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.

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