Continued poor financial health will prevent the Coop from offering a rebate to its members for the third consecutive year, store officials announced this week.

Although the store managed to reduce its operating losses from last year, it still suffered an 11.2 percent drop in overall sales, according to Coop President Jeremiah P. Murphy Jr. '73.

This is largely due to the discontinuance of certain lines of business and the downsizing of others, Murphy said.

Citing the Coop's varied history, from originally selling firewood to storing steamer trunks and later serving as a laundromat and pharmacy, Murphy said, "We will always support what is going on at the University and adapt to what the students want."

"We've made the right changes and we're headed in the right direction," Murphy said.

Having watched sales decline since the early 1980s, when the Coop was able to offer a nine-percent rebate to its members, Murphy said the store realized there were certain markets in which it could not compete.

Some students agreed yesterday that the Coop should not operate as a general department store.

"There are just too many departments that are not profitable because too many other stores in Harvard Square can compete in these markets better," Heath W. Hohwald '97 said.

Last fall, the store decided to restructure its operations and embark on a renovation program.

And indeed, operating costs have declined since Barnes & Noble took over as the Coop's manager of operations last fall, with the large bookstore chain assuming the Coop's costs of advertising, data processing and some employee benefits and salaries.

But sales have also dropped, largely because of last year's gradual elimination of high-ticket items such as computer hardware, televisions, major stereo units and cameras.

In addition, the store has taken off the floor tailored clothing, shoes and fashionable items, according to Murphy.

To compensate for the loss of sales in these areas, the store will probably expand its supply of prints, posters and books.

"We would like the Coop to be the finest academic bookstore in the country," Murphy said.

"We are changing the focus of the store from a department store that happens to sell books and insignia to a bookstore that happens to sell department store goods."

Bridie J. Clark '99 said this is the type of store that would best serve her needs.

"I want it to be convenient most of all," she said. "I don't want it to be a department store."

The store plans to begin extensive physical renovations after the second-semester rush in January.

The modifications will most likely include the installation of escalators in the front building and the expansion of floor space for books, school supplies and Harvard insignia goods.

"The plans for the Harvard Coop suggest this will be the most beautiful and grand store in the Square, returning the Coop to the prominence it used to have," said Daniel C. Allen '97, a member of the Coop Board of Directors and The Crimson's business manager.

"It won't look like a generic Barnes & Noble," Allen said.

The MIT Coop at Kendall renovation project was completed last month. Like the Harvard Square Coop's planned refurbishing, the MIT Coop has undergone extensive internal renovations and has shifted its sales focus to providing mainly academic necessities.