revenue they acquire, they still make a profit on that amount.
Maybe the shareholders take the lesser amount in dividend rather than the workers at the coal face taking a pay cut?
Surely that would be a more equitable solution?
Seriously? Their revenue was less than their expenses, therefore a LOSS. And it’s a cooperative. They don’t take dividends. Back to my original point. Do you think that since there is a loss, the employees should take a pay cut? Or better still, all immediately pay back some of their wages?
Lol IAS, just another socialist that wants major benefits for taking no risk, but won't share any of the downside. FYI, each say, Pak n Save is owned. Each owner is a member of the Co-operative. The Co-op centralises many admin and buying functions, reducing the overall cost to each owner. To become an owner of a Pak N Save store for example, you have to meet certain standards, for instance, in a Four Square, first. And yes, the Co-op (ie, all the other owners) decides whether you can become an owner of a Pak n Save store.
I V V,
Clearly a believer in Friedman's view that companies have no social responsibility to the public or society, only to shareholders. He was quite wrong. As a longtime stockmarket investor, I know that the best companies put their customers and employees first and that leads to better long-term performance for the shareholders.
As a long time business owner (and good enough at it to be well retired before 60), I would say Friedman was seldom wrong. In saying that, adapting to customers needs tends to generate long term benefits for shareholders and is just common sense. If the customers don’t like what you are doing, you get torched pretty quickly. So, I’d suggest if you don’t like shopping Foodstuffs, vote with your feet. As an aside, and as you are a longtime Stockmarket investor, which companies that you know put their customers and employees and which generate better long term performance? That’s superior performance to the market.
Ah,the old debate of fairness.
I doubt that ideological understanding around old theories are relevant anymore.Just my opinion of course.
From my understanding, the debate around fairness in capitalist societies often gets framed in political terms, with policies aimed at greater economic fairness or redistribution sometimes being labeled as "socialist" or "left-wing," even if they don't necessarily align with traditional socialist ideologies.
There are a few potential reasons for this:
1. Differing views on the role of government: Proponents of free-market capitalism generally favor a more limited role for government, while policies aimed at greater fairness often involve greater government intervention in the economy.
2. Concerns about government overreach: Some fear that efforts to make the system more "fair" could lead down a slippery slope towards excessive government control.
3. Ideological divides: There are deep-seated ideological differences between those who prioritize individual liberty and those who prioritize economic equality.
Ultimately, the question of what constitutes "fair" in a capitalist society is a subjective and heavily debated issue. Reasonable people can disagree on where to strike the right balance between individual freedom and collective wellbeing.
I'd encourage you to explore the topic further, looking at perspectives from economists, political scientists, and others who have studied these questions in depth.
Just assuming that having a conscience in business is somehow socialist or to the detriment of business as a whole is really very conservative.
Way more kir. And that is as it should be. And the model is NOT a franchise model. Each store is owned by someone who has purchased it, either from a seller, or when it is built. They are not cheap. And first thing each owner has to do, is pay off the significant debt they take on to buy the place. Profit is one thing, but doesn't take into account principal repayments of debt.
To any and all reading this article ... Be clear a 'loss' for the Foodstuff's companies is not what it may seem.
This is down to the co-op structure.
The FS companies, now just two, the North Island and the South Island, operate as co-ops but their members are not customers. The co-op members, i.e. those who 'share' in the profits, are the stores. The stores are privately owned. And the FS 'companies' distribute any surpluses (accidental profits) to the privately owned stores.
Thus, whether FS 'companies' make a profit or loss is meaningless as they have many ways to manipulate that outcome. If you really want to know how much profit has been made then it is the sum of all the stores. But as the stores are privately owned - and often operated through less than transparent ownership vehicles - establishing how wildly profitable they are requires too much work for most journalists.
I do wish that all people reporting on the FS companies made this structure very, very clear in the opening paragraphs. With that information readers are likely to be misled.
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