MEC records $11.5-million loss from higher costs and competition

Nov 29 2019, 5:23 pm

Mountain Equipment Co-op (MEC) indicates it experienced a loss of $11.5 million in its latest fiscal year ending in February 2019.

According to publicized financial statements, the outdoor clothing and equipment retailer saw sales of $462.4 million during the last fiscal year — up from $454.8 million over the previous fiscal year, when it saw a profit of $11.7 million.

MEC blames the overall negative performance on higher costs and increased competition in the retail market.

“The investments into improving our systems and store network, higher overhead costs, and less than expected performance have resulted in larger operating deficits for the Co-op than planned,” wrote Ellen Pekeles, the chair of MEC’s board of directors, in the 2018-19 annual report.

“Over the last year, the Board has been working with MEC’s executive team to implement measures to ensure we return to profitability. The Board is confident that the measures we are taking now will produce positive results so the Co-op can remain financially sound for generations to come.”

Pekeles says the consumers’ cooperative is taking the necessary steps needed to operate efficiently, creating infrastructure and tools that will allow it to “stay at the forefront of competition and provide value to our members.” The investments made in the last fiscal year, contributing to the negative fiscal performance, are needed for MEC’s long-term success in “burgeoning e-commerce operation and sustainable brand direction.”

“We need to invest and grow to ensure we have the tools and profile to compete,” she continued. “Our Co-op needs to be increasingly agile in our rapidly changing world and these developments are giving us that ability.”

MEC Vancouver Olympic Village flagship store

Construction progress on the new MEC Vancouver flagship store on August 15, 2019. (Kenneth Chan / Daily Hive)

MEC opened a new store in Calgary South’s Seton Urban District in Fall 2018, and construction is now underway on a new Calgary West store, which is set to open in 2020. A new store is also planned for Saskatoon.

As well, the company has made significant investments into two new flagship stores; a 54,000-sq-ft, two-level store opened in downtown Toronto in April 2019, and a new 60,000-sq-ft, three-level store in Vancouver’s Olympic Village district will open early in 2020.

Currently, the cooperative has 22 stores across Canada, 5.42 million members, and 2,583 employees.

In June 2019, David Labistour stepped down from CEO, a position he had held since 2008, and was replaced by Philippe Arrata.