Food inflation helps Foodstuffs North Island hit record revenue of $9.2 billion but annual profit still sinks into the red

Food price inflation might’ve helped Foodstuffs North Island make $9.2 billion dollars in statutory revenue during its 2024 financial year but the grocery giant says the co-op has played a role in taming price inflation.

Despite its record high revenue, Foodstuffs North Island (FSNI) reported an annual net loss after tax of $3.2 million.

It’s a significant decline from the $44.9 million profit reported by Foodstuffs North Island at its 2023 results, representing a decrease of around 107%. 

Dean Waddell, the chair of Foodstuffs North Island (FSNI) and  owner of PAK’nSAVE Tauranga, described it as a “milestone year” in the co-op’s 2024 annual report which was published on Wednesday.

He said at the start of the co-op’s 2024 financial year, food price inflation had been in the double digits due to supplier cost increases and the impact of Cyclone Gabrielle on produce.

“With food price inflation under 1% p.a. at the time of writing, it seems to me it’s been tamed, for now, and I believe we can be proud of the role we’ve played in achieving that.”

Statistics NZ revealed today that food price inflation on an annual basis has fallen to a six-year low but on a month-by-month basis, food prices rose 1% in June.

FSNI’s 2024 earnings before interest and taxes (Ebit) came to $292 million, an 8.4% or $23 million increase from FSNI’s Ebit of $268.9 million in the previous period.

Overall capital expenditure jumped 47% or $82 million to $254 million.

FSNI Chief Executive Chris Quin said in his report address that inflation had been hitting NZ communities hard and FSNI had kept its food price rises below the official rate of food price inflation for 10 months out of the year.

Quin said retail crime was on the rise and the growth of violence in supermarket crime was “deeply worrying.” He added that it was the reason the co-op is currently trialing facial recognition technology (FRT) in 25 New World and PAK’nSAVE supermarkets.

Both Quin and Waddell brought up the proposed Foodstuffs merger that would see the North Island and South Island co-ops merge into one co-operative if approved by the Commerce Commission.        

ComCom has pushed out its decision twice and a new decision date has been set for October.

The Commission has extended its deadline due to unresolved issues with the contentious merger application.

Parties like the Food and Grocery Council and the Grocery Action Group have submitted against the merger because of concerns around less grocery competition.

The Foodstuff co-ops have argued there is no threat to grocery competition from the merger going ahead.

“It’s the right time for this next step because both our co-ops play a significant role in the lives of New Zealanders, and together nationally we can deliver more value, more innovation and better experiences,” Quin said.

“[..] all going well, by this time next year we’ll be well down the road of merging into one national co-op that’s more efficient and therefore able to deliver better value and innovation for customers,” Waddell said.

Store investment

According to the annual report, FSNI invests around $100 million each year into building new stores and renovating existing ones. 

At the end of its 2024 financial year, the North Island co-op said it had 320 physical grocery stores, made up of 163 Four Squares, 103 New Worlds, 46 PAK’nSAVEs and eight Gilmours.

The eight new stores opened during its latest financial period were a PAK’nSAVE in Warkworth, a new Gilmours wholesale store in Napier, and six Four Squares: two in Auckland, Onehunga and Britomart, two for Taranaki, Waverley and Fitzroy, and one each for the Bay of Plenty and Waikato.

In the coming year, FSNI said it expects to open at least six new stores around the country. These new stores will include New Worlds in Papamoa in the Bay of Plenty and Havelock North in Hawke’s Bay, a Four Square in Opunake in Taranaki, and a PAK’nSAVE in Highland Park in Auckland.

Foodstuffs South Island reported their 2024 annual results last month.

The South Island co-op made an extra $267 million in revenue during the 2024 financial year, which the co-operative said was driven by rising food prices and a surge in domestic and international tourism.

Like Foodstuffs North Island though, FSSI’s full-year net profit was also in the red as the co-op reported a net loss after tax of $11.5 million in the 2024 financial year. This was down from the $6.9 million profit reported in 2023.