Indigo Reports Q2 Total Revenues up in all channels

Comparable Superstore Sales grow by 9.6%

TORONTO, Nov. 4, 2014 /CNW/ - Indigo Books & Music Inc. (TSX: IDG), Canada's largest book, gift and specialty toy retailer reported revenue for the quarter ended September 27, 2014 of $189.0 million, up $9.6 million from last year, despite operating four fewer superstores and two fewer small format stores. 

On a comparable store basis, Indigo and Chapters superstores posted 9.6% growth, while Coles and Indigospirit small format stores grew 2.4%.  Sales from Indigo's online channel, indigo.ca, grew by 13.4%.  When including closed stores, total revenue growth was 5.4%.

The increase in revenue was driven by continued double digit growth in Lifestyle, Paper, Toys and Electronics as well as growth in the core trade books business.  Revenues from the two American Girl® specialty boutiques continued to exceed expectations, contributing to the strong revenue performance.  Subsequent to the quarter-end, Indigo successfully launched an additional American Girl® boutique within the Chapters Rideau store in Ottawa.

Commenting on the results, CEO Heather Reisman said "These results demonstrate that our customers are responding to the investments we have made to transform Indigo.  While we still have a long way to go – we feel energised and are looking forward to a joyful Holiday season".

The loss before income taxes was $8.5 million for the 13-week period ended September 27, 2014, compared to a loss of $13.6 million for the period ended September 28, 2013.  The improvement of $5.1 million was primarily driven by higher revenues and margins. There was no income tax recovery in the period compared to a $3.5 million recovery in the prior year. As a result the Company recognized a net loss of $8.5 million ($0.33 net loss per common share) for this quarter, compared to a net loss of $10.1 million ($0.39 net loss per common share) for the same period last year.    

During the quarter, Indigo hosted its annual "Adopt a School" fundraising program in partnership with the Indigo Love of Reading Foundation, from September 14^th to October 4^th, 2014, raising over 61,000 books for 214 elementary school libraries across Canada. Indigo, Chapters and Coles stores across Canada "adopted" public elementary schools in their communities, from British Columbia to Newfoundland to Yukon.

Analyst/Investor Call

Indigo will host a conference call for analysts and investors to review these results at 10:00 a.m. (Eastern Time) tomorrow, November 5th, 2014.  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 77029659. 

A playback of the call will also be available by telephone until 11:59 p.m. (ET) on Wednesday, November 12, 2014. The call playback can be accessed after 6:45 p.m. (ET) on November 5, 2014, 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 029659 #.  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 comparative store sales growth, 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. Comparative store sales growth 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. Comparable 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 Indigo Love of Reading Foundation grants $1.5 million to 20 high-needs elementary schools so they can transform their libraries with the purchase of new books and education resources. To date, the Indigo Love of Reading Foundation's Literacy Fund has committed $15 million to 170 Canadian schools. The Foundation's annual grassroots Adopt a School program unites employees, customers, schools and their communities to raise funds to put even more books into the hands of children. Over the past five years we have raised over $2.7 million so 463,000 children have a book to call their own.

To learn more about Indigo, please visit the Our Company section at indigo.ca.

Consolidated Balance Sheets
(Unaudited)
		As at	As at	As at
		September 27,	September 28,	March 29,
(thousands of Canadian dollars)		2014	2013	2014
ASSETS
Current
Cash and cash equivalents		149,429	166,260	157,578
Accounts receivable		12,778	12,620	5,582
Inventories		235,053	241,939	218,979
Prepaid expenses		6,406	6,641	5,184
Total current assets		403,666	427,460	387,323
Property, plant and equipment		55,845	58,072	58,476
Intangible assets		19,550	22,255	21,587
Equity investment		-	-	598
Deferred tax assets		44,604	58,061	44,604
Total assets		523,665	565,848	512,588
LIABILITIES AND EQUITY
Current
Accounts payable and accrued liabilities		175,396	184,595	136,428
Unredeemed gift card liability		40,773	42,016	46,827
Provisions		913	1,726	928
Deferred revenue		13,178	13,462	12,860
Income taxes payable		-	10	-
Current portion of long-term debt		316	752	584
Total current liabilities		230,576	242,561	197,627
Long-term accrued liabilities		2,398	3,147	2,896
Long-term provisions		97	78	164
Long-term debt		133	450	227
Total liabilities		233,204	246,236	200,914
Equity
Share capital		204,601	203,812	203,812
Contributed surplus		9,366	8,094	8,820
Retained earnings		76,494	107,706	99,042
Total equity		290,461	319,612	311,674
Total liabilities and equity		523,665	565,848	512,588

Consolidated Statements of Loss and Comprehensive Loss
(Unaudited)
	13-week	13-week	26-week	26-week
	period ended	period ended	period ended	period ended
	September 27,	September 28,	September 27,	September 28,
(thousands of Canadian dollars, except per share data)	2014	2013	2014	2013
Revenues	189,030	179,417	369,832	350,942
Cost of sales	(105,707)	(96,935)	(206,556)	(196,224)
Gross profit	83,323	82,482	163,276	154,718
Operating, selling, and administrative expenses	(92,175)	(96,375)	(185,985)	(189,684)
Operating loss	(8,852)	(13,893)	(22,709)	(34,966)
Interest on long-term debt and financing charges	(20)	(30)	(29)	(57)
Interest income on cash and cash equivalents	411	600	788	1,184
Share of loss from equity investment	(79)	(238)	(598)	(609)
Loss before income taxes	(8,540)	(13,561)	(22,548)	(34,448)
Income tax recovery	-	3,491	-	9,330
Net loss and comprehensive loss for the period	(8,540)	(10,070)	(22,548)	(25,118)
Net loss per common share
Basic	$  (0.33)	$  (0.39)	$  (0.88)	$  (0.98)
Diluted	$  (0.33)	$  (0.39)	$  (0.88)	$  (0.98)

 

Consolidated Statements of Cash Flows
(Unaudited)
		13-week	13-week	26-week	26-week
		period ended	period ended	period ended	period ended
		September 27,	September 28,	September 27,	September 28,
(thousands of Canadian dollars)		2014	2013	2014	2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period		(8,540)	(10,070)	(22,548)	(25,118)
Add (deduct) items not affecting cash
	Depreciation of property, plant, and equipment	3,635	4,074	7,333	8,113
	Amortization of intangible assets	2,981	2,761	5,849	5,474
	Loss on disposal of capital assets	2	3	9	13
	Stock-based compensation	163	194	498	697
	Directors' compensation	62	111	166	244
	Deferred tax assets	-	(3,491)	-	(9,330)
	Other	(1,686)	587	(541)	12
Net change in non-cash working capital balances		4,573	(6,669)	8,160	(5,693)
Interest on long-term debt and financing charges		20	30	29	57
Interest income on cash and cash equivalents		(411)	(600)	(788)	(1,184)
Income taxes paid		-	(1)	-	(1)
Share of loss from equity investment		79	238	598	609
Cash flows from (used in) operating activities		878	(12,833)	(1,235)	(26,107)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment		(2,551)	(5,868)	(4,711)	(7,158)
Addition of intangible assets		(1,808)	(3,733)	(3,812)	(5,565)
Distributions from equity investment		-	359	-	359
Interest received		411	601	788	1,241
Cash flows used in investing activities		(3,948)	(8,641)	(7,735)	(11,123)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of long-term debt		(180)	(234)	(366)	(431)
Interest paid		(21)	(34)	(31)	(70)
Proceeds from share issuances		340	7	671	7
Dividends paid		-	(2,782)	-	(5,565)
Repurchase of options		-	-	-	(975)
Cash flows from (used in) financing activities		139	(3,043)	274	(7,034)
Effect of foreign currency exchange rate changes on cash and cash equivalents		1,693	(569)	547	(38)
Net decrease in cash and cash equivalents during the period		(1,238)	(25,086)	(8,149)	(44,302)
Cash and cash equivalents, beginning of period		150,667	191,346	157,578	210,562
Cash and cash equivalents, end of period		149,429	166,260	149,429	166,260

SOURCE: Indigo Books & Music Inc.

Janet Eger, Vice President, Public Affairs, 416 342 8561, [email protected]

Related Links

http://www.indigo.ca