By Angela Park
Daily Bruin Contributor After five years of loss, the Associated
Students of UCLA projects a positive $2 million net income ““
a $3.2 million turnaround from last year, according to its
financial results for the first half of the 2000-01 fiscal year.
Since August, ASUCLA has managed to rake in $2 million in net
income through expense savings and improved cash flow, but plans to
break even during the latter half of its fiscal year.
“We’re not looking to make millions of dollars,”
said Randy Hall, chair of the ASUCLA Board of Directors. “The
association is a non-profit organization.” The BOD, which
comprises a student majority, defines policy, passes budgets and
controls ASUCLA activities. In June 2000, the board eliminated 44
administrative staff positions ““ including finance,
information systems, accounting, marketing and business services
““ which reduced the administration by 37 percent and saved
ASUCLA $1.6 million. Cutting the number of UCLA store employees
saved the association another $700,000 in wages and benefits,
according to Rich Delia, chief financial officer of ASUCLA.
“This is a tremendous turnaround,” said Patricia
Eastman, executive director of ASUCLA. “It’s been a
joint effort on the part of ASUCLA. A critical element is the
board’s support. They’ve had to make some difficult
decisions which they’ve stuck by.” But ASUCLA also
incurred unexpected expenses this year, spending $500,000 more than
budgeted in utilities due to the California energy crisis, as well
as an additional $150,000 from the increase in minimum wage. In
January, ASUCLA increased its entry-level student wage from $6 to
$6.50. Another increase in January 2002 will raise starting wages
to $6.75, Delia said. “That’s obviously going to affect
our budget,” he said. The association may not be able to
continue absorbing these unexpected costs during the final half of
the fiscal year, officials said. “Fall and winter rush are
the critical months,” Eastman said. “Total sales
decrease after spring rush. There aren’t any major athletic
events and most students leave during the summer.” Rushes
occur at the beginning of every quarter, when students buy
textbooks and supplies such as pens and paper. ASUCLA’s
financial concerns stem from a huge build up of debt related to the
reopening of the UCLA Store in January 1996, Delia said. “The
association didn’t have enough money to build it, so we
borrowed money from the university,” he said. Aside from the
$1 million needed to expand Ackerman, Delia said, interest alone
incurred $1 million in expenses, with another $2.5 million going
toward maintenance, utilities and depreciation. The reconstruction
of Ackerman included adding an earthquake support system, which
would have taken up sales space in Ackerman. “We
couldn’t shrink our selling space, so it made more sense to
expand,” Eastman said. ASUCLA made plans for reconstructing
the building with the assumption that sales would continue to grow
as they had in the 1980s. According to Delia, sales typically
increase 12 to 15 percent when a store is rebuilt. But a major flaw
in the plan involved expanding selling space without bringing in
new product categories, Eastman said. Earlier this year, ASUCLA
reduced selling space in Ackerman and leased the extra areas for
additional products and services. This move, Eastman said, resulted
in modest increases in both sales and gross margin, totaling a $1.5
million income for the full fiscal year. Ackerman now holds Moby
Disc, Post Office Express and Campus Cuts. Eastman said a sporting
goods store may replace Markdown Madness on B-level as early as
spring. In addition, the store’s distribution center was
moved from Pico Rivera back to campus in January, saving costs in
rent, processing and transportation. While ASUCLA has increased
sales productivity on campus, it also endeavors to win the online
market. In the past four years, ASUCLA has marketed items such as
BearWear and graduation supplies online. ASUCLA hoped to acquire an
additional $148,000 this fiscal year through increased online
BearWear sales. But the online sales have not been going as well as
planned, said Jerry Mann, director of student union and student
support services. Though Internet BearWear sales have not grown
substantially, other online retailers have also failed to show
significant gains. “Online textbook stores such as
Bigwords.com have faded away,” Delia said. While online
textbook competition dwindles, a textbook store has recently sprung
up in Westwood. But Delia said he is not discouraged.
“We’ve seen competition in the village before,”
Delia said. “They come and go, but we offer convenience and
competitive prices. Plus, we offer all the books the students
need.” The association has remained unprofitable since the
1992-93 fiscal year, according to Hall, with the exception of
1994-95, which made $600,000 when the men’s basketball team
won the national championship.
ASUCLA’S PROJECTED TURNAROUND ASUCLA projects a
net income of $2.0 million this year, improving its operations by
$3.2 million for the full year. SOURCE: ASUCLA Original by JACOB
LIAO/Daily Bruin Web Adaptation by CHRISTINE TAN/Daily Bruin