Tough market: PCC tells members not to expect a dividend due to $250K loss
PCC told members of its customer co-op program they won't receive their annual dividend on Tuesday.
The regional chain of grocery stores posted an operating loss of nearly $250,000 for 2022. PCC says a variety of pandemic-driven factors led costs to increase faster than revenue.
“This is a challenging time for shoppers and for retailers,” PCC CEO Kris Srinivasan told KUOW. “We're all navigating a post-pandemic society and figuring out post-pandemic ways of working, and the effect that that's been having on city centers, on retailing, and on the way people are behaving in this economic climate with their wallets is very telling.”
PCC cited inflation, poor performance at a downtown store, and the cost of providing city-mandated hazard pay to workers as reasons for the loss.
Despite those headwinds, PCC’s net sales increased 6% and membership jumped 8% year-over-year. Those gains just couldn’t keep pace with the 9% jump in company expenses, according to PCC's 2022 financial report.
The Seattle City Council mandated temporary hazard pay for grocery workers during the peak of the pandemic. The ordinance required grocers to pay employees working through the crisis an extra $4 an hour. Burien and Edmonds adopted similar mandates. The hazard pay rules expired last summer.
The pandemic’s lingering impact on Seattle's urban core hurt PCC’s bottom line last year, the company said. A new downtown store’s anticipated customer base was gutted by the shift to remote work. The lack of commuter traffic resulted in a “significant operating loss” at the downtown location, according to the financial report.
PCC said consumers spending less on groceries and labor shortages also contributed to its financial troubles in 2022.
"I absolutely see this as an aberration and reflective of a broader economic and social climate right now," Srinivasan said.
PCC's bylaws require dividends to come out of profits, making it impossible to issue them this year.
“Are some members frustrated and disappointed about not receive receiving a dividend for 2022? Yes, certainly they are,” Srinivasan said. “I understand their frustration. At the same time, I have been so greatly reassured and comforted by the equally high number of members who have responded with words of support for what we do.”