MEC to sublease Vancouver headquarters in restructuring plan

Jan 20 2020, 4:32 pm

A number of sweeping changes are happening at Mountain Equipment Co-op (MEC) as part of the struggling retailer’s charted new course to return to profitability.

In a released statement by MEC CEO Phil Arrata, the co-operative is looking to sublease its headquarters office building at 1077 Great Northern Way and move into a smaller space that is more appropriate for its current needs.

MEC constructed its four-storey, 112,000-sq-ft office in 2014 at a cost of $35 million. The building has won a number of awards for its green design, with its heavy timber structure, interior optimized for a healthy work environment, energy efficiency, and LEED Platinum certification. The building is designed by Proscenium Architecture and Interiors.

BC Assessment values the property at $78.715 million, with $50.356 million of the assessed value from the land and $28.359 million from the structure.

MEC headquarters 1077 Great Northern Way Vancouver

MEC Head Office at 1077 Great Northern Way, Vancouver. (Proscenium Architecture)

MEC headquarters 1077 Great Northern Way Vancouver

MEC Head Office at 1077 Great Northern Way, Vancouver. (Proscenium Architecture)

The not-for-profit retailer has also converted over 950 casual non-permanent roles into a combined 950 full-time and part-time roles, which includes benefits such as extended health and dental coverage, tuition assistance benefit, and RRSP matching plan, and the Maternity and Parental Leave top-ups.

“This shift is in response to the feedback MEC received from our staff regarding MEC’s casual-non-permanent staff designation,” wrote Arrata.

“The change improves job stability, member experience, employee engagement and product knowledge. Staff that prefer non-permanent status are eligible to apply for seasonal fixed term positions during peak periods.”

MEC headquarters 1077 Great Northern Way Vancouver

MEC Head Office at 1077 Great Northern Way, Vancouver. (Proscenium Architecture)

MEC headquarters 1077 Great Northern Way Vancouver

MEC Head Office at 1077 Great Northern Way, Vancouver. (Proscenium Architecture)

Some layoffs will occur, but the exact number is unspecified. MEC plans to work with the union representing workers at its Vancouver and Victoria stores to implement the changes at the locations.

Additionally, he says the co-operative is finding efficiencies elsewhere in order to invest into the store locations and frontline staff. Annual costs were already reduced in 2019 when efficiencies were found in technology spend, supply chain, and operations.

“In order to remain viable in the rapidly evolving retail market and ensure our long-term sustainability, MEC needs to move faster than ever,” Arrata continued.

“First and foremost, the executive team has set a goal to bring MEC back to a financially healthy state… The changes we are implementing are measured and progressive and will have both an immediate and lasting positive impact on our operations. While MEC is not profit-driven in the same way as the retailers we compete against, we still must be profitable to ensure we deliver great service to our members, elevated employee experiences and continue to contribute to the communities where we live, work and play.”

MEC headquarters 1077 Great Northern Way Vancouver

MEC Head Office at 1077 Great Northern Way, Vancouver. (Proscenium Architecture)

MEC headquarters 1077 Great Northern Way Vancouver

MEC Head Office at 1077 Great Northern Way, Vancouver. (Proscenium Architecture)

MEC experienced a loss of $11.5 million in the 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 2018-19 fiscal year — up from $454.8 million over the previous fiscal year, when it saw a profit of $11.7 million.

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

As of last year, the co-operative 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 Arrata.

MEC headquarters 1077 Great Northern Way Vancouver

MEC Head Office at 1077 Great Northern Way, Vancouver. (Proscenium Architecture)

MEC headquarters 1077 Great Northern Way Vancouver

MEC Head Office at 1077 Great Northern Way, Vancouver. (Proscenium Architecture)

The retailer’s new flagship Vancouver store location at 101 East 2nd Avenue in the Olympic Village district is expected to open early this year.

This new mass timber building, spanning 60,000 sq. ft. over three levels, is on property owned by Beedie Development. The first two levels totalling 34,789 sq. ft. will be dedicated to retail, representing a 21% increase in retail floor area over the existing West Broadway store. Extensive services such as a full-service bike and ski tech shop will be incorporated into the new store.

Office and amenity space, including a community meeting room and outdoor patio, are slated for the third floor.

To support all the shoppers, 148 vehicle parking stalls and 50 bike parking spaces are slotted into three underground levels.

When open, it will replace the ageing, smaller location at 130 West Broadway, where MEC’s lease is set to expire, allowing for a mixed-use tower redevelopment by the landlord.

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