Indigo Revenue Up in Third Quarter

-Sales Up In Store, Online with Double Digit Increases in Gift, Lifestyle and Toys-

TORONTO, Feb. 8, 2012 /CNW/ - Indigo Books & Music Inc. (TSX: IDG), Canada's largest book, gift and specialty toy retailer reported a 0.5% growth in revenue for its third quarter ending December 31, 2011.  Revenue for the quarter was $352.9 million, up $1.7 million from last year driven by growth in the gift, lifestyle, toy, and eReader businesses.

On a comparable store basis, Indigo and Chapters superstores posted a 1.8% increase in revenue, and Coles and IndigoSpirit small format stores were up by 2.5%.  Sales from Indigo's online channel, chapters.indigo.ca were up 9.3% compared to last year.

Commenting on the results, CEO Heather Reisman said, "We were very pleased with our holiday results.  We recorded the highest sales day in the history of our Company during December and experienced double digit growth in our gift, lifestyle, and toy businesses".

Net profit from continuing operations for the quarter was $23.7 million compared to a net profit from continuing operations of $27.0 million last year.  Ms. Reisman noted, "The reduced profit was due to lower gross margins as a result of increased promotional discounts to drive print sales and increased sales of low margin eReaders.  This margin impact has not yet been offset by expected growth in the gift, lifestyle and toy businesses. The Company also recorded a $4.0 million non-cash asset impairment charge during the quarter.  Excluding this charge, net profit increased $0.7 million."

During the quarter, the Company entered into an agreement with Rakuten, Inc. to acquire all of the outstanding shares of Kobo Inc. on a fully diluted basis for an aggregate price of US$315 million.  The sale was completed shortly after quarter end and Indigo received US$146.1 million from the proceeds of the sale.  The Company noted that it intends to keep the cash proceeds to support its growth and transformation strategy.

The Company also announced that Ted Marlow decided to return to the U.S. and has stepped down from his role as President. "We thank Ted for his leadership over the past year," said Ms. Reisman.

The Board of Directors today approved a quarterly dividend of 11 cents per common share to be paid on March 12, 2012, to all shareholders of record as of February 24, 2012.

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 consolidated financial statements in accordance with International Financial Reporting Standards.  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) and the majority shareholder of the global eReading service Kobo Inc. 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, The World's Biggest Bookstore, and Coles. The online channel, indigo.ca, features books, eBooks, toys, gifts and, and hosts the award winning Indigo Online Community.  In 2004, Indigo founded the Indigo Love of Reading Foundation, a registered charity that provides new books and education materials to high-needs Canadian elementary schools, to address the literacy crisis in Canada. To date the Foundation has contributed $10.5 million to schools in need. Visit loveofreading.org for more information.

To learn more about Indigo, please visit the About Our Company section of www.indigo.ca.

Consolidated Balance Sheets
(Unaudited)
         
    As at As at As at
    December 31, January 1, April 2,
(thousands of Canadian dollars)   2011 2011 2011
ASSETS        
Current        
Cash and cash equivalents   148,610 144,643 83,661
Accounts receivable   21,690 26,007 12,684
Inventories   234,705 255,750 232,694
Income taxes recoverable   - 899 -
Prepaid expenses   3,915 13,729 7,941
Derivatives   1,747 - -
Assets held for sale   117,551 - -
Total current assets   528,218 441,028 336,980
Property, plant and equipment   70,409 85,722 78,777
Intangible assets   22,333 28,359 30,614
Deferred tax assets   60,290 34,847 38,004
Goodwill   1,216 26,632 26,632
Total assets   682,466 616,588 511,007
LIABILITIES AND EQUITY        
Current        
Accounts payable and accrued liabilities   241,553 256,432 180,899
Unredeemed gift card liability   60,959 57,094 40,991
Provisions   -   33 -
Deferred revenue   12,110 12,639 11,528
Income taxes payable   310 - 657
Notes payable   5,224 - -
Current portion of long-term debt   1,163 1,302 1,290
Liabilities associated with assets held for sale   114,400 - -
Total current liabilities   435,719 327,500 235,365
Long-term accrued liabilities   4,820 6,822 6,284
Long-term debt   1,327 2,081 1,995
Total liabilities   441,866 336,403 243,644
Equity        
Share capital   203,254 201,294 202,220
Contributed surplus   6,860 5,986 6,066
Retained earnings   16,468 70,825 48,629
Total equity attributable to shareholders of the Company   226,582 278,105 256,915
Non-controlling interest   14,018 2,080 10,448
Total equity   240,600 280,185 267,363
Total liabilities and equity   682,466 616,588 511,007

Consolidated Statements of Earnings (Loss) and Comprehensive Earnings (Loss)
(Unaudited)
         
  13-week 13-week 39-week 39-week
  period ended period ended period ended period ended
  December 31, January 1, December 31, January 1,
(thousands of Canadian dollars, except per share data) 2011 2011 2011 2011
         
Revenues 352,858 351,225 738,111 756,289
Cost of sales 208,456 199,335 431,035 426,615
Gross profit 144,402 151,890 307,076 329,674
Cost of operations 82,277 84,041 213,986 213,948
Selling and administrative expenses 21,376 20,838 58,708 56,846
Foreign currency translation (1,780) 75 (1,167) 339
Operating earnings before the following 42,529 46,936 35,549 58,541
Depreciation of property, plant and equipment 4,810 4,801 13,826 13,424
Amortization of intangible assets 2,082 1,955 6,266 5,793
Impairment of capital assets 3,956 - 3,956 -
Impairment of goodwill - - 25,416 -
Interest on long-term debt and financing charges 34 72 117 115
Interest income on cash and cash equivalents (25) (122) (40) (295)
Earnings (loss) before income taxes 31,672 40,230 (13,992) 39,504
Income tax expense 7,961 13,280 3,109 13,367
Earnings (loss) and comprehensive earnings (loss) from continuing operations 23,711 26,950 (17,101) 26,137
Loss and comprehensive loss from discontinued operations, net of taxes (17,906) (10,107) (41,679) (21,151)
Net earnings (loss) and comprehensive earnings (loss) for the period 5,805 16,843 (58,780) 4,986
         
Net earnings (loss) and comprehensive earnings (loss) attributable to:        
Shareholders of the Company 14,362 20,827 (38,863) 13,699
Non-controlling interest (8,557) (3,984) (19,917) (8,713)
Total net earnings (loss) and comprehensive earnings (loss) for the period 5,805 16,843 (58,780) 4,986
         
Net earnings (loss) per common share        
Basic $0.57 $0.84 $(1.54) $0.55
Diluted $0.56 $0.82 $(1.54) $0.54

Consolidated Statements of Cash Flows
(Unaudited)
  13-week 13-week 39-week 39-week
  period ended period ended period ended period ended
  December 31, January 1, December 31, January 1,
(thousands of Canadian dollars) 2011   2,011 2011   2,011
         
CASH FLOWS FROM OPERATING ACTIVITIES        
Net earnings (loss) from continuing operations for the period 23,711 26,950   (17,101) 26,137
Add (deduct) items not affecting cash        
 Depreciation of property, plant and equipment   4,810   4,801 13,826 13,424
 Amortization of intangible assets   2,082   1,955   6,266   5,793
 Impairment of capital assets   3,956   -   3,956   -
 Impairment of goodwill   -   - 25,416   -
 Loss on disposal of capital assets 50 4 65 73
 Stock-based compensation   196   243   866   532
 Directors' compensation   117   100   384   416
 Deferred tax assets   7,961 13,280   3,109 13,367
 Interest on long-term debt and financing charges 34 72   117   115
 Interest income on cash and cash equivalents   (25) (122)   (40) (295)
 Other   2,453   363 43   494
Net change in non-cash working capital balances related to continuing operations 97,121 56,514 85,620 32,325
Operating cash flows of discontinued operations   (51,874) (9,102)   (68,687)   (11,587)
Cash flows from operating activities 90,592 95,058 53,840 80,794
         
CASH FLOWS FROM INVESTING ACTIVITIES        
Acquisition of non-capital tax losses   -   -   (10,559)   -
Purchase of property, plant and equipment (4,682) (7,382)   (10,530)   (21,878)
Addition of intangible assets (2,152) (3,182) (6,040) (8,893)
Investing cash flows of discontinued operations (3,289) (1,267) (7,936) (3,789)
Cash flows used in investing activities   (10,123)   (11,831)   (35,065)   (34,560)
         
CASH FLOWS FROM FINANCING ACTIVITIES        
Notes payable   -   -   5,280   -
Repayment of long-term debt (335) (356) (1,047) (1,983)
Interest received 15 54   109   177
Proceeds from share issuances   -   1,093   578   2,274
Repurchase of common shares   -   -   - (387)
Purchase of shares in subsidiary   - (5,714) (3,009) (9,286)
Dividends paid (2,776) (2,742) (8,315) (8,193)
Financing cash flows of discontinued operations 50,604   7,628 75,082 12,401
Cash flows from (used in) financing activities 47,508   (37) 68,678 (4,997)
         
Effect of foreign currency exchange rate changes on cash and cash equivalents (2,422) (369)   (68) (492)
         
Net increase in cash and cash equivalents during the period   125,555 82,821 87,385 40,745
Cash and cash equivalents, beginning of period 45,491 61,822 83,661   103,898
Cash and cash equivalents, end of period   171,046   144,643   171,046   144,643
         
Cash and cash equivalents attributable to:        
Continuing operations   148,610   136,648   148,610   136,648
Discontinued operations 22,436   7,995 22,436   7,995
    171,046   144,643   171,046   144,643

 

 

SOURCE Indigo Books

For further information:

Janet Eger

Vice President, Public Relations

416 342 8561

jeger@indigo.ca


FORFAITS PERSONNALISÉS

Jetez un coup d’œil sur nos forfaits personnalisés ou créez le vôtre selon vos besoins de communication particuliers.

Commencez dès aujourd'hui .

ADHÉSION À CNW

Remplissez un formulaire d'adhésion à CNW ou communiquez avec nous au 1-877-269-7890.

RENSEIGNEZ-VOUS SUR LES SERVICES DE CNW

Demandez plus d'informations sur les produits et services de CNW ou communiquez avec nous au 1‑877-269-7890.