Online Revenues at Record Level, Significant Growth in General Merchandise
TORONTO, Feb. 4, 2014 /CNW/ - Indigo Books & Music Inc. (TSX: IDG), Canada's largest book, gift and specialty toy retailer reported 3.0% growth in revenue for its third quarter ended December 28, 2013. Revenue for the quarter was $332.4 million, up $9.8 million from the previous year driven by double-digit growth in its lifestyle, paper, and toy businesses and new revenue from its recently launched !ndigotech™ business. Additionally, the Company experienced growth in its print business due to a strong line-up of hit titles. The revenue growth was achieved despite the Company operating eight fewer small format stores and one less superstore compared to the same time last year.
On a comparable store basis, Indigo and Chapters superstores posted a 2.6% increase in revenue, while Coles and Indigospirit small format store revenues were up 0.5%. Online sales increased 19.3% to a record $41.5 million, up from $34.8 million for the same period last year.
Commenting on the results, CEO Heather Reisman said, "It is very satisfying to see the Company achieve this positive growth - particularly given the impact of unusually bad weather this holiday season. Clearly the investments we are making to transform Indigo are resonating with our customers."
The Company reported net earnings of $8.5 million for the 13-week period ended December 28, 2013 ($0.33 net earnings per common share), compared to net earnings of $22.0 million ($0.86 net earnings per common share) in the same period last year. Net earnings declined as a result of both higher tax expense as the Company recorded a valuation allowance against the deferred tax assets and intentional investments made to advance the Company's transformational agenda. Specifically, the Company invested in expanding merchandising space for growing categories within its existing superstores, in online marketing to drive customer acquisition, in improving its online capabilities and launching additional !ndigotech™ locations. Excluding the valuation allowance, net earnings for the third quarter of fiscal 2014 would have been $20.9 million ($0.82 net earnings per common share), compared to net earnings of $22.0 million ($0.86 net earnings per common share) in the same period last year.
By the end of Q3, the Company had opened its 37th !ndigotech™ shop. These shops within shops feature design-inspired lifestyle electronics and accessories.
In the quarter, the Company also launched its Indigo Mobile App for both Android and iOS platforms which simplifies the Indigo shopping experience for quicker and easier purchasing, at home, in-store, or on the go. The Indigo Mobile App, in addition to effortless mobile shopping, gives customers access to their plum loyalty and rewards membership, great product information, personalized recommendations and offers that understand, anticipate and cater to their shopping needs.
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; The World's Biggest Bookstore; 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.
In 2004, Indigo founded the Indigo Love of Reading Foundation, a registered charity that provides new books and education materials to high-needs Canadian elementary schools, to address the literacy crisis in Canada. To date the Foundation, as well as its "Adopt a School" program, have contributed more than $15.6 million — equating to over 1.4 million books — to high-needs elementary schools across Canada. Visit loveofreading.org for more information.
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 28, | December 29, | March 30, | |||||||
| (thousands of Canadian dollars) | 2013 | 2012 | 2013 | ||||||
| ASSETS | |||||||||
| Current | |||||||||
| Cash and cash equivalents | 265,292 | 310,076 | 210,562 | ||||||
| Accounts receivable | 25,846 | 26,968 | 7,126 | ||||||
| Inventories | 247,780 | 239,836 | 216,533 | ||||||
| Prepaid expenses | 5,075 | 4,144 | 4,153 | ||||||
| Total current assets | 543,993 | 581,024 | 438,374 | ||||||
| Property, plant and equipment | 62,396 | 60,619 | 58,903 | ||||||
| Intangible assets | 22,039 | 22,112 | 22,164 | ||||||
| Equity investment | 1,609 | 2,080 | 968 | ||||||
| Deferred tax assets | 38,821 | 46,310 | 48,731 | ||||||
| Total assets | 668,858 | 712,145 | 569,140 | ||||||
| LIABILITIES AND EQUITY | |||||||||
| Current | |||||||||
| Accounts payable and accrued liabilities | 259,559 | 267,177 | 150,177 | ||||||
| Unredeemed gift card liability | 64,256 | 63,639 | 47,169 | ||||||
| Provisions | 1,524 | 221 | 2,168 | ||||||
| Deferred revenue | 13,185 | 13,882 | 13,733 | ||||||
| Income taxes payable | 38 | 111 | 11 | ||||||
| Current portion of long-term debt | 727 | 811 | 773 | ||||||
| Total current liabilities | 339,289 | 345,841 | 214,031 | ||||||
| Long-term accrued liabilities | 3,562 | 4,153 | 4,004 | ||||||
| Long-term provisions | 78 | 285 | 78 | ||||||
| Long-term debt | 275 | 856 | 705 | ||||||
| Total liabilities | 343,204 | 351,135 | 218,818 | ||||||
| Equity | |||||||||
| Share capital | 203,812 | 203,733 | 203,805 | ||||||
| Contributed surplus | 8,422 | 7,858 | 8,128 | ||||||
| Retained earnings | 113,420 | 149,419 | 138,389 | ||||||
| Total equity | 325,654 | 361,010 | 350,322 | ||||||
| Total liabilities and equity | 668,858 | 712,145 | 569,140 | ||||||
| Consolidated Statements of Earnings (Loss) and Comprehensive Earnings (Loss) | ||||||||||||
| (Unaudited) | ||||||||||||
| 13-week | 13-week | 39-week | 39-week | |||||||||
| period ended | period ended | period ended | period ended | |||||||||
| December 28, | December 29, | December 28, | December 29, | |||||||||
| (thousands of Canadian dollars, except per share data) | 2013 | 2012 | 2013 | 2012 | ||||||||
| Revenues | 332,393 | 322,620 | 683,335 | 694,809 | ||||||||
| Cost of sales | (191,433) | (185,500) | (387,657) | (392,184) | ||||||||
| Gross profit | 140,960 | 137,120 | 295,678 | 302,625 | ||||||||
| Operating, selling and administrative expenses | (115,389) | (110,032) | (305,073) | (290,768) | ||||||||
| Operating profit (loss) | 25,571 | 27,088 | (9,395) | 11,857 | ||||||||
| Interest on long-term debt and financing charges | (25) | (17) | (82) | (69) | ||||||||
| Interest income on cash and cash equivalents | 582 | 685 | 1,766 | 1,844 | ||||||||
| Share of earnings from equity investment | 1,609 | 1,955 | 1,000 | 1,226 | ||||||||
| Earnings (loss) before income taxes | 27,737 | 29,711 | (6,711) | 14,858 | ||||||||
| Income tax recovery (expense) | (19,240) | (7,676) | (9,910) | (2,323) | ||||||||
| Net earnings (loss) and comprehensive earnings (loss) for the period | 8,497 | 22,035 | (16,621) | 12,535 | ||||||||
| Net earnings (loss) per common share | ||||||||||||
| Basic | $0.33 | $0.86 | $(0.65) | $0.49 | ||||||||
| Diluted | $0.33 | $0.86 | $(0.65) | $0.49 | ||||||||
| Consolidated Statements of Cash Flows | ||||||||||||
| (Unaudited) | ||||||||||||
| 13-week | 13-week | 39-week | 39-week | |||||||||
| period ended | period ended | period ended | period ended | |||||||||
| December 28, | December 29, | December 28, | December 29, | |||||||||
| (thousands of Canadian dollars) | 2013 | 2012 | 2013 | 2012 | ||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||
| Net earnings (loss) for the period | 8,497 | 22,035 | (16,621) | 12,535 | ||||||||
| Add (deduct) items not affecting cash | ||||||||||||
| Depreciation of property, plant and equipment | 4,101 | 4,277 | 12,214 | 13,325 | ||||||||
| Amortization of intangible assets | 2,724 | 2,617 | 8,198 | 7,554 | ||||||||
| Net impairment of capital assets | 505 | - | 505 | 250 | ||||||||
| Loss on disposal of capital assets | 100 | - | 113 | 44 | ||||||||
| Stock-based compensation | 228 | 210 | 925 | 569 | ||||||||
| Directors' compensation | 100 | 101 | 344 | 330 | ||||||||
| Deferred tax assets | 19,240 | 7,676 | 9,910 | 2,323 | ||||||||
| Other | (442) | (195) | (430) | (440) | ||||||||
| Net change in non-cash working capital balances | 79,640 | 91,363 | 73,947 | 90,068 | ||||||||
| Interest on long-term debt and financing charges | 25 | 17 | 82 | 69 | ||||||||
| Interest income on cash and cash equivalents | (582) | (685) | (1,766) | (1,844) | ||||||||
| Income taxes received (paid) | 27 | - | 26 | 45 | ||||||||
| Distributions from equity investment | - | - | 359 | 107 | ||||||||
| Share of earnings from equity investment | (1,609) | (1,955) | (1,000) | (1,226) | ||||||||
| Cash flows from operating activities | 112,554 | 125,461 | 86,806 | 123,709 | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||
| Purchase of property, plant and equipment | (9,030) | (3,415) | (16,188) | (6,869) | ||||||||
| Addition of intangible assets | (2,508) | (2,262) | (8,073) | (6,876) | ||||||||
| Interest received | 582 | 682 | 1,823 | 1,900 | ||||||||
| Cash flows used in investing activities | (10,956) | (4,995) | (22,438) | (11,845) | ||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
| Notes payable | - | 190 | - | 190 | ||||||||
| Repayment of long-term debt | (189) | (280) | (620) | (964) | ||||||||
| Interest paid | - | (41) | (70) | (127) | ||||||||
| Proceeds from share issuances | - | 50 | 7 | 280 | ||||||||
| Dividends paid | (2,783) | (2,780) | (8,348) | (8,336) | ||||||||
| Repurchase of options | - | - | (975) | - | ||||||||
| Cash flows used in financing activities | (2,972) | (2,861) | (10,006) | (8,957) | ||||||||
| Effect of foreign currency exchange rate changes on cash and cash equivalents | 406 | 224 | 368 | 451 | ||||||||
| Net increase in cash and cash equivalents during the period | 99,032 | 117,829 | 54,730 | 103,358 | ||||||||
| Cash and cash equivalents, beginning of period | 166,260 | 192,247 | 210,562 | 206,718 | ||||||||
| Cash and cash equivalents, end of period | 265,292 | 310,076 | 265,292 | 310,076 | ||||||||
SOURCE: Indigo Books & Music Inc.
Janet Eger
Vice President, Public Affairs
416 342 8561
[email protected]
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