Co-op earnings dip again

The cheques should soon be in the mail — although the numbers on many will be smaller than in the past.

The cheques should soon be in the mail — although the numbers on many will be smaller than in the past.

Red Deer Co-op Ltd.’s earnings dipped for the second year in a row in 2010, with the decline to be reflected in the patronage allocations sent out to members next month.

The Co-op, which operates grocery stores, fuel outlets, liquor stores and a home and garden centre, earned $4.6 million during its fiscal year ended Jan. 31.

That was down from $5.7 million in 2009 and $7.8 million in 2008.

Co-op members will share in $2.5 million from the most recent year of operations, with about $1.5 million to be paid out in cash and the balance to be retained in members’ equity accounts. Last year, the patronage allocation was $3.1 million, of which $1.9 million was paid out; and for 2008, the Co-op distributed $4.2 million to members, including $2.5 million in cash.

“Those cheques will be out the last week in May,” said Larry Parks, Red Deer Co-op’s general manager.

The Co-op enjoyed repeated record earnings in the years leading up to the recession, but has since seen profits drop with consumers’ disposable income.

“I think that’s typical of a lot of the food industry right now,” said Parks, describing how shoppers have become very price-conscious and are on the lookout for sale items now. “I think everybody’s hurting a little bit.”

A slowdown in the residential construction sector has adversely affected Red Deer Co-op’s Home and Garden Centre, he added. In 2009, the impact was blunted by the federal government’s home renovation tax credit.

On a positive note, Red Deer Co-op achieved record fuel sale volumes and revenues in 2010. Membership grew by more than 3,000, to approximately 47,000, and total sales reached $127.8 million, up from $124.4 million in 2009.

“Sales were actually another record,” said Parks.

He’s optimistic the Co-op’s earnings and patronage allocation will improve this year as the economy continues to recover, but acknowledges that the grocery store landscape is shifting with both of Red Deer’s Walmarts gaining Supercentre status.

“There’ll be new competition in the food business this year, so I think everybody will have a smaller slice of the pie.”

But, added Parks, nearly a month after the south Red Deer Walmart relaunched as a Supercentre (the Parkland Mall store is expected to follow suit late this summer) the local Co-op grocery stores have not seen an erosion in their business.

“We’re 11 weeks into our year now and we’ve seen a little bit of an improvement.”

At the same time, spring’s slow arrival has hampered business at the Home and Garden Centre.

“When there’s snow on the ground people aren’t doing decks, garages or renovations yet.”

No major changes to Red Deer Co-op’s operations are anticipated this year, said Brooks, other than development of a 10-lane gas bar, convenience store and car wash in Stettler, beginning this summer.

Red Deer Co-op held its annual meeting at the Black Knight Inn Tuesday evening.

hrichards@bprda.wpengine.com