Indigo Reports Q2 Results: Exceptional revenue growth and improved profitability

Comp Superstore Sales grow by 13.6%
Online Sales grow by 14.2%

TORONTO, Nov. 3, 2015 /CNW/ - Indigo Books & Music Inc. (TSX: IDG), Canada's largest book, gift and specialty toy retailer reported 8.8% growth in revenue for its second quarter ended September 26, 2015.

Revenue for the quarter was $205.7 million, up $16.7 million from last year, despite operating two fewer superstores and four fewer small format stores.  On a comparable store basis, Indigo and Chapters superstores posted 13.6% growth, while Coles and IndigoSpirit small format stores increased by 12.9%. Sales from Indigo's online channel, indigo.ca, grew by 14.2%.

Revenue growth was driven by continued double digit growth in the general merchandise business, mainly in Paper and Toys, and strong growth in the core book business, boosted by the trend for adult colouring books.

Commenting on the results, CEO Heather Reisman said, "We are pleased with this quarter's results.  Up against a tough comp from last year, we have demonstrated that we are consistently growing the business and improving profitability."

The net loss for the 13-week period ended September 26, 2015 was $1.8 million (net loss per common share of $0.07), compared to a loss of $8.5 million (net loss per common share of $0.33) for the period ended September 27, 2014.  The improvement of $6.7 million was driven by increased revenue performance and a higher margin rate.

During the quarter Indigo launched a new American Girl® Specialty Boutique at the Toronto Eaton Centre store, alongside a complete renovation of the Books and Indigo Kids sections.  Additionally, the Company revitalized their plum® rewards loyalty program to now include online collection and redemption of plum® points and an enhanced suite of member benefits based on customer feedback.

Analyst/Investor Call

Indigo will host a conference call for analysts and investors to review these results at 10:00 a.m. (ET) tomorrow, November 4th, 2015.  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 34060006.

A playback of the call will also be available by telephone until 11:59 p.m. (ET) on Wednesday November 11th, 2015.  The call playback can be accessed after 12:00 p.m. (ET) on November 4th, 2015, 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 060006#.  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 $20.5 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
						September 26,			September 27,						March 28,
(thousands of Canadian dollars)						2015			2014						2015
ASSETS
Current
Cash and cash equivalents						176,199			149,429						203,162
Accounts receivable						18,616			12,778						4,896
Inventories						256,952			235,053						208,395
Income taxes recoverable						25			-						25
Prepaid expenses						4,843			6,406						5,477
Total current assets						456,635			403,666						421,955
Property, plant, and equipment						52,955			55,845						54,886
Intangible assets						15,700			19,550						16,587
Equity investment						-			-						726
Deferred tax assets						44,241			44,604						44,241
Total assets						569,531			523,665						538,395
LIABILITIES AND EQUITY
Current
Accounts payable and accrued liabilities						208,805			175,396						160,645
Unredeemed gift card liability						42,249			40,773						48,211
Provisions						52			913						913
Deferred revenue						14,172			13,178						13,298
Current portion of long-term debt						112			316						172
Total current liabilities						265,390			230,576						223,239
Long-term accrued liabilities						2,618			2,398						3,841
Long-term provisions						91			97						110
Long-term debt						21			133						56
Total liabilities						268,120			233,204						227,246
Equity
Share capital						206,472			204,601						205,871
Contributed surplus						10,232			9,366						9,770
Retained earnings						84,707			76,494						95,508
Total equity						301,411			290,461						311,149
Total liabilities and equity						569,531			523,665						538,395

Consolidated Statements of Loss and Comprehensive Loss
(Unaudited)
			13-week			13-week			26-week			26-week
			period ended			period ended			period ended			period ended
			September 26,			September 27,			September 26,			September 27,
(thousands of Canadian dollars, except per share data)			2015			2014			2015			2014
Revenue			205,722			189,030			390,616			369,832
Cost of sales			(112,102)			(105,707)			(215,612)			(206,556)
Gross profit			93,620			83,323			175,004			163,276
Operating, selling, and administrative expenses			(95,582)			(92,175)			(185,801)			(185,985)
Operating loss			(1,962)			(8,852)			(10,797)			(22,709)
Interest on long-term debt and financing charges			(3)			(20)			(5)			(29)
Interest income on cash and cash equivalents			336			411			727			788
Share of loss from equity investment			(219)			(79)			(726)			(598)
Net loss and comprehensive loss for the period			(1,848)			(8,540)			(10,801)			(22,548)
Net loss per common share
Basic		$	(0.07)		$	(0.33)		$	(0.42)		$	(0.88)
Diluted		$	(0.07)		$	(0.33)		$	(0.42)		$	(0.88)

Consolidated Statements of Cash Flows
(Unaudited)
							13-week			13-week			26-week			26-week
							period ended			period ended			period ended			period ended
							September 26,			September 27,			September 26,			September 27,
(thousands of Canadian dollars)							2015			2014			2015			2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period							(1,848)			(8,540)			(10,801)			(22,548)
Add (deduct) items not affecting cash
	Depreciation of property, plant, and equipment						3,580			3,635			7,164			7,333
	Amortization of intangible assets						2,206			2,981			4,660			5,849
	Loss on disposal of capital assets						1			2			660			9
	Share-based compensation						278			163			610			498
	Directors' compensation						85			62			196			166
	Other						(3,090)			(1,686)			(2,651)			(541)
Net change in non-cash working capital balances							967			4,573			(20,674)			8,160
Interest on long-term debt and financing charges							3			20			5			29
Interest income on cash and cash equivalents							(336)			(411)			(727)			(788)
Share of loss from equity investment							219			79			726			598
Cash flows from (used in) operating activities							2,065			878			(20,832)			(1,235)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant, and equipment							(3,644)			(2,551)			(5,897)			(4,711)
Addition of intangible assets							(2,370)			(1,808)			(3,774)			(3,812)
Proceeds from disposal of capital assets							5			-			5			-
Interest received							259			411			486			788
Cash flows used in investing activities							(5,750)			(3,948)			(9,180)			(7,735)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of long-term debt							(44)			(180)			(95)			(366)
Interest paid							(17)			(21)			(34)			(31)
Proceeds from share issuances							53			340			257			671
Cash flows from (used in) financing activities							(8)			139			128			274
Effect of foreign currency exchange rate changes on cash and cash equivalents							3,181			1,693			2,921			547
Net decrease in cash and cash equivalents during the period							(512)			(1,238)			(26,963)			(8,149)
Cash and cash equivalents, beginning of period							176,711			150,667			203,162			157,578
Cash and cash equivalents, end of period							176,199			149,429			176,199			149,429

 

SOURCE Indigo Books & Music Inc.

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