|
-2-
<br />When the Hand ine Store was closed in June , 19 7 9 , the above mentioned
<br />administrative exppmses allocated to that store were reallocated to the
<br />Lexington and Har Mar stores in proportion to their gross sales. This
<br />action alone caused the Lexington store to increase its net loss by appro i-
<br />rr ately $2,000. If this reallocation did not occur, the less for Lexington
<br />would have been approximately $8,000, instead of $10,,000,
<br />In any event, the decision to close the Lexington Store was made in Decerrber.
<br />The City will vacate those prenA ses no later than June 3 0 , 19 8 o M
<br />Har Mar Store. This store completed the year by increasing its gross sales
<br />by 25% aver the prior year* The dross sales .increase is believed due to a
<br />significant nurrbers of the Ha nl ine customers switching to the Har Molar Store,
<br />an increase in new sales, sorm of the Lexington store customers during the
<br />reconstruction of Lexington Avenue, and a small increase due to the increased
<br />cost of merchandise C
<br />The store's net profit increased by 4% over the prior year, Reallocation of
<br />expenses applied to the Har Mar store as it did to the Lexington store, If
<br />it had not been for the reallocation of administrative expenses, the Har liar
<br />store would have earned an operating profit of $52,000 instead of $45,1639
<br />Heconmndations
<br />At the present time there appeam to be only two alternative decis ions i one, close
<br />the re mi
<br />r� ng store (Har Mar) , or two, keep it open for another year. , The reca mr
<br />endation as to keep the Har Mar store open for one additional y r . , This recamwnd-
<br />ation is based on the belief that an off -sale liquor outlet in Roseville, whether
<br />in Har Mar or sow other ' location possesses a significant earnings potential.
<br />This is supported, in part, by the fact that substa.nt improvement has been made
<br />since the disastrous year of 1976, and that there is evidence that the flury of -
<br />cut rate activity is decreasing, if not moderating. In addition, sales figures
<br />from other mmicipal stare operations indicate there is a marked increase in liter
<br />sales.
<br />In addition, the reco=mndation is based on a projected net profit increase for
<br />1980 of $7,000 - $12,000 over the prior year
<br />If the Har Mar store is kepi open for an additional year-and the Lexington stare
<br />is closed June 30, 1980, the staff is projecting gross sales of $800,000 - $900,000.
<br />The Lexington store would close out with an operating lass of $6,000 - $7,000. Har
<br />Mar would finish 1980 with a projected net profit of $50,000 - $55,000, or a total
<br />net operating profit of $43,000 -- $48,000.
<br />Compared to the profits the City was earning in the 1960's and early 1970's
<br />the projected net profit figures are not that encouraging. But epared to the
<br />net profit of $3,000 for the year 1976, it represents substantial. progress. If
<br />it was believed that we have reached our ntax rte, level of net profit, the recomrr-
<br />endation would be to close June 30, 19 8 0 . However,, it is believed the potential
<br />for a net profit of $75,000 - $90,000 is likely in the next two to three years.
<br />Again, an additional year would assist in further determining the likelihood of
<br />that projection.
<br />M
<br />
|