I've built your operating review package. Here's the summary:

## **Full Year 2025 vs Budget — Line by Line**

| Line Item | Actual | Budget | Variance | Direction |
|-----------|--------|--------|----------|-----------|
| **Revenue** | $11.2M | $11.6M | ($362K) | **Unfavourable** |
| Cost of goods sold | $7.9M | $8.1M | $196K | Favourable |
| Freight out | $377K | $348K | ($29K) | Unfavourable |
| **Gross profit** | $2.9M | $3.1M | ($194K) | **Unfavourable** |
| Gross margin % | 25.9% | 26.8% | (0.9) pts | – |
| Salaries and wages | $1.6M | $1.5M | ($38K) | Unfavourable |
| Rent and occupancy | $431K | $408K | ($23K) | Unfavourable |
| Marketing | $94K | $132K | $38K | Favourable |
| Technology | $143K | $168K | $25K | Favourable |
| Professional fees | $97K | $96K | ($1K) | Unfavourable |
| Depreciation | $79K | $78K | ($1K) | Unfavourable |
| Other operating | $120K | $120K | $116 | Favourable |
| **Operating income** | $388K | $583K | ($195K) | **Unfavourable** |

## **December 2025 vs Budget — Line by Line**

| Line Item | Actual | Budget | Variance | Direction |
|-----------|--------|--------|----------|-----------|
| **Revenue** | $827K | $824K | $3K | **Favourable** |
| Cost of goods sold | $584K | $578K | ($6K) | Unfavourable |
| Freight out | $27K | $25K | ($3K) | Unfavourable |
| **Gross profit** | $215K | $221K | ($5K) | **Unfavourable** |
| Gross margin % | 26.1% | 26.8% | (0.7) pts | – |
| Salaries and wages | $128K | $128K | ($324) | Unfavourable |
| Rent and occupancy | $34K | $34K | $169 | Favourable |
| Marketing | $7K | $10K | $3K | Favourable |
| Technology | $10K | $14K | $4K | Favourable |
| Professional fees | $6K | $6K | ($310) | Unfavourable |
| Depreciation | $7K | $7K | ($95) | Unfavourable |
| Other operating | $16K | $10K | ($6K) | Unfavourable |
| **Operating income** | $8K | $13K | ($5K) | **Unfavourable** |

## **Commentary**

The full year revenue fell $362K short at $11.2M (3.1% unfavourable), driven by three difficult months: March missed by $123K, July by $132K, and August by $105K. COGS performed well, delivering $196K savings, but freight and labour costs ran over budget. Salaries were $38K high; freight out was $29K over; and occupancy added $23K in overages. Marketing and Technology more than offset these with $38K and $25K underspends respectively.

Operating income finished at $388K—$195K or 33.5% below the $583K budget. The primary headwind was the gross profit miss of $194K, which came entirely from the revenue gap since COGS actually beat plan.

December saw a modest revenue beat of $3K, but margin compression to 26.1% versus 26.8% plan pushed operating income down $5K. Other operating costs spiked $6K—worth investigating before Thursday's review.

The detailed analysis and data files are in `/output/`.