Indigo Reports Impressive Third Quarter: Same Store Sales grow by 15.1%

Online Sales grow by 17.9%
Earnings improve by $19.8M

TORONTO, Feb. 2, 2016 /CNW/ - Indigo Books & Music Inc. (TSX: IDG), Canada's largest book, gift and specialty toy retailer reported 12.9% growth in revenue for its third quarter ended December 26, 2015, marking Indigo's ninth consecutive quarter of growth.

Revenue for the quarter was $383.2 million, up $43.8 million from last year, despite operating one less superstore and four fewer small format stores.  On a comparable store basis, Indigo and Chapters superstores posted 15.5% growth, while Coles and Indigospirit small format stores increased by 13.4%.  Sales from Indigo's online channel, indigo.ca, grew by 17.9%.

Revenue growth was driven by continued double digit growth in the general merchandise business and high single digit growth in the core book business.

Commenting on the results, CEO Heather Reisman said, "We're delighted to be reporting such a meaningful improvement in our financial results for Q3.  As with every retailer, our third quarter is critical to the business and Indigo performed strongly across all categories and in all channels.  We're incredibly proud of the Indigo team for delivering an outstanding assortment of books, gifts and toys, coupled with amazing service to our customers for the holidays."

Indigo recognized net earnings of $52.8 million which is $2.03 net earnings per common share for the quarter, compared to net earnings of $33.0 million, or $1.28 net earnings per common share for the same period last year.  The improvement of $19.8 million was primarily driven by increased revenues at a higher margin rate and a lower tax expense.    

During the quarter, Indigo launched two expanded IndigoKids locations, at Chapters Chinook Centre in Calgary and Chapters West Edmonton Mall in Edmonton, bringing the best kids' books and toys, as well as the highly popular American Girl® Specialty Boutique to both locations in time for holiday gift giving.

Also in the quarter, the Indigo Love of Reading Foundation celebrated the global movement of Giving Tuesday by distributing over $1 million in Indigo e-gift cards to over 400 high needs elementary schools.  Our Indigo, Chapters and Coles store teams across the country were delighted to deliver this incredible surprise to some of their local schools, who will use the money to bolster their libraries with books, learning tools and educational resources. These gifts would not have been possible without the generous donations and support from Indigo customers.

Analyst/Investor Call

Indigo will host a conference call for analysts and investors to review these results at 9:00 a.m. (ET) tomorrow, February 3, 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 53408737#. 

A playback of the call will also be available by telephone until 10:00 a.m. (ET) on Wednesday February 10, 2016.  The call playback can be accessed after 11:00 a.m. (ET) on February 3, 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 408737#.  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 has committed over $22.9 million to over 2,000 schools through our signature programs.

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

Consolidated Balance Sheets

(Unaudited)









As at

As at

As at



December 26,

December 27,

March 28,

(thousands of Canadian dollars)


2015

2014

2015






ASSETS





Current





Cash and cash equivalents


312,254

287,227

203,162

Accounts receivable


22,354

20,784

4,896

Inventories


220,507

223,260

208,395

Income taxes recoverable


-

-

25

Prepaid expenses


4,576

5,864

5,477

Total current assets


559,691

537,135

421,955

Property, plant, and equipment


58,340

56,771

54,886

Intangible assets


15,593

17,902

16,587

Equity investment


2,426

1,684

726

Deferred tax assets


46,332

40,766

44,241

Total assets


682,382

654,258

538,395

LIABILITIES AND EQUITY





Current





Accounts payable and accrued liabilities


241,539

248,881

160,645

Unredeemed gift card liability


68,735

64,232

48,211

Provisions


43

885

913

Deferred revenue


13,414

13,380

13,298

Income taxes payable


25

26

-

Current portion of long-term debt


84

187

172

Total current liabilities


323,840

327,591

223,239

Long-term accrued liabilities


2,596

2,335

3,841

Long-term provisions


83

99

110

Long-term debt


9

94

56

Total liabilities


326,528

330,119

227,246

Equity





Share capital


207,897

204,970

205,871

Contributed surplus


10,455

9,715

9,770

Retained earnings


137,502

109,454

95,508

Total equity


355,854

324,139

311,149

Total liabilities and equity


682,382

654,258

538,395

Consolidated Statements of Earnings and Comprehensive Earnings

(Unaudited)








13-week

13-week

39-week

39-week


period ended

period ended

period ended

period ended


December 26,

December 27,

December 26,

December 27,

(thousands of Canadian dollars, except per share data)

2015

2014

2015

2014






Revenue

383,171

339,389

773,787

709,221

Cost of sales

(214,057)

(191,709)

(429,669)

(398,265)

Gross profit

169,114

147,680

344,118

310,956

Operating, selling, and administrative expenses

(121,162)

(113,012)

(306,963)

(298,997)

Operating profit

47,952

34,668

37,155

11,959

Interest on long-term debt and financing charges

(4)

(19)

(9)

(48)

Interest income on cash and cash equivalents

330

465

1,057

1,253

Share of earnings from equity investment

2,426

1,684

1,700

1,086

Earnings before income taxes

50,704

36,798

39,903

14,250

Income tax recovery (expense)

2,091

(3,838)

2,091

(3,838)

Net earnings and comprehensive earnings for the period

52,795

32,960

41,994

10,412






Net earnings per common share





Basic

$

2.03

$

1.28

$

1.62

$

0.41

Diluted

$

2.02

$

1.27

$

1.61

$

0.40

Consolidated Statements of Cash Flows

(Unaudited)




13-week

13-week

39-week

39-week


period ended

period ended

period ended

period ended


December 26,

December 27,

December 26,

December 27,

(thousands of Canadian dollars)

2015

2014

2015

2014






CASH FLOWS FROM OPERATING ACTIVITIES





Net earnings for the period

52,795

32,960

41,994

10,412

Add (deduct) items not affecting cash






Depreciation of property, plant, and equipment

3,666

3,703

10,830

11,036


Amortization of intangible assets

2,210

3,032

6,870

8,881


Net reversal of capital assets

(1,619)

(458)

(1,619)

(458)


Loss on disposal of capital assets

236

25

896

34


Share-based compensation

341

315

951

813


Directors' compensation

98

86

294

252


Deferred tax assets

(2,091)

3,838

(2,091)

3,838


Other

(665)

(175)

(3,316)

(716)

Net change in non-cash working capital balances

91,397

101,386

70,723

109,546

Interest on long-term debt and financing charges

4

19

9

48

Interest income on cash and cash equivalents

(330)

(465)

(1,057)

(1,253)

Income taxes received

50

26

50

26

Share of earnings from equity investment

(2,426)

(1,684)

(1,700)

(1,086)

Cash flows from operating activities

143,666

142,608

122,834

141,373






CASH FLOWS FROM INVESTING ACTIVITIES





Purchase of property, plant, and equipment

(7,665)

(4,196)

(13,562)

(8,907)

Addition of intangible assets

(2,106)

(1,384)

(5,880)

(5,196)

Proceeds from disposal of capital assets

-

-

5

-

Interest received

284

207

770

995

Cash flows used in investing activities

(9,487)

(5,373)

(18,667)

(13,108)






CASH FLOWS FROM FINANCING ACTIVITIES





Repayment of long-term debt

(40)

(170)

(135)

(536)

Interest paid

(17)

(19)

(51)

(50)

Proceeds from share issuances

1,209

317

1,466

988

Cash flows from financing activities

1,152

128

1,280

402






Effect of foreign currency exchange rate changes on
cash and cash equivalents

724

435

3,645

982






Net increase in cash and cash equivalents during the period

136,055

137,798

109,092

129,649

Cash and cash equivalents, beginning of period

176,199

149,429

203,162

157,578

Cash and cash equivalents, end of period

312,254

287,227

312,254

287,227

SOURCE Indigo Books & Music Inc.

For further information: Janet Eger, Vice President, Public Affairs, 416 342 8561, jeger@indigo.ca

RELATED LINKS
http://www.indigo.ca

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