Dear Co-op Members,
Over the past several weeks, I’ve been updating you about how our business performed in 2016 and what it means for the year ahead. Last year wasn’t easy. Sales didn’t meet expectations, and that affected everyone. And yet, I’m proud of how staff responded. Our entire Co-op team met the challenge with innovation, teamwork, and creativity, and it made a difference.
We recently closed the books on 2016 and presented to the board of directors last evening (Wednesday February 22, 2017). In the end, we posted a loss of approximately $125,000. But thanks to the staff’s hard work, it’s not the loss it could have been. We had a monster holiday season, tightened our belts, cut back on expenses, and created new, realistic sales expectations for 2017. The end result is we’re becoming a leaner, fitter cooperative, and it puts us in a great position for the year ahead. I expect to end 2017 back in the black and with a small surplus—a cooperative made healthier and stronger by weathering challenges together.
We’re also a cooperative committed to transparency. Because of that, I have drafted a press release for our local media. I am releasing the information to staff and members first, then to the press soon after.
It’s important to me to put this news into context. To only look at sales is not the cooperative, not-for-profit way.
Cooperatives adhere to the triple bottom line of financial, social, and environmental responsibility. Our triple bottom line is as strong as ever. To reduce our collective work to nothing more than a sales projection does a disservice to the employees, members, and shoppers who are making a better world through this cooperative. And yet, we must always pay close attention to our sales and expenses, for losing track of those puts at risk all the good we seek to do.
The press release is below in its entirety. I encourage you to read it. And as always, if you have any questions or comments, reach out to me. My door is always open.
For Immediate Release
CO-OP REPORTS LOSS FOR 2016
HANOVER, NH—The Hanover Co-op Food Stores, a storied 81-year-old food cooperative with locations in Vermont and New Hampshire, fell short of 2016 budget expectations and will post a $125,000 loss on sales of nearly $72 million for the year, company officials reported today. The loss represents .18 percent of 2016 sales.
“The single largest contributor to the loss was overly optimistic sales goals for 2016,” said Ed Fox, Hanover Co-op general manager. “To put it simply, our projections were just too lofty. When you reach high, sometimes you overreach.”
In recent years, the Hanover Co-op also created monthly discount days for members and placed hundreds of items at everyday low prices. These and other forms of instant “rebates” directly affect total sales. The Co-op reported that the 24 Member Discount Days last year resulted in $450,000 in savings for its member-owners.
The Co-op closed out 2016 with nearly $72 million in sales, including $13 million in sales of local products. Total sales were more than $1.5 million higher than in 2015.
In the fall of 2015, the Hanover Co-op entered the 2016 budget process with high hopes for sales thanks in part to a new and improved Hanover food store—a much-needed, $5.3 million renovation project approved by Co-op members in April of 2014 and completed 16 months later.
As 2016 progressed, sales were strong, but they failed to match projections and budgets. Co-op staff worked together to examine expenses and tighten belts throughout the organization.
“The staff has been incredible,” Fox said. “As a co-op, we responded by managing as many non-fixed costs as possible. Although the efforts to match expenses to sales were broadly successful, in the end we still posted a loss.”
Fox said 2016 holiday sales were much stronger than anticipated, which helped offset losses from earlier in the year. Department managers and store managers also worked together to set new, realistic sales forecasts for 2017, adjusting expenses to be in line with projections.
“The good news is that the Co-op continues to make substantial progress at becoming a tighter, fitter organization and we’re in a great position for the year ahead,” Fox said. “No one can predict the future, but we should end 2017 on very strong footing and with a small surplus. I feel really good about the future at the Co-op.”
Co-ops are member owned, democratically controlled, not-for-profit businesses. They exist to provide the goods and services their members and communities need, rather than to generate profits for a single individual or small group of investors.
Unlike a traditional for-profit business, co-ops adhere to a triple bottom line of financial, social, and environmental responsibility.
“When we evaluate our performance, we look at a lot more than just sales,” Fox said. “We had a huge year in terms of our education and outreach efforts, our sustainability initiatives, our commitment to local, and our community-service programs. When we cut back on expenses, we didn’t touch any of that. We also made sure to take care of our staff with training and benefit investments. When times are tough, taking care of employees and preserving their careers is always a top priority.”
Fox pointed to Pennies for Change, a charitable-giving program founded on an innovative approach to collecting money at the registers. Launched in the summer of 2016, the program gives Hanover Co-op shoppers the opportunity to round up their grocery bill to the next dollar, then the Co-op donates the difference to community nonprofits. Co-op shoppers donated $137,591.54 to local nonprofits in 2016 through Pennies for Change.
“In 2016, our staff, members, and shoppers contributed to a thriving local economy, helped nurture and protect the planet, provided a market for hundreds of local producers and small family farms, and raised more than $100,000 for charity,” Fox said. “We’re certainly disappointed that sales didn’t meet expectations, but it’s hard to call that a bad year.”
About the Co-op
The Hanover Consumer Cooperative Society (DBA, Hanover Co-op Food Stores) is a member-owned consumer cooperative owned by more than 20,000 families, and one of the oldest, largest, and most successful co-ops in the United States. It was formed in January of 1936, when 17 Upper Valley residents formed a buying club to order cases of Florida citrus and other items hard to come by during the Great Depression.
The fledgling cooperative quickly added local products to the mix, offering local potatoes and maple syrup and arranging for discounts with area oil and fuel suppliers. Supporting local would be a hallmark of the Hanover Co-op from then on.
Today, the Hanover Consumer Cooperative Society is composed of three large retail food stores, a market, a commissary kitchen, a service center, and a suite of administrative offices. It employs nearly 400 people and is supplied by more than 300 local producers.
Learn more at coopfoodstore.coop.
For media inquiries, please contact:
Director of Public Relations
Co-op Food Stores