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.

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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