CEO Report

Product. Service. Culture. These are the pillars of MEC's foundation, and as relevant today as they were 38 years ago when the Co-op was founded. In my fi rst year as MEC's CEO, I have emphasized the need to stay true to our roots and to focus on a basic formula: great gear, member service, sustainable leadership, and getting people outside.

Clearly, it's a formula that's working. Our store sales went from $239 million in 2007 to $247.7 million in 2008. Same-store sales increased by 2.7 percent, and our website, mec.ca, outpaced all the stores in terms of year-over-year growth. While softer sales were evident in Calgary, Montreal, and Edmonton, we feel extremely confi dent we have a strong fi nancial foundation to weather the storm.

Product

In 2008, we opened bike service shops in Montreal, Toronto, Vancouver, and Calgary. (Burlington and Winnipeg will open spring 2009.) For us, this is a big opportunity—and a huge responsibility—but we intend to do it right. Our primary focus is on providing trustworthy, effi cient, and high-quality bike service. Many of our mechanics are being trained at the highly regarded Barnett Bicycle Institute. We are also pleased to provide staff with the opportunity to work their way up from frontline staff to mechanic. We will begin selling MEC-brand bikes in 2010, with an initial launch this coming November. We'll offer 12 bike styles (including kids) in four categories, with, of course, a focus on quality and value. Expanding our bike program is key to getting more people outside and engaging them in healthy lifestyles. Beyond bikes, increasingly, the design, function, and quality of MEC-brand products are recognized by our industry peers as being world-class.

Service

Our MEC Burlington store opened in November 2008. Hiking, cycling, and paddling are very popular in southern Ontario, and we're confi dent the Burlington store will help increase participation of these activities. Operationally, we made the transition to our new Distribution Centre, which has improved our inventory position in the stores.

We also renovated our Calgary store, and are updating the signage in all our stores, all with the goal of enhancing member service.

Culture

Our success owes much to MEC employees. At the end of 2008, staff numbered 1,670. There were 786 new hires over the year (this relatively high turnover is typical in the retail sector), and a new recruitment program is helping us attract good front-line people. We hired a Director of Product Integrity to deepen our commitment to material and design stewardship, a Product Development Manager to optimize our product development process, and a Cycling Product Manager to design and source MEC-brand bikes. We also hired a Store Group Manager to better coordinate store operations.

Paddlefest 2008, hosted by all MEC stores, featured learning opportunities relating to canoeing and kayaking. MEC was also a primary sponsor of the Tour de Greenbelt, an event in Ontario that promotes and celebrates biking, and takes place in the largest and most diverse greenbelt on the planet. Finally, many members submitted entries for our new Sweet Spots Outdoor Video Contest, and we plan to continue the tradition in 2009.

A key component of our culture is our focus on sustainability. MEC was instrumental in securing permanent public access to the Skaha Bluffs, a premiere climbing destination. We continue to make advancements with product innovation, including our Pista and Rapidi garments. We've been working with bluesign technologies to improve our product footprint, and other major brands are following suit. We also followed through on our promise to disclose the names of factories that make clothing and gear under the MEC brand. By disclosing factory names, we reveal more about the companies and countries we do business with, which can ultimately help improve the lives of factory workers, both within our supply chain and beyond it.

We continue to integrate green practices into new buildings. Our new Burlington store has a combination of structural elements and operational systems that are expected to make it 70 percent more energy efficient than a conventional retail building. The project has been designed to meet LEED Gold certification. We also continue to work on lowering our GHG emissions by sending more products to our eastern stores by rail shipments, instead of trucks.

Conclusion

I am heartened to work with MEC staff who are committed to an organization that focuses on product, service, and culture. MEC's co-operation, teamwork, and camaraderie are truly inspiring. I look forward to another challenging and exciting year, and to reporting on our future progress.

- David Labistour -