Indigo Q1 Revenue Up 3.1%

    First Quarter Loss Cut In Half

    TORONTO, July 30 /CNW/ - Indigo Books & Music Inc. (TSX: IDG), Canada's
largest book retailer, reported gains in net revenue and net earnings for its
first quarter ending June 28th, 2008.
    Notwithstanding continuing decreases in retail book prices, total revenue
for the quarter increased 3.1% to $191 million. On a comparable store basis,
Indigo and Chapters superstores posted 3.3% growth, while Coles small format
stores were up 5.4%. Sales from Indigo's online channel,,
grew 7.7% to $21 million.
    The Company's net loss for the first quarter was $1.3 million, reduced
from $2.8 million during the same quarter last year.
    Commenting on the results, CEO Heather Reisman said "We are pleased that
consumers continue to respond to lower book prices by buying and reading
    Also in the quarter, Chapters and Indigo were deemed Canada's highest
rated retail brands by consumers in the well regarded Kubas Major Market
Retail Report for 2008.
    Additionally, the Indigo Love of Reading Foundation granted $1.5 million
in literacy funding to 20 high needs elementary schools across the country
bringing total donations to-date to $6 million across 50 schools.

    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
    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-GAAP Financial Measures

    The Company prepares its consolidated financial statements in accordance
with Canadian generally accepted accounting principles. In order to provide
additional insight into the business, the Company has also provided non-GAAP
data, including comparative store sales growth, in the press release above.
This measure does not have a standardized meaning prescribed by GAAP, 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.

    About Indigo Books & Music Inc.

    Indigo is a Canadian company and the largest book retailer in Canada,
operating bookstores in all provinces under the names Indigo, Chapters, Coles,
Indigospirit and The World's Biggest Bookstore. Indigo operates, an online retailer of books, music, movies and more. It is
a publicly traded company listed on the Toronto Stock Exchange under the stock
symbol IDG.
    In 2004, Indigo founded the Indigo Love of Reading Foundation, a
registered charity whose mission is to provide new books and creative learning
materials to high-needs elementary schools, enhancing the literacy and
self-esteem of students in Canada. Visit for more

                         Consolidated Balance Sheets

                                              As at       As at        As at
                                            June 28,    June 30,    March 29,
    (thousands of dollars)                     2008        2007         2008

    Cash and cash equivalents                 57,052       6,870      55,933
    Accounts receivable                        7,389       7,417       8,996
    Inventories                              197,188     214,313     206,259
    Income taxes recoverable                      21         194          21
    Prepaid expenses                           5,250       5,085       4,929
    Future tax assets                          6,745       9,205       6,745
    Total current assets                     273,645     243,084     282,883

    Property and equipment                    67,146      72,303      67,348
    Future tax assets                         43,647      32,035      43,250
    Goodwill                                  27,523      27,523      27,523
    Total assets                             411,961     374,945     421,004

    Bank indebtedness                              -      12,520           -
    Accounts payable and accrued
     liabilities                             187,126     187,207     193,323
    Deferred revenue                          10,832      12,431      10,350
    Derivative liabilities                         -       1,400           -
    Current portion of long-term debt          2,618       2,661       2,648
    Total current liabilities                200,576     216,219     206,321

    Long-term accrued liabilities              6,736       9,009       7,549
    Long-term debt                             2,847       4,861       3,380
    Total liabilities                        210,159     230,089     217,250

    Shareholders' equity
    Share capital                            198,424     197,622     198,938
    Contributed surplus                        2,867       1,994       2,564
    Retained earnings (deficit)                  511     (53,396)      2,252
    Accumulated other comprehensive loss           -      (1,364)          -
    Total shareholders' equity               201,802     144,856     203,754

    Total liabilities and shareholders'
     equity                                  411,961     374,945     421,004

                     Consolidated Statements of Earnings
                                                        13-week      13-week
                                                         period       period
                                                          ended        ended
                                                        June 28,     June 30,
    (thousands of dollars, except per share data)          2008         2007

    Revenues                                            190,602      184,917
    Cost of sales, operations, selling and
     administration                                     185,398      179,764

                                                          5,204        5,153

    Amortization of property and equipment                7,111        7,610
    Amortization of pre-opening store costs                   -           54

                                                          7,111        7,664

    Loss before the undernoted items                     (1,907)      (2,511)
    Interest on long-term debt and financing charges        108          247
    Interest expense (income) on bank indebtedness         (393)          82
    Loss before income taxes                             (1,622)      (2,840)
    Income tax recovery                                    (397)           -
    Net loss for the period                              (1,225)      (2,840)

    Net loss per common share
    Basic                                                $(0.05)      $(0.12)
    Diluted                                              $(0.05)      $(0.12)
    Weighted average number of common
     shares outstanding                                  24,833       24,648

                    Consolidated Statements of Cash Flows

                                                        13-week      13-week
                                                         period       period
                                                          ended        ended
                                                        June 28,     June 30,
    (thousands of dollars)                                 2008         2007

    Net loss for the period                              (1,225)      (2,840)
    Add (deduct) items not affecting cash
      Amortization                                        7,111        7,664
      Stock-based compensation                              233          140
      Directors' compensation                               105          110
      Future tax assets                                    (397)           -
      Loss on disposal of property and equipment             13            -
      Amortization and write-off of deferred
       financing charges                                      -          139
      Other                                                   -           17

    Net change in non-cash working capital balances
     related to operations
      Accounts receivable                                 1,607        2,431
      Inventories                                         9,071        9,746
      Prepaid expenses                                     (321)        (561)
      Deferred revenue                                      482        1,810
      Accounts payable and accrued liabilities           (7,010)     (21,133)
    Cash flows from (used in) operating activities        9,669       (2,477)

    Purchase of property and equipment                   (5,888)      (2,939)
    Cash flows used in investing activities              (5,888)      (2,939)

    Increase in bank indebtedness                             -       12,520
    Repayment of long-term debt                          (1,597)     (13,895)
    Proceeds from share issuances                            99           22
    Repurchase of common shares                          (1,164)           -
    Cash flows used in financing activities              (2,662)      (1,353)

    Net increase (decrease) in cash and cash
     equivalents during the period                        1,119       (6,769)
    Cash and cash equivalents, beginning of period       55,933       13,639
    Cash and cash equivalents, end of period             57,052        6,870

For further information:

For further information: Janet Eger, Director, Public Relations, (416)

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