Coop announces severn percent patronage rebate
By Prabhat Mehta
The annual Harvard Cooperative Society patronage rebate for the 1988 fiscal year is 7.0 percent, down from last year's 7.8 percent. James A. Argeros, president of the Coop, attributed the decline primarily to an increase in the cost of labor and employee benefits.
Specifically, Argeros cited four sources of greater expenses which led to lower earnings this year: payroll, taxes, health and welfare insurance, and rent. Together, these factors more than matched an increase in sales from $63.8 million in fiscal 1987 to this year's $64.4 million, he claimed.
Health insurance, Argeros noted, is becoming an increasing expense for employers nationwide, and the Coop is "no different from the rest of the world." Over the past four years, health costs for employees have more than doubled, he claimed.
Primarily as a result of these rising health costs, as well as consistently high urban salary rates which Argeros described as "nuts," the Coop's pre-tax, pre-patronage earnings -- the figure from which the rebate is calculated -- dipped from $4.1 million in fiscal 1987 to $3.9 million for fiscal 1988. On July 1, the beginning of the Coop's new fiscal year, the Coop replaced its old employee health insurer. The new one, Argeros claimed, provides the same benefits at a lower rate.
The patronage rebate is calculated as a percentage of pre-tax earnings. The percentage is determined from the proportion of total Coop sales that come from members. This year's total rebate allotment was $2.5 million, versus last year's $2.766 million.
Increase in member
Even though "the Coop is doing very well," it "can do better," said Robert Potter '90, an MIT student member on the Coop's Board of Directors. He felt that sales were still strong and that it was possible to bring rebates back to the nine percent range of just a few years back.
According to Argeros, as the retail business becomes increasingly tight in the next few years, the Coop will stress member patronage in order to bolster sales. "Everybody is pretty much struggling. . . We need to increase member sales," Argeros said.
In addition to increased membership patronage, Argeros said he hopes to increase earnings by keeping expenses in check. One cost-cutting measure he cited was lowering the turnover rate so that time and money would not be wasted in constantly training new workers.
Potter felt that rather than focus on the immediate year's rebate and the near future, the Coop and its members should look forward. He said that students should be more concerned with long-range planning than with what has already happened or what is inevitable.