Business reforms are necessary to ensure we protect our valued members’ interests, achieve financial sustainability and pave the way for the Strategic Plan 2024-27.
For the reasons explained in the FAQs below the decision was made to close Mitre 10 & CRT Wauchope, Kew Rural Store and Comboyne Rural Store on April 5, 2024 and The Department Store on August 31, 2024. The closures will release up to $2 million in stock and immediately improve operating performance, solidifying our medium-term financial position.
The core foundation of the 2024-27 Strategic Plan is maximising member benefits, which is more important than ever - and we look forward to finding new ways to be innovative, to grow and change, and to meet the challenges of the future.
Thank you to members who attended a progress meeting on April 4, 2024. A summary of key points is available here, and should be read in conjunction with the Members meeting fact sheet, Strategic Plan 2024-37 and frequently asked questions below.
Downloads
- Members meeting summary
- Members meeting fact sheet
- Strategic Plan 2024-27
- Business closure announcement, March 13, 2024
Frequently asked questions
Why is it necessary to close Mitre 10 & CRT, Kew Rural Store, Comboyne Rural Store and The Department Store?
The Co-op’s short and medium-term financial position demands immediate action.
A number of our businesses are underperforming and, with the cost of doing business increasing constantly, and unavoidable unfunded capital expenditure in excess of $5M over the next five years, we will not be in a position to continue operating, without substantial structural reform. If these businesses were not closed, the Co-op's financial viability would have been under threat.
The difficult decision to close businesses was necessary to protect members’ interests, achieve financial sustainability and pave the way for the 2024-27 Strategic Plan.
The Co-op has always been a dynamic business and has reinvented itself, including exiting industries and selling assets where it was no longer in the interests of the members to continue to operate them.
This has encompassed everything from being Wauchope’s primary electricity supplier from 1924-36, operating a butter factory up until 1952, and ultimately exiting the dairy industry altogether, to purchasing a Port Macquarie supermarket and entering the car hire industry in 2019.
How many staff are affected?
A total of 27 staff are affected, including full-time, part-time and casual employees. As at April 4, 2024 12 staff have accepted roles with Co-op businesses and four employees have taken redundancies. The Department Store will remain open until August 31 and we continue to offer consultation and transitioning support to those staff.
What will Hastings Co-op do with the proceeds from these business closures?
The closures will release up to $2 million of cash tied up in stock and immediately improve operating performance. These funds will be used to:
- Solidify our financial position and allow us to fund foreseeable cash outflows over the next few years
- Allow us to reinvest in our existing businesses, systems and processes.
What will happen to the Department Store?
The store will not close until August 31 and we fully appreciate that the location has a range of potential uses. We understand the store has a significant profile in Wauchope, and our intention is to re-develop this site. We want nothing more than to see Wauchope's CBD grow.
At the April 4 Members meeting it was announced that we have secured a tenant, who intends to re-open the store in September. We're very excited that the new tenant would like to continue the Christmas window tradition, as well as Mid-Year and Christmas Sales, and offering a Hastings Co-op member discount.
What will happen to Mitre 10 & CRT Wauchope, Kew Rural Store and Comboyne Rural Store?
These stores closed on April 5. Mitre 10 & CRT is currently leased month to month. Kew Rural Store is also currently leased and Comboyne Rural Store is owned by Hastings Co-op.
The provision of household and commercial gas will continue as normal via the fuel division and enquiries can continue to be directed to 02 6588 8940.
At the April 4 Members meeting it was announced that we are negotiating with Cundletown-based business, Dillon Rural, who is interested in re-opening Kew Rural Store in coming weeks. If supported by the local community, they have indicated that they may also consider re-opening Comboyne Rural Store. At this stage, they have kindly offered to service Comboyne customers through the Kew store.
Is Sovereign Place IGA the cause of Hastings Co-op’s financial problems?
As a result of the difficult economic conditions of the past four years since opening in 2019, the performance of Sovereign Place IGA + Liquor has not met expectations, however, we continue to explore all options to improve performance. This includes working closely with stakeholders to manage our costs and margins and to ensure the best outcome for staff, members and the wider community. We are also implementing a number of improvements internally to increase sales, reduce costs and operate more efficiently. Sales have increased by 12% since October 2023.
Why doesn’t Hastings Co-op sell or close Sovereign Place IGA + Liquor?
We have a legal commitment to operate Sovereign Place IGA + Liquor for the life of the existing lease, which ends in 2029. It is not possible to close the store without significant financial commitment and/or legal risk. We continue to work collaboratively with our landlord and suppliers to identify solutions to improve performance. Selling the business remains an option, however, we need to be realistic about our ability to find a suitable buyer.
Is there job security for Hastings Co-op’s other employees?
The remainder of our businesses will continue to operate as normal and we are steadfast in our commitment to supporting our staff.
Is Hastings Co-op still considering selling Cedar Service Station, as discussed at the Member Information Night in October 2023?
The future of this service station is still being considered, however, no immediate sale is planned. We continue to focus on ensuring a product offering that appeals to members.
Is Hastings Co-op still considering selling and leasing back Wauchope IGA + Liquor?
The long-term financial viability of the Co-op is critical and the sale and lease back of Wauchope IGA + Liquor is still a potential solution.
We have four IGA supermarkets and all of these operate in facilities which we lease, except for Wauchope IGA + Liquor.
From a business perspective, owning this land and building is currently of little strategic benefit, and it may be the case that we can better utilise the capital tied up in this asset to shore up our ongoing financial position and re-invest in our businesses, systems, infrastructure and staff.
What is next for Hastings Co-op?
The decision to close the four stores has resolved the short-term financial emergency, however, longer-term financial challenges remain. Operational and capital expenditure commitments over the next five years will require difficult strategic decisions, which may include selling assets or businesses. These decisions may require the support of members to ensure the Co-op's survival (under Section 359 of the Co-operatives National Legislation).
The Strategic Plan for 2024-27 was released in November 2023, based on: developing mutually beneficial partnerships and relationships; enhancing member benefits and offerings and; expanding our membership base. We are focussed on supporting our community in challenging economic times, but this is only possible through your continued patronage of our businesses.
How can members provide feedback?
We invite members to provide feedback via the button below or the hard copy feedback form, which is available at Hastings Co-op’s Head Office at Level 1, 9-13 High Street, Wauchope.
Important member information is generally communicated via email, the Hastings Co-op website and Facebook pages, the Heart of the Hastings newspaper and in-store posters.
We acknowledge the community's feedback since the business closure announcement on March 14, and recognise that we need to rebuild members' trust. We are committed to improving the way we engage and share information. If members would like to update their contact details visit www.hastingscoop.com.au/update or phone the Corporate Centre on 02 6588 8999.
Questions submitted for April 4, 2024 Members meeting
Would the Co-op consider raising more capital through additional member shares to existing Shareholders or Co-op 100 members?
Ultimately, we would love to give members the opportunity to invest in worthwhile projects, however, with respect to our current financial requirements, the Board considers it inappropriate to seek member capital investment until we have full confidence that we will be able to return members' capital and/or pay a dividend.
Would you consider a community ownership model for smaller outlets?
As a co-operative we are supportive of all forms of community and co-operative models to manage businesses.
On this occassion we are hopeful of a private interest in owning and operating the businesses we closed.
Is Mitre 10 (the owners) looking at another Mitre 10 franchisee or merging with Mitre 10 Port Macquarie?
Not that we are aware of.
What changes to the 2023 balance sheet are expected to follow the planned disposal of assets? In particular, the asset revaluation reserve?
Outside the effective change in the nature of some of our short-term assets (such as inventory and trade debtors to cash) and the elimination of lease assets and liabilities, which will materially offset, these reforms have no impact on our balance sheet. As we are not selling any assets, our asset revaluation reserve will remain unchanged.
What options have been considered with regards to Sovereign Place IGA + Liquor?
We have, and continue to, consider all options, including the sale, sub-leasing, re-negotiating of terms and closing Sovereign Place IGA + Liquor.
What is the expected net receipt from the planned disposals?
The inventory of the farm supplies businesses and Department Store collectively is approximately $2M. Our operating performance will also improve, as ongoing losses incurred in operating these businesses will be discontinued.
Why were members not informed that these businesses were becoming unviable years before the decision was made, so we could support them?
The underperformance of the farm supplies businesses and The Department Store have been referenced in Annual Reports for at least the past five years, but particularly in 2021/22 and 2022/23, and the underperformance of these businesses was discussed at the last two Annual General Meetings and members meetings in October 2023 and February 2024.
Why have the rural stores underperformed?
The performance of the rural stores has been impacted by a variety of factors including the extent of competition in Wauchope, recent cost of living pressures, supply chain logistics and other economic factors. Without doubt, the management of the rural stores could have been improved as well.
Why have you not had a loyalty app and a modern digital manner to communicate with customers to drive sales, engagement and loyalty?
We have consistently exploured different forms of digital communication. Currently, we communicate with members and customers primarily via email, social media and our website. We have explored using an app, but research suggests that, at this time, it would not be well supported by our members. We will continue to look for ways to enhance our communication and engagement with members.
Why have you committed to Port Macquarie when your base is the rural Hastings hinterland?
Why not make a success in the area of your inception rather than pandering to Port Macquarie? The name of the Co-op was changed to Hastings Co-operative Limited with the intent of extending our footprint across the Hastings region, in 1966. Our first investments in Port Macquarie were in the 1990ss. While we are fully committed to Wauchope and the Wauchope rural community we will continue to consider investments and activity in all parts of the Hastings region and beyond, so long as such investments are in the best interests of members.
Would it be better to sell the Department Store site?
Selling the Department Store site was considered by the Board, but rejected. The Board believes this site is of critical importance to the future development of Wauchope and is committed to developing the site in the future.
Can you talk to the messages of the 2022/23 Annual Report, including outcomes of proposed strategic reviews, necessary business reviews and asset upgrades? What has been done?
The Board and senior management have reviewed all business and strategic assets over the past 12 months. Late in 2023, we released the Strategic Plan for 2024-27, which directs our focus to member benefits through developing partnerships and relationships. In the plan we also flagged the importance of ensuring all of our businesses are financially sustainable. Ultimately, the closure of the farm supplies stores and Department Store reflects that review.
Can you comment on the impact on the intrinsic value of the Department Store. Has this been considered?
The Board recognises the significant intrinsic value of The Department Store and seriously considered the potential impact on Wauchope resulting from its closure. The reality is that this intrisic value was the fundamental reason that the Department Store remained open for many years when it was not performing financially.
In the 2022/23 Annual Report the CEO expressed confidence that significant improvement could be made. Has this confidence been lost?
The CEO continues to have absolute confidence that the Co-op's performance can be considerably improved. The recent decision to close some of our businesses, while difficult, were necessary as part of the pathway to those improvements.
