On October 18, 2023 an information meeting was held to discuss Hastings Co-op’s current financial position and proposed steps to ensure we remain a strong, competitive and sustainable business.
In summary, we are facing challenges regarding intense competition, cashflow constraints, poor performing businesses and escalating costs. We also have significant capital requirements (for things like aging assets, equipment and technology). If we don't take action these costs could amount to as much as $15 million over the next five years.
Below are answers to some frequently asked questions and a feedback button if you would like to know more or share your thoughts.
Frequently asked questions
Why is Hastings Co-op in the current financial position?
It’s no secret that we are facing challenging times, like many businesses across Australia, particularly in regard to falling sales, substantial increases in the cost of goods and services and freight and operating expenses. This has been compounded by rising inflation and the nation-wide economic downturn.
Significant cost increases and ever-present competition means some of our businesses, particularly Sovereign Place IGA + Liquor, are struggling at the moment.
We have developed some immediate strategies to reduce costs and operate more efficiently, but these will not be sufficient, as our operating costs and cash outflows are expected to continue to rise.
Why is Hastings Co-op considering selling Cedar Service Station?
Cedar Service Station is a great business, in an excellent location, however, the site needs significant remediation and re-development.
We believe members and the wider community will be best served by allowing an experienced, large operator, in whom we have confidence, to undertake this re-development and operate the service station into the future.
Why is Hastings Co-op considering selling and leasing back Wauchope IGA + Liquor?
We have four IGA supermarkets at Wauchope, Timbertown, Sovereign Place and Port Macquarie. All of these operate in facilities which we lease, except for Wauchope IGA + Liquor.
From a business perspective, owning this land and building is of little strategic benefit, and we believe we can better utilise the capital tied up in these assets to shore up our ongoing financial position and re-invest in our businesses, systems, infrastructure and staff.
Will any jobs be lost as a result of the sale of Cedar Service Station and sale and lease back of Wauchope IGA + Liquor?
We understand change can create anxiety about job security, and this is completely understandable.
Should a decision be made to sell the Cedar Service Station we will work closely with any acquisition partner to ensure staff either have a role with the new owner or opportunities with Hastings Co-op.
The sale and lease back of Wauchope IGA + Liquor would have no impact on the day-to-day operations of the business, and there would be no job losses as a result.
In this demanding economic environment, we have an obligation to members and staff to be competitive and financially sound. In this context, we can never guarantee that there will be no changes in our staff structure or numbers.
Will any other Hastings Co-op businesses be closed?
We have an obligation to members to take steps to maintain our financial stability and may consider exiting businesses in which we are not competitive.
The Board and management is looking at each industry we operate in and assessing our competitive advantage and the benefit that those businesses bring for our members and customers, therefore all aspects of Hastings Co-op are under review.
What would Hastings Co-op do with the proceeds from the sales of Cedar Service Station and Wauchope IGA + Liquor?
The proceeds from the sale of the Cedar Service Station and the sale and lease back of Wauchope IGA + Liquor would:
- Solidify our financial position and allow us to fund foreseeable losses and cash outflows over the next few years
- Allow us to reinvest in our existing businesses, systems and processes
- Allow us to reinvest in new projects and businesses for the benefit of staff, members and the community.
What is Hastings Co-op doing to minimise losses relating to Sovereign Place IGA + Liquor?
As a result of the difficult economic conditions of the past four years since opening, the performance of Sovereign Place IGA 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.
What is the worst case scenario in regard to losses if Hastings Co-op continues to trade at Sovereign Place IGA until the current lease ends in 2029?
There remains significant economic uncertainty, and industry experts warn that things could get worse before they get better.
We have projected worst case scenarios and are confident that we can trade through the next few years, to the end of the Sovereign Place IGA + Liquor lease if we can access necessary capital.
Why doesn’t Hastings Co-op sell 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. 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.