The Coop announced yesterday that its annual rebate to members will be 1.1 percent of their total purchases--the lowest rebate since records have been kept.
The payback represents a precipitous fall from the 5 percent rebate of 1991, and is significantly lower than the 4.5 percent figure some company officials had predicted for this year. The 1990 rebate was 5.5 percent, the 1989 rebate was 7.8 percent and the 1988 rebate was 10 percent.
For the past 30 years, the patronage rebate has generally hovered around 10 percent.
While the Coop's approximately 122,000 active members received $1.7 million in rebate checks last year, this year they will be paid only $348,000.
Emphasizing the stagnant economy, Coop president Jeremiah P. Murphy '73, who assumed his post last spring, said students were fortunate to receive any payback at all.
He said a loss in sales (down $3.3 million to $56.9 million) and the resulting drop in company profits were the primary causes of the rebate cutback. Funds for the rebate come from pretax profits, which were down more than 80 percent, from $2.6 million to $460,000.
"We're proud of the fact that we were able to offer something in this economy," Murphy said in an interview yesterday. "We're not proud of the fact that the rebate is lower than before."
The Coop board of directors finalized the rebate in a meeting Thursday. Several directors and stockholders did not return phone calls yesterday.
Murphy said a large part of the loss in sales was in the Coop's music department, which has faced stiff competition from Square newcomers HMV and Tower Records. Murphy said the Coop has begun a new advertising campaign to win more student business. and he added that he hoped to beat his music competition with lower prices.
"If I can get the volume back, we can get back the profitability and the rebate," Murphy said.
In addition to the loss of sales, rising expenses were a contributing factor to the low rebate, Murphy said. He said rent and health care costs rose more than $200,000 despite his efforts to keep expenses fixed.
Murphy, who came to the Coop from Nieman Marcus in Dallas last spring, said he has not done anything to change the store's accounting practices. He said last year's sales drop had particularly drastic effects on store finances because the Coop had sustained previous damage from the recessionary economy.
"This last batch of volume loss really came down hard on the bottom line," Murphy said.
The rebate plunge comes as Murphy tries to make the store more ac- This year, Murphy added an area devoted toselling Champion athletic wear and remodeled thestore's stationery department. The renovations,Murphy said, are not responsible for the lowerrebate. Coop sales reached a record high of $64.4million in 1989, but have fallen every year since. Members can pick up their rebate checks at theCoop after October 14
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