Message from Travis Boman, CFO – July 2022 

It’s hard to believe we’re halfway through 2022!  Between the incredible pace of our industry and the constant adjustments we’re making throughout our operations, the year has already been a whirlwind of challenges, opportunities and progress. 

In watching trends nationwide, and in our market, we are seeing reasons for both caution and optimism. Customers are returning to some pre-pandemic buying habits which has an impact on our business, and we anticipate these trends will continue as consumers return to more normal lifestyles. With that caveat, our stores, and overall system, continue benefiting from changes in consumers’ purchase practices.  

On the heels of record years in both 2021 and 2020, the momentum we’ve created is still going strong! For the first half of 2022, AFS wholesale operations achieved $1.04 billion in sales, an increase of over $107.0 million from 2021. That’s a strong reflection of how you and our member retail stores are performing so far this year. Corporate stores surpassed sales of $403.0 million for the first half of the year, an increase of over $41.0 million compared to last year.  

It’s important to keep in mind that a good portion of these sales increases is driven by high food inflation. According to the June 2022 report of the US Bureau of Labor Statistics, Food at Home inflation was 12.2 percent, the largest 12-month increase in over 40 years. However, it’s also worth noting that we’ve seen increases in product movement at the same time. For example, invoiced units for AFS Wholesale operations are up more than 2.0 percent for the first six months this year compared to last year.  

So, what are we expecting to see during the second half of 2022? Sales increases have tapered off a little, but for the most part continue to be steady. Sales for Wholesale Operations are up nearly 10.0 percent for the first three weeks of July 2022. Corporate store sales are up nearly 9.0 percent compared to last year for the same time period. With higher sales, most retailers are experiencing more profitability and more cash in the bank. All of this has come as a result of the commitment, dedication, and hard work of team members across “One Associated” during some incredibly challenging times. Together, we can keep the momentum going! 

The executive team appreciates the significant efforts throughout “One Associated” that have led to these positive results. Every day, whether we’re at retail, the distribution center or the corporate office, we see examples of team members giving their all to our united cause. Thank you for what you do to make AFS great! 

We know of the numerous challenges faced throughout the organization. Although we do see lights at the end of many tunnels, we know the path before us remains a difficult one. Evolving consumer trends, labor shortages, supply chain disruptions and other issues continue impacting our business. As “One Associated,” we fight every day to find and implement solutions. We do everything within our power to improve, and know our combined success depends on continued innovation, communication and commitment to shared goals. 

Progress continues on many key initiatives that will drive both our near and long-term success. These projects include warehouse modernization, centralized production opportunities, advanced loyalty and personalization, enhancing the guest checkout experience, asset protection, and using data to improve all aspects of our business at wholesale and retail. We encourage you to pay close attention to our communications to stay current on these and other exciting efforts. 

In addition to the initiatives above, we are involved and aware of many retailers who are enhancing their own operations through projects large and small. As an example, the New Vistas program is helping dozens of retailers improve the experience they provide to their customers and we applaud the many ongoing efforts to grow, expand and innovate. As an enhancement to New Vistas, our rewards team just launched a New Vistas initiative using the principles of 4DX to drive shopper awareness and engagement. It’s exciting to see the principles paying dividends. 

As I conclude, please allow me to share a quote I believe applies to our situation from Henry Ford. He said, “Coming together is a beginning. Keeping together is progress. Working together is success.” Nowhere is this quote more true than Associated Food Stores. Your ability to work together has and will move the company forward in marvelous ways. It’s a testament to the power of phenomenal people. It would be easy, in times of trouble, to splinter and silo. We’ve done just the opposite. I am so grateful to be part of such an outstanding organization and look forward to a bright and profitable future.