Co-op reports loss for 2016
The Hanover Consumer Cooperative Society, which operates the Co-op Food Stores, fell short of breaking even last year, reporting a loss of approximately $125,000 for 2016. The loss represents 0.18 percent of its 2016 annual sales of nearly $72 million.
The Co-op fell short of its sales target by $2.1 million dollars, which affected its bottom-line, chief financial officer Paul Guidone said. The loss can be mostly attributed to over-optimistic projections made in fall 2015, especially about the Hanover store, which had finished renovations that same fall. Following the 5.3 million renovations, customers took longer than anticipated to return to the Hanover store. During the renovation, around 20 percent of the store was unavailable to shoppers, which contributed to it accumulating additional debt, according to Guidone.
However, general manager Ed Fox said that the Co-op feels positively about its circumstances going forward.
“A loss is not great in any way, but this was really very minimal, and we feel very good about how we finished the year and how we’re moving into the current year,” Fox said.
Fox said that going into the fourth quarter, the Co-op had estimated it would lose around $350,000. However, strong sales from the holiday season helped to shrink the loss. He added that the year should not be looked at as a “bad year” due to other programs the Co-op accomplished, such as implementing a donation program for the charitable organization Pennies for Change.
When the year’s finances started to show losses, the Co-op put a hold on filling newly created and non-critical positions and buying non-essential equipment upgrades. Guidone emphasized that no employees were fired as a result of the Co-op’s tight finances.
Normally, when the Co-op turns a profit, the sum is distributed to the members as a rebate at the end of the year. Though there were no profits to divide this year, the Co-op implemented monthly 10 percent-off shopping days throughout the year, which totaled in $450,000 in savings for members, Co-op board president Anthony Roisman ’60 said.
“The best way for members to have the benefit of being a member is for them to pay just enough for the product that at the end of the year, the Co-op breaks even,” he said.
Roisman said on any given year, the Co-op tries to “break even” and has a “triple bottom line” business model, unlike larger grocery chains. The triple bottom line refers to ensuring that the Co-op is environmentally responsible, favors local farmers and producers over distant ones and makes charitable contributions, such as food donations.
“That kind of triple bottom line is what makes us different than the typical business,” Roisman said.
Roisman said the Co-op announces whether there have been losses or profits to the public each year at an annual meeting. At the meeting, members can ask to see further information about the Co-op’s finances.
This year, several changes and investments are predicted to boost sales. Guidone said the anticipated uptick in sales from the newly renovated Hanover store has only just started.
Fox said the Co-op is looking to launch an inventory system by the end of the summer, which will help track the popularity of different products, ultimately allowing for a more efficient ordering schedule and increased shelf-space.
The Co-op’s commissary kitchen in Wilder, Vermont is another investment. Fox said he hopes the facility will eventually streamline the process of producing the prepared foods sold individually in each of the Co-op’s four stores. Employees in the stores will be able to spend more time on customer service rather than cutting up fruit or bagging bulk products.
In addition to these investments, the Co-op has also focused on building relationships with its members via greater transparency. In 2016, the at-will firing of two Co-op employees shrouded the Co-op’s board elections in controversy and demands for increased transparency by a Facebook group called “Concerned About the Co-Op.” Since then, several changes in management structure and communication have been made to address those concerns.
Many people who were elected to the board in 2013 and in 2016 ran on platforms emphasizing the importance of transparency, according to Roisman, whose three-year term ends in 2018. He emphasized the democratic nature of the Co-op – each member has one vote to help shape the direction of the business and members of the board.
Board meeting packets detailing the Co-op’s operations are now made publicly available online, though personal information and confidential financial transactions are withheld. Two years ago, only a “stripped down” version of the board meeting packets was made available to the members, according to Roisman.
Additionally, this year’s April annual meeting, which is open to the approximately 20,000 members of the Co-op, is centered on the theme “A Seat At The Table.” Whereas previous meetings were structured with higher management on a stage and everyone else watching them, this year’s meeting will have 16 open tables, each with a representative from key parts of the Co-op’s operation.
Roisman described Fox as someone who is very committed to transparency and said that the decision to hire him was very popular during 2016.
Guidone, who has worked in investment management and who started working at the Co-op in April 2016, said he takes a “very pragmatic approach” to the board where he provides the board with financial information. He said he provides the board with “security analysis” and walks them through the financial history of the Co-op in internal seminars.
Since December 2016, Fox has been publishing regular posts and updates to the Co-op blog. He said the blog is “absolutely” a part of the effort to increase transparency. Fox also emphasized that information is intentionally relayed to the staff and members before released to the public.