Owner-members of a cooperative bookstore in downtown Billings heard a bit of good news at the store’s annual meeting Wednesday night, but also some sobering statements about what might lie ahead.
Carrie La Seur, board president for This House of Books, said that after months of losing money, the store had enough money last month to pay the rent and meet payroll without borrowing money, for the first time in three months.
“Things are very tight, and we’ve cut expenses absolutely to the bone,” she said.
Despite the upward trend and confidence on the part of the board, La Seur said, the bookstore desperately needs to find new or larger investors, increased revenues or additional loans, either from members or third parties.
One option the board has discussed and felt obliged to mention at the annual meeting, she added, was to declare bankruptcy or go into a “structured shutdown,” which is somewhat less drastic than bankruptcy and involves selling assets and paying off creditors.
“That is not an attractive option,” La Seur said. “We still think it’s a viable business.”
The second annual meeting, held Wednesday night in Losekamp Auditorium on the Rocky Mountain College campus, drew only about 25 of the cooperative’s 300 share-holding members.
After hearing the latest news about the store and electing two additional board members—John Felten and Jaclyn Laferriere will join La Seur, Precious McKenzie and Nina Hernandez—members adjourned to the bookstore at 224 N. Broadway for birthday cake and tea.
The store opened last Oct. 1, after having hired Gary Robson as the CEO and bookstore manager, and buying all the assets—books, teas, shelving, equipment and other furnishings—of Robson’s business, Red Lodge Books and Tea.
In mid-March, the bookstore board announced the departure of Robson and tea bar manager Gwen Gunn. Two people already working at the store filled the gap, with Gustavo Belotta named store manager and Jamie Winter manager of the tea bar. A little more than a week later, Robson and Gunn announced they were opening a new tea shop in Red Lodge.
Few details were given at the time of the staff change, but there were strong hints that financial troubles led to the departure of Robson and Gunn. Board members fleshed out those hints Wednesday night.
In 2016, expenses totaled $179,400—$15,750 in lease payments, $3,041 for advertising, $50,304 for payroll, $32,333 for inventory (not counting the Red Lodge Books and Tea inventory), $22,972 for leasehold improvements, and $55,000 for the initial asset and inventory acquisition from Robson.
Income was slightly less than expenses, at $178,620—$67,094 in gross sales, $35,000 in member loans and $76,526 in share sales. The share sales figure was updated through Wednesday; all other figures were for 2016.
La Seur said things started off well enough, what with the opening coinciding with the 2016 High Plains BookFest and resultant strong sales, which totaled $24,000 in October. Sales slipped to $16,700 in November, then rebounded to $24,000 in December.
Then came two brutally cold, snowy months, and sales plunged to $9,700 in January and $11,700 in February. Meanwhile, the payroll was running about $13,000 a month.
Payroll “was eating up all or nearly all our revenue,” La Seur said, prompting some “really serious conversations.” One hourly worker was laid off after the January numbers came in, but that was not enough, and in March came the decision to let go of Robson and Gunn, which cut payroll expenses by 70 percent.
La Seur said the store still owes Robson and Gunn pay for the last two pay periods they worked, and the board is still negotiating with Robson over their asset-purchase agreement. Robson said last month said he’d received only about half what the store had agreed to pay him for the Red Lodge Books and Tea assets.
La Seur told members that despite the need to cut expenses, the store also needs to raise enough money to increase inventory and finish the store’s interior décor. The inventory is only about a third of what it should be for a store that size, she said.
To get there, members were urged to come up with ways to promote the store and encourage more foot traffic, and to persuade others to buy shares—either $100 common shares or $500 preferred shares.
The store is also seeking donations from members, including 12 bar stools, a large rug, two to four armchairs and a sofa. The board is also looking for more volunteers to design and install window displays, help at bookstore events, share social media posts from This House of Books and schedule book clubs or other events at the store.