XXXXX DIRECTORS’ REPORT
because the processing of sales orders was at times delayed. Higher people costs were incurred to source replacement staff and to ensure sufficient resources were available to service the needs of Member stores. Towards the end of the financial year the Company recruited a sales team. The intention of the sales team is to increase sales from existing stores, to open new accounts and seek opportunities within the wider health and wellness market. It is a normal part of business that the mix of supplier brands distributed through the warehouse can change over time. One of the objectives of the business is to offer new and exciting products. There is a constant process of new brands identified by our National Buyer entering the warehouse. Some of these new brands become established and remain with the warehouse ongoing. Some brands may not continue to be ranged within the warehouse after a category review. There were two larger brands which exited the warehouse during the financial year which resulted in a reduction in sales. One of these brands returned to the warehouse towards the end of the financial year. Gross profit margins on products sold was 18.3%. The increase can be attributed to the launch of an E-commerce business at the beginning of September 2021. The business has historically produced four magazines each financial year. This marketing initiative is intended to encourage customers to read the magazine then visit Member stores to purchase the promoted products. In the 2022 financial year because of staff resignations in the marketing and private label teams it was only possible to produce two magazines. There was a corresponding reduction in advertising revenue received from suppliers. Expenses within the business were higher for several reasons. There were costs associated with the investment in the new E-commerce business although these were partly offset by the margin generated from selling the products. There was $31,554 of gross margin shared with Members from
Environmental Regulation and Performance The directors are not aware of any material issues affecting the Company or its compliance with the relevant environmental agencies or regulatory authorities. The company is a member of the Australian Packaging Covenant Organisation (APCO) which is concerned with reducing the environmental impacts of consumer packaging in Australia.
Review of operations Trading Review and Outlook
The consolidated after-tax loss for FY2022 is $57,388. The consolidated after-tax profit of the Group for FY2021 amounted to $630,991. Stock sales were down 8% on last year. This was a combination of a several factors including Covid related demand changes, Member and customer changes and supplier changes. Trading conditions for the financial year were impacted by Covid 19 and included the impact of lockdowns, supply chain issues and raw material shortages. In the two previous financial years of 2021 and 2020 there were a higher level of sales because of increased consumer purchasing of immunity products such as Vitamin C and pantry stocking of food products, once again triggered by concerns around Covid 19. During the 2022 financial year consumer behaviour changed and the higher level of sales activity because of Covid did not continue. At certain times of the year many stores reported lower foot traffic as consumers stayed home through their own preference and because of Government mandated lockdowns in some areas. Indications post this financial year show a significant uplift in sales from 1 July 2022 to the date of this report. The warehouse was also negatively impacted by Covid at times when staff were required to isolate either through their own illness or when they were a close contact of a family member. This caused lower sales in some months
34 I GO VITA GROUP LIMITED ANNUAL REPORT 2021-2022
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