by Paige Wickline, Finance Director
Fiscal Year 2020 runs from July 1, 2019 through June 28, 2020. The Fiscal Year 2020 budget was prepared by management, reviewed by our Board’s Finance Committee, and approved by our Board at their June 2019 meeting.
This is the fourth year in a row we are budgeting for a loss. We had originally expected to have positive net income in FY20 following three years of losses after opening Willy North. The expansion project at Willy West which was completed in FY19, will result in another year of operating losses. Operating expenses increased due to the expansion. These expenses include additional rent, utilities and depreciation/amortization expense for the equipment and construction costs. We anticipate it will take another year for our sales to grow enough to cover the additional expenses.
Total Sales. The Fiscal Year 2020 sales projections for our three retail sites and catering program are based on our current sales trends, changes in the Madison-area grocery market, and expanded retail space at Willy West. The budget shows a sales increase of 7.4% year-over-year.
Gross Margin. Gross margin refers to the percent of sales remaining after subtracting the cost of goods sold. Gross margin dollars are the funds used to pay for our operations. Our gross margin of 36.0% is the same as the previous fiscal year.
Personnel. Personnel expenses include labor hours and benefits. These costs are budgeted to be 25.74% of sales, which is slightly lower than the previous year.
Capital Budget. The Fiscal Year 2020 approved capital budget is $807,746 which includes $707,746 in specific items and $100,000 for unanticipated items. This year at Willy East we plan to replace equipment that can no longer be repaired along with several upgrades at West that we did not have funds for as part of the FY19 expansion.
The past four years we have made some large investments in Willy North and West that will allow us to maintain and grow our market share through convenient locations for our Owners and customers. We look forward to continuing to provide each of you with the best customer experience possible along with the fairly priced high quality products you have come to expect from Willy Street Co-op.
If you have any questions regarding the FY20 budget, feel free to email me at p.wickline@willystreet.coop.
