Indigo Reports Q2 Results: Continued strong revenue growth of 5.4%; Three years of quarterly revenue growth
TORONTO, Nov. 8, 2016 /CNW/ - Indigo Books & Music Inc. (TSX: IDG), Canada's largest book, gift and specialty toy retailer reported 5.4% growth in revenue for its second quarter ended October 1, 2016.
Revenue for the quarter was $216.9 million, up $11.2 million from last year, despite operating three fewer stores. Total comparable sales, which includes both online sales and comparable store sales, increased by 5.1% in the second quarter.
Revenue growth was driven by continued double digit growth in the general merchandise business, and growth in the core book business enhanced by the release of Harry Potter and the Cursed Child.
Commenting on the results, CEO Heather Reisman said, "We are pleased to continue our strong track record of revenue growth, with three years of quarterly revenue increases. The momentum and energy in the business is palpable and we feel confident as we approach our critical Holiday season."
The net loss for the 13-week period ended October 1, 2016 was $1.2 million (net loss per common share of $0.04), compared to a loss of $1.8 million (net loss per common share of $0.07) for the period ended September 26, 2015. The improvement was driven by increased revenues.
During the quarter Indigo announced that its entire assortment of American Girl® dolls and accessories were available to purchase online through indigo.ca. The Company operates seven specialty American Girl® boutiques in stores across the country and the addition of the assortment online makes the iconic brand even more accessible to customers.
Analyst/Investor Call
Indigo will host a conference call for analysts and investors to review these results at 5:00 p.m. (ET) today, November 8th, 2016. The call can be accessed by dialling 416-764-8688 from within the Toronto area, or 1-888-390-0546 outside of Toronto. The eight digit participant code is 39449591.
A playback of the call will also be available by telephone until 11:59 p.m. (ET) on Tuesday November 15th, 2016. The call playback can be accessed after 7:00 p.m. (ET) on November 8th, 2016, by dialing 416-764-8677 from within the Toronto area, or 1-888-390-0541 outside of Toronto. The six-digit replay passcode number is 449591#. The conference call transcript will be archived in the Investor Relations section of the Indigo website, www.indigo.ca.
Forward-Looking Statements
Statements contained in this news release that are not historical facts are forward-looking statements which involve risk and uncertainties that could cause results to differ materially from those expressed in the forward-looking statements. Among the key factors that could cause such differences are: general economic, market or business conditions in Canada; competitive actions by other companies; changes in laws or regulations; and other factors, many of which are beyond the control of the Company.
Non-IFRS Financial Measures
The Company prepares its unaudited interim condensed consolidated financial statements in accordance with International Financial Reporting Standards and International Accounting Standards 34, "Interim Financial Reporting." In order to provide additional insight into the business, the Company has also provided non-IFRS data, including total comparable sales, in the press release above. This measure does not have a standardized meaning prescribed by IFRS and is therefore specific to Indigo and may not be comparable to similar measures presented by other companies. Total comparable sales is a key indicator used by the Company to measure performance against internal targets and prior period results. This measure is commonly used by financial analysts and investors to compare Indigo to other retailers. Total comparable sales is based on comparable retail store sales and includes online sales for the same period. Comparable retail store sales are defined as sales generated by stores that have been open for more than 12 months on a 52-week basis.
About Indigo Books & Music Inc.
Indigo is a publicly traded Canadian company listed on the Toronto Stock Exchange (IDG). As the largest book, gift and specialty toy retailer in Canada, Indigo operates in all provinces under different banners including Indigo Books & Music; Indigo Books, Gifts, Kids; Indigospirit; Chapters; and Coles. The online channel, indigo.ca, offers a one-stop online shop with a robust selection of books, toys, home décor, stationery, and gifts.
Indigo founded the Indigo Love of Reading Foundation in 2004 to address the underfunding of public elementary school libraries. Every year the Love of Reading Foundation makes grants to high-needs elementary schools so they can transform their libraries with the purchase of new books and educational resources. To date, the Love of Reading Foundation has committed over $23.5 million to 2,600 elementary schools, benefitting more than 750,000 students.
To learn more about Indigo, please visit the Our Company section at indigo.ca.
Consolidated Balance Sheets |
||||
As at |
As at |
As at |
||
October 1, |
September 26, |
April 2, |
||
(thousands of Canadian dollars) |
2016 |
2015 |
2016 |
|
ASSETS |
||||
Current |
||||
Cash and cash equivalents |
183,895 |
176,199 |
216,488 |
|
Accounts receivable |
18,298 |
18,616 |
7,663 |
|
Inventories |
264,267 |
256,952 |
217,788 |
|
Income taxes recoverable |
25 |
25 |
25 |
|
Prepaid expenses |
5,044 |
4,843 |
11,290 |
|
Derivative financial instruments |
392 |
- |
- |
|
Total current assets |
471,921 |
456,635 |
453,254 |
|
Property, plant and equipment |
62,237 |
52,955 |
60,973 |
|
Intangible assets |
17,280 |
15,700 |
16,506 |
|
Equity investment |
62 |
- |
1,421 |
|
Deferred tax assets |
55,022 |
44,241 |
51,836 |
|
Total assets |
606,522 |
569,531 |
583,990 |
|
LIABILITIES AND EQUITY |
||||
Current |
||||
Accounts payable and accrued liabilities |
208,424 |
208,805 |
171,112 |
|
Unredeemed gift card liability |
44,974 |
42,249 |
50,969 |
|
Provisions |
28 |
52 |
34 |
|
Deferred revenue |
13,575 |
14,172 |
13,232 |
|
Current portion of long-term debt |
21 |
112 |
53 |
|
Total current liabilities |
267,022 |
265,390 |
235,400 |
|
Long-term accrued liabilities |
2,809 |
2,618 |
4,483 |
|
Long-term provisions |
96 |
91 |
109 |
|
Long-term debt |
- |
21 |
- |
|
Total liabilities |
269,927 |
268,120 |
239,992 |
|
Equity |
||||
Share capital |
211,185 |
206,472 |
209,318 |
|
Contributed surplus |
11,214 |
10,232 |
10,591 |
|
Retained earnings |
113,909 |
84,707 |
124,089 |
|
Accumulated other comprehensive income |
287 |
- |
- |
|
Total equity |
336,595 |
301,411 |
343,998 |
|
Total liabilities and equity |
606,522 |
569,531 |
583,990 |
Consolidated Statements of Loss and Comprehensive Loss |
|||||
13-week |
13-week |
26-week |
26-week |
||
period ended |
period ended |
period ended |
period ended |
||
October 1, |
September 26, |
October 1, |
September 26, |
||
(thousands of Canadian dollars, except per share data) |
2016 |
2015 |
2016 |
2015 |
|
Revenue |
216,945 |
205,722 |
410,044 |
390,616 |
|
Cost of sales |
(119,207) |
(112,102) |
(226,433) |
(215,612) |
|
Gross profit |
97,738 |
93,620 |
183,611 |
175,004 |
|
Operating, selling, and administrative expenses |
(99,147) |
(95,582) |
(197,045) |
(185,801) |
|
Operating loss |
(1,409) |
(1,962) |
(13,434) |
(10,797) |
|
Interest expense |
(13) |
(3) |
(30) |
(5) |
|
Interest income |
421 |
336 |
918 |
727 |
|
Share of loss from equity investment |
(411) |
(219) |
(922) |
(726) |
|
Loss before income taxes |
(1,412) |
(1,848) |
(13,468) |
(10,801) |
|
Income tax recovery |
232 |
- |
3,288 |
- |
|
Net loss |
(1,180) |
(1,848) |
(10,180) |
(10,801) |
|
Other comprehensive income |
|||||
Items that are or may be reclassified subsequently to net earnings (loss): |
|||||
Net change in fair value of cash flow hedges |
503 |
- |
598 |
- |
|
(net of tax of $184 and $219; 2015 - $0 and $0) |
|||||
Reclassification of net realized gain to inventory |
(395) |
- |
(311) |
- |
|
(net of tax of $145 and $114; 2015 - $0 and $0) |
|||||
Other comprehensive income |
108 |
287 |
- |
||
Total comprehensive loss |
(1,072) |
(1,848) |
(9,893) |
(10,801) |
|
Net loss per common share |
|||||
Basic |
($0.04) |
($0.07) |
($0.39) |
($0.42) |
|
Diluted |
($0.04) |
($0.07) |
($0.39) |
($0.42) |
Consolidated Statements of Cash Flows |
|||||
13-week |
13-week |
26-week |
26-week |
||
period ended |
period ended |
period ended |
period ended |
||
October 1, |
September 26, |
October 1, |
September 26, |
||
(thousands of Canadian dollars) |
2016 |
2015 |
2016 |
2015 |
|
CASH FLOWS FROM OPERATING ACTIVITIES |
|||||
Net loss |
(1,180) |
(1,848) |
(10,180) |
(10,801) |
|
Add (deduct) items not affecting cash |
|||||
Depreciation of property, plant and equipment |
3,896 |
3,580 |
7,759 |
7,164 |
|
Amortization of intangible assets |
2,145 |
2,206 |
4,276 |
4,660 |
|
Loss on disposal of capital assets |
- |
1 |
1 |
660 |
|
Share-based compensation |
354 |
278 |
756 |
610 |
|
Directors' compensation |
89 |
85 |
197 |
196 |
|
Deferred tax assets |
(232) |
- |
(3,291) |
- |
|
Other |
(670) |
(3,090) |
(375) |
(2,651) |
|
Net change in non-cash working capital balances |
7,785 |
967 |
(20,901) |
(20,674) |
|
Interest expense |
13 |
3 |
30 |
5 |
|
Interest income |
(421) |
(336) |
(918) |
(727) |
|
Share of loss from equity investment |
411 |
219 |
922 |
726 |
|
Cash flows from (used for) operating activities |
12,190 |
2,065 |
(21,724) |
(20,832) |
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|||||
Purchase of property, plant and equipment |
(3,607) |
(3,644) |
(9,024) |
(5,897) |
|
Addition of intangible assets |
(3,081) |
(2,370) |
(5,050) |
(3,774) |
|
Proceeds from disposal of capital assets |
- |
5 |
- |
5 |
|
Distributions from equity investment |
- |
- |
437 |
- |
|
Interest received |
414 |
259 |
541 |
486 |
|
Cash flows used for investing activities |
(6,274) |
(5,750) |
(13,096) |
(9,180) |
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|||||
Repayment of long-term debt |
(12) |
(44) |
(32) |
(95) |
|
Interest paid |
(11) |
(17) |
(26) |
(34) |
|
Proceeds from share issuances |
537 |
53 |
1,537 |
257 |
|
Cash flows from (used for) financing activities |
514 |
(8) |
1,479 |
128 |
|
Effect of foreign currency exchange rate changes on cash and cash equivalents |
675 |
3,181 |
748 |
2,921 |
|
Net increase (decrease) in cash and cash equivalents during the period |
7,105 |
(512) |
(32,593) |
(26,963) |
|
Cash and cash equivalents, beginning of period |
176,790 |
176,711 |
216,488 |
203,162 |
|
Cash and cash equivalents, end of period |
183,895 |
176,199 |
183,895 |
176,199 |
SOURCE Indigo Books & Music Inc.
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Janet Eger, Vice President, Public Affairs, 416 342 8561, [email protected]
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