Earnings Tumble at Harvard CoopBy Eva Moy
The Harvard Cooperative Society's annual patronage rebate plummeted to 1.1 percent for fiscal year 1991-1992, continuing a steady downward trend since the late 1980s, the Coop announced Friday.
Last year's rebate was 5 percent; five years ago, Coop members were entitled to 9.5 percent refunds.
"Every year we give back whatever amount of money which is attributed to the members. If the profitability of the company drops," the rebate percentage will decrease, said Coop President Jeremiah P. Murphy.
A Coop press release blamed the decline in profits on the economy. "The difficult economic environment which persists in the New England region continued to affect adversely the Coop's operations throughout the year. It is indeed a tribute to its members that the Coop was able to declare a patronage refund for the 110th consecutive year, under such circumstances."
The Coop will return a total of $348,000 to its members, compared to $1.7 million last year. Sales had dropped from $60.2 million last year to $56.8 million. This resulted in only $459,854 in earnings before taxes and refunds, down from $2.6 million last year.
Members are disappointed
"By the cooperative nature of the Society, we return any excess of funds based on sales," said William R. Dickson '56, Chairman of the Coop's Board of Directors. "Hopefully we'll return to a period of higher rebates."
Dickson, also a senior vice president at MIT, added, "Personally, I would like to return to something over 5 percent, and if we could, even more. ... We have a lot of good members, and we want to interest them more in shopping at the Coop."
"I was kind of disappointed that it wasn't higher," said Pieter M. Pil G, a member of the board of directors for four years. "At least there's still a rebate. ... The Coop is sparing no effort to improve things," he added.
The rebate "was incentive for people to go the Coop," UA President Shally Bansal '93 said. "I think a lot of people will be turned off to the Coop for a while. ... It would be pretty obvious to [the Board of Directors representatives from MIT] that something needs to be done," she added.
"When I was a freshmen, the rebate was 9.5 percent. Last year, people were really griping ... [but] they kind of looked over the bigger issue that it had gone down 4.5 percent in four years," said Michael L. McComas '93. "I don't know what [the Coop] could change except streamlining their business, making it more of a bookstore instead of a Filene's," he added.
"It's almost not worth it. I don't buy anything there anymore, except books," said John F. Shiple '93.
"It doesn't matter much to me," said Ziad J. Azzam G. "I don't remember getting more than $10-15 back" even when the rebate percentage was higher, he added.
Coop changes planned
The Coop is currently working with students from MIT's Sloan School of Management on a project to survey students and alumni about the types of merchandise the Coop should supply, Murphy said. "By late fall, we should have a report from them," he added.
Another possible change is the computerization of cash registers, which would have with inventory records, Murphy added.
"The business over time has been hurt for various reasons," Murphy said. He attributed part of this decrease to a slight increase in expenses, such as rent and health care. He also said that sales were down in the music and computer departments because of new competitors, while customer pools stayed about the same.
The Coop's stores vary in profitability by the kinds of goods that they sell, Murphy said. "Just because it's not the most profitable business in the world doesn't mean you shouldn't have it," he added. "We have to balance the needs of the members. ... The profit level shouldn't be the only determining factor."
Textbooks are one of the Coop's lowest profit margin businesses because of high maintenance costs, Murphy said.
The profit margin at the Coop in Kendall Square is in line with those of the other stores, Murphy added.
The Coop had installed some changes within the past year in response to the falling volume of sales. The stores "cut back on payroll and cut out jobs [they] didn't need in the back room," concentrating more on the sales floors, according to Murphy.