Indigo Reports Q3 Results: Strong holiday season driving 8.2% revenue growth

TORONTO, Feb. 6, 2018 /CNW/ - For the third quarter ended December 30, 2017, Indigo Books & Music Inc. (TSX: IDG), Canada's largest book, gift and specialty toy retailer, delivered its highest ever quarterly revenues and a 17^th straight quarter of topline comparable growth.

Revenue for the quarter increased $33.0 million or 8.2% from last year to reach $433.3 million. Total comparable sales, which include both online sales and comparable store sales, increased by 7.9%, fueled by continued momentum in online operations and impressive in-store performance. Revenue growth was driven by double digit growth in all areas of the general merchandise business. The core book business remains healthy, showing growth over last year.  

Commenting on the results, CEO Heather Reisman said: "We are happy to report a strong third quarter – our biggest holiday to date. Our performance across all channels and categories is a clear reflection of the success of our "Every gift tells a story" seasonal message, the strength of our brand and the passion of our customers for our reimagined cultural department store concept. Our investments in digital, new store development and supply chain infrastructure were critical to our success, as was, of course, the outstanding engagement of our team."

The Company will be opening new stores, including a new flagship location in downtown Vancouver in the coming year, as well as a distribution facility in Calgary to support future growth and provide faster, more efficient service to its customers in the western provinces.  The Company will also accelerate the roll out of its new store concept, as these newly re-imagined stores, which reflect Indigo's transformation from a bookstore to a cultural department store for booklovers, continued to show outstanding growth during the critical holiday season.  

Net earnings for the third quarter was $42.6 million (net earnings per common share of $1.58) compared to net earnings of $40.0 million (net earnings per common share of $1.51) last year. This increase in net earnings is reflective of the top-line growth in the quarter, which was fueled by investments in digital, new store development, marketing and supply chain, plus certain changes in accounting estimates.

The Company ended the period with cash and short-term investments of $308 million and no debt, maintaining a very solid financial position.

Analyst/Investor Call

Indigo will host a conference call for analysts and investors to review these results at 5:30 p.m. (Eastern Time) today, February 6^th, 2018. The call can be accessed by dialing 416-764-8688 from within the Toronto area, or 1-888-390-0546 outside of Toronto. The eight digit participant code is 74160254.

A playback of the call will also be available by telephone until 11:59 p.m. (ET) on Tuesday, February 13^th, 2018. The call playback can be accessed after 7:30 p.m. (ET) on Tuesday, February 6^th, 2018, 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 160254#. 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 52-weeks.

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. This quarter, the Love of Reading Foundation provided an additional $1.5 million to over 500 high-needs elementary schools as part of it's annual Adopt a School program and in connection with Giving Tuesday, an annual global celebration of charitable giving. To date, the Love of Reading Foundation has committed over $26 million to 3,000 elementary schools, benefitting more than 900,000 students.

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

Non-IFRS Financial Measures

The following table reconciles total comparable sales to revenue, the most comparable IFRS measure.

SOURCE Indigo Books & Music Inc.