The False Profits

Let’s see if you can pick up on a theme here…

“The Board agreed with management that Market Basket associates deserve to be rewarded for their hard work and dedication notwithstanding the Company’s financial performance.

“based on management’s preliminary figures, it is clear that Market Basket’s profit margins will be lower than the prior year and that net income will be flat or less than prior years.

“the Board voted to increase contributions to the profit sharing plan and the bonus pool for associates, despite the fact that the company’s profitability is expected to decrease in 2013.

“The Board voted for the increased bonus pool, even though after spending hundreds of millions of dollars on new stores and renovations in the past few years, the Company’s profit margins for the year are expected to be down for the fifth year in a row and net profits are expected to be approximately flat with 2012 results and consistently down since 2008.”

These statements make three things abundantly clear: The Board has no fundamental understanding of our business structure, they are charged with the simple focus of enhancing the shareholders’ wealth over all other things and they are laying the groundwork for a case to fire Arthur T. Demoulas and his management team.

In 2008 this country entered a long recession as we all know. Suppliers, reacting to world events and commodity price jumps, raised the prices on the goods which stock our shelves. Retailers across the land raised retails because that is what the book tells them to do…keep the margins consistent. Arthur T. Demoulas and his management team launched a strategy of holding retails in place for the simple reason that the company could absorb the hit better than the customer. Business school 101, which our Board members passed with flying colors, doesn’t teach or appreciate this concept. As the recession worsened and consumers grew especially sensitive to pricing, they flocked to our stores. The success of this strategy is evident not only by our customer counts but also by the fact that, as the board points out, our bottom line has remained flat rather than gone down as one would expect it to. Think about how difficult that is to achieve.

Who is “hurt” by the lower profit level? The shareholders, the shareholders and only the shareholders. Our company is the envy of the industry across the country with multiple market reports concluding that we are the standard bearer not only in prices but also in operating margins (see the ‘links’ page under “Demoulas Feeling the Pinch”) . The hundreds of millions of dollars spent on new stores have been an investment on the future of this company and in the communities it serves. ASD is tremendously bitter that those monies have not gone into his pockets and the Board is fighting to ensure that doesn’t continue to happen.

Gentlemen, we can see your endgame clear as day. Understand that as you set up your case to fire Arthur T. Demoulas and his management team for declining profits, among other perceived infractions, we are on to you and we will not let you get away with it. This is our company, not yours. We work every day so that we can feed our families and stay afloat in this difficult world. While we are at it we have made Arthur S. Demoulas, his sisters and Rafaela wealthy beyond their wildest dreams while they build vast collections cars and buy vineyards in California. If you think for a second that we will let this happen without a fight, you are woefully underestimating us…which is par for the course as we have seen with the way you speak to us through your letters and your website.

Arthur T, thank you for fighting for us each and every day. Don’t think for a second that we do not have your back.

Comments

  1. Well said.

  2. Thank You Mr. DeMoulas for fighting for us and I am so sorry that you have to deal with this everyday.

  3. Of course profits are going to be lower this year. The Board of Directors have been SPENDING MONEY LIKE CRAZY on OVERPRICED P.R. Firms and a Executive Search Firms!!!!! They have also let stores sit closed therefore not making ANY money! These are no-brainers! Stop wasting the PROFITS you claim the company isn’t making you enough of!
    As for the bonus pool amount going up….well think about that for a moment, how many new stores were open this year? How many NEW EMPLOYEES have been added over last year? Also, since there weren’t as many extra bonuses this year, most people will be making less money this year. Their earnings have gone down….how is it that 15% of their earnings for Profit Sharing (since the earnings have gone down) is going to be consistant to last years?????

  4. Well said. Without mr. Demoulas fighting for us, they could do whatever they feel like. That would be the end of the employee benefits as we know it

  5. elbis aquino says:

    Thank you for everything you have done for us, we appreciate it. Thank you.

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