Indigo Reports $24.5M Improvement in Q3 Net Earnings

Comparable Superstore Sales grow by 5.5% and Online Sales grow by 10.6%

TORONTO, Feb. 3, 2015 /CNW/ - Indigo Books & Music Inc. (TSX: IDG), Canada's largest book, gift and specialty toy retailer reported revenue for the quarter ended December 27, 2014 of $339.4 million, up $7.0 million from last year, despite operating five fewer superstores and one less small format store. 

On a comparable store basis, Indigo and Chapters superstores posted 5.5% growth, while sales at Coles and Indigospirit small format stores were flat.  Sales from Indigo's online channel, indigo.ca, grew by 10.6%.

The increase in revenue was driven by continued double digit growth in Lifestyle, Paper and Toys, including the highly successful American Girl®. Additionally, the core trade books business grew in spite of the lack of major hit titles compared to the same period last year.  Gross profit margin rate improved by 1.1% compared to the same period last year as a result of higher sell through of full priced goods and more effective use of promotions.

Commenting on the results, CEO Heather Reisman said, "We are pleased with these results which show both top line growth and improvements in profitability. We're confident these results demonstrate customer affection for our brand. Our entire team is focused on continuing to position this vibrant Canadian business for long-term growth and success."

The Company recognized net earnings of $33.0 million which is $1.28 net earnings per common share for this quarter, compared to net earnings of $8.5 million, or $0.33 net earnings per common share, for the same period last year. The improvement of $24.5 million was primarily driven by higher revenues, improved margins, lower operating costs and a lower tax expense.

During the quarter, the Company launched the 1450 square-foot American Girl® specialty boutique at Chapters Rideau in Ottawa, marking the third retail location for the iconic brand in Canada, exclusively available at Indigo and Chapters.

Analyst/Investor Call

Indigo will host a conference call for analysts and investors to review these results at 5:00 p.m. (Eastern Time) today, February 3, 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 52848004. 

A playback of the call will also be available by telephone until 11:59 p.m. (ET) on February 10, 2015. The call playback can be accessed after 7:00 p.m. (ET) on February 3, 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 848004 #.  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's Literacy Fund has committed $15 million to 170 Canadian schools. The Foundation's annual grassroots Adopt a School program unites employees, customers, schools and their communities to raise funds to put even more books into the hands of children. Over the past five years we have raised over $2.7 million so 463,000 children have a book to call their own.

To learn more about Indigo, please visit the Our Company section at indigo.ca.

SOURCE Indigo Books & Music Inc.

Related Links

http://www.indigo.ca