Hastings Co-op considers options to address financial challenges

Options on the table for investigation are the sale of Cedar Service Station and sale and leaseback of Wauchope IGA + Liquor.

It comes as Sovereign Place IGA + Liquor underperforms amid tough economic conditions.

A member information evening at the Wauchope Country Club on October 18 outlined the co-op's financial challenges and its plan to address those challenges.

Hastings Co-op chief executive officer Nick de Groot said it is anticipated about $15 million will be needed over the next five years to fund ongoing operating costs and capital requirements.

Mr de Groot said the COVID pandemic, followed by high inflation and interest rates, meant revenue levels aren't as anticipated at Sovereign Place IGA + Liquor.

The business at Sovereign Hills opened in 2019.

He said the co-op is making a loss on the Sovereign Place IGA and it anticipates making a loss probably through to the end of the lease in 2029.

"Fundamentally, we are in a position where we have to fund those losses, because we can't renege on the lease, and we also have a backlog of capital expenditure which we need to meet," he said.

The co-op is considering the sale of Wauchope IGA + Liquor to raise capital, with a leaseback arrangement.

"It is a particularly attractive investment, because in these volatile financial times, it is a stable asset with a supermarket," Mr de Groot said.

There would be no change from a customer and staff perspective as a result of a sale and leaseback, he said.

The potential sale of Wauchope's Cedar Service Station is also being examined.

Mr de Groot said the co-op has signed a non-disclosure agreement with a party interested in buying the service station. A due diligence process is in place.

If that doesn't lead to a sale, the co-op would look at potentially going to market, he said.

The community-owned co-operative will continue communicating with members as it investigates the options before presenting a further proposal to the board.

In the meantime, the co-op is working to minimise losses at Sovereign Place IGA + Liquor including the elimination of waste, sales growth and attracting more foot traffic.

Mr de Groot urged customers to stay loyal to the co-op.

"During this time of challenges, the most important thing for us is the continued patronage of our members," he said.

"We are not in any immediate financial difficulty.

"We will trade our way out of this and build a bigger, better and more responsive co-op in the future."

Hastings Co-op is a multi-faceted retailer with 17 businesses and 300 employees across the Hastings and Camden Haven.

IN OTHER NEWS: