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Indigo First Quarter Results Improved Significantly

August 8, 2012

Growth in Trade Books; Continued Double Digit Growth in Gift, Lifestyle,
and Toys

TORONTO, Aug. 8, 2012 /CNW/ – Indigo Books & Music Inc. (TSX: IDG),
Canada’s largest book, gift and specialty toy retailer reported a 0.8%
decrease in net revenue for its first quarter ending June 30, 2012.
Revenue for the quarter was $186.5 million, down $1.5 million from last
year driven significantly by lower sales of eReaders due to the strong
launch of the Kobo Touch in the same period last year and a delay in
the launch of new Kobo devices.  Trade book sales were up 0.6% behind
strong sales of the Fifty Shades and Hunger Game trilogies and the
Indigo Spotlight programs highlighting hidden gems.

On a comparable store basis, Indigo and Chapters superstores posted a
0.9% decrease in revenue, while Coles and IndigoSpirit small format
stores were up 6.0%.

Commenting on the results, CEO Heather Reisman said, “We are very
pleased to see continued double digit growth in our general merchandise
businesses as we expand our exciting gift, lifestyle and IndigoKids
categories. We’re also happy to see positive comp sales in our small
format stores driven by the strong book titles this quarter and the
expansion of some general merchandise to our smaller stores.”

The net loss attributable to shareholders of the Company from continuing
operations improved $6.5 million from a loss of $12.0 million last year
to a loss of $5.5 million this year.  The significant reduction in net
loss was due to improvements in net margins and lower operating
expenses.

Ms. Reisman noted, “While a loss in this quarter is typical for our
business, we’re encouraged that our efforts to improve margins and
drive productivity, two of our top strategic priorities for this year,
are clearly showing positive results.”

The net loss per share improved from a loss of $0.72 per share last year
to a loss of $0.22 per share due to the improvements mentioned above
and to the elimination of losses from discontinued operations as a
result of the sale of Kobo in January 2012.

During the quarter, the Company completed the upgrade of its retail
distribution facility to support the growth of its general merchandise
business and improve the efficiency of its supply chain operations.   
The Company also completed the launch of its talent management software
tool, along with enhancements to existing human resources reporting
tools.

The Board of Directors today approved a quarterly dividend of 11 cents
per common share to be paid on September 5(th), 2012, to all shareholders of record as of August 22, 2012.

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 consolidated financial statements in accordance
with International Financial Reporting Standards.  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 the Indigo “Adopt A
School” program, have contributed $13 million, equating to more than a
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

                                                June 30, July 2, March 31,

    (thousands of Canadian dollars)                 2012    2011      2012

    ASSETS                                                                

    Current                                                               

    Cash and cash equivalents                    188,595  73,385   207,601

    Accounts receivable                           13,586  14,380    12,627

    Inventories                                  219,964 215,746   229,706

    Prepaid expenses                               4,520   6,840     3,695

    Total current assets                         426,665 310,351   453,629

    Property, plant and equipment                 63,537  76,532    67,464

    Intangible assets                             22,198  30,620    22,810

    Goodwill                                           -  26,632         -

    Deferred tax assets                           52,675  66,093    48,633

    Total assets                                 565,075 510,228   592,536

    LIABILITIES AND EQUITY                                                

    Current                                                               

    Accounts payable and accrued liabilities     154,690 165,382   174,201

    Unredeemed gift card liability                43,174  41,600    42,711

    Provisions                                       237       -       232

    Deferred revenue                              11,980  11,467    11,234

    Income taxes payable                              69     649        65

    Notes payable                                      -   4,896         -

    Current portion of long-term debt              1,006   1,281     1,060

    Total current liabilities                    211,156 225,275   229,503

    Long-term accrued liabilities                  4,644   5,275     5,800

    Long-term provisions                             391       -       460

    Long-term debt                                 1,135   1,685     1,141

    Total liabilities                            217,326 232,235   236,904

    Equity                                                                

    Share capital                                203,482 202,962   203,373

    Contributed surplus                            7,310   6,646     7,039

    Retained earnings                            136,957  42,135   145,220

    Total equity attributable to shareholders    347,749 251,743   355,632
    of the Company

    Non-controlling interest                           -  26,250         -

    Total equity                                 347,749 277,993   355,632

    Total liabilities and equity                 565,075 510,228   592,536

                Consolidated Statements of Loss and Comprehensive Loss

                                                 (Unaudited)

                                                       13-week      13-week

                                                  period ended period ended

                                                      June 30,      July 2,

    (thousands of Canadian dollars, except per
    share data)                                           2012         2011

    Revenues                                           186,483      188,005

    Cost of sales                                      106,388      111,082

    Gross profit                                        80,095       76,923

    Operating and administrative expenses               90,174       92,691

    Operating loss                                    (10,079)     (15,768)

    Interest on long-term debt and financing
    charges                                                 31           44

    Interest income on cash and cash equivalents         (581)         (71)

    Loss before income taxes                           (9,529)     (15,741)

    Income tax recovery                                (4,042)      (3,778)

    Loss and comprehensive loss for the period
    from continuing operations                         (5,487)     (11,963)

    Loss and comprehensive loss for the period
    from discontinued operations (net of tax)                -     (12,231)

    Net loss and comprehensive loss for the
    period                                             (5,487)     (24,194)

    Net loss and comprehensive loss attributable
    to:                                                                    

    Shareholders of the Company                        (5,487)     (18,105)

    Non-controlling interest                                 -      (6,089)

    Total net loss and comprehensive loss for the
    period                                             (5,487)     (24,194)

    Net loss per common share from continuing
    operations                                                             

    Basic                                              $(0.22)      $(0.48)

    Diluted                                            $(0.22)      $(0.48)

    Net loss per common share from discontinued
    operations                                                             

    Basic                                           $       -       $(0.24)

    Diluted                                         $       -       $(0.24)

    Net loss per common share                                              

    Basic                                              $(0.22)      $(0.72)

    Diluted                                            $(0.22)      $(0.72)

                            Consolidated Statements of Cash Flows

                                                (Unaudited)

                                                      13-week      13-week

                                                 period ended period ended

                                                     June 30,      July 2,

    (thousands of Canadian dollars)                      2012         2011

    CASH FLOWS FROM OPERATING ACTIVITIES                                  

    Net loss from continuing operations for the
    period                                            (5,487)     (11,963)

    Add (deduct) items not affecting cash                                 

      Depreciation of property, plant and                            4,459
      equipment                                         4,719

      Amortization of intangible assets                 2,422        2,081

      Impairment of capital assets                        250            -

      Loss on disposal of capital assets                   44            4

      Stock-based compensation                            159          595

      Directors' compensation                             133          149

      Deferred tax assets                             (4,042)      (3,602)

      Other                                             (753)        (286)

    Net change in non-cash working capital
    balances related to continuing operations        (11,564)        6,805

    Interest on long-term debt and financing
    charges                                                31           44

    Interest income on cash and cash equivalents        (581)         (71)

    Income taxes received                                   4            -

    Operating cash flows of discontinued
    operations                                              -     (16,531)

    Cash flows used in operating activities          (14,665)     (18,316)

    CASH FLOWS FROM INVESTING ACTIVITIES                                  

    Acquisition of non-capital tax losses                   -     (10,109)

    Purchase of property, plant and equipment           (784)      (2,197)

    Addition of intangible assets                     (1,830)      (1,629)

    Investing cash flows of discontinued
    operations                                              -      (2,158)

    Cash flows used in investing activities           (2,614)     (16,093)

    CASH FLOWS FROM FINANCING ACTIVITIES                                  

    Notes payable                                           -        5,055

    Repayment of long-term debt                         (346)        (319)

    Interest received                                     559           84

    Proceeds from share issuances                          88          578

    Purchase of shares in subsidiary                        -      (3,009)

    Dividends paid                                    (2,776)      (2,767)

    Financing cash flows of discontinued
    operations                                              -       24,442

    Cash flows used in financing activities           (2,475)       24,064

    Effect of foreign currency exchange rate
    changes on cash and cash equivalents                  748           69

    Net decrease in cash and cash equivalents
    during the period                                (19,006)     (10,276)

    Cash and cash equivalents, beginning of
    period                                            207,601       83,661

    Cash and cash equivalents, end of period          188,595       73,385

    Cash and cash equivalents attributable to:                            

    Continuing operations                             188,595       43,656

    Discontinued operations                                 -       29,729

                                                      188,595       73,385

 

 

SOURCE Indigo Books & Music Inc.


Source: PR Newswire