Indigo narrows Q2 loss to $8.5M, sees growth in revenues on specialty products

TORONTO – Indigo Books and Music Inc. (TSX:IDG) narrowed its loss to $8.5 million in its latest quarter, boosted by higher revenues and improved margins.

The country’s largest book, gift and specialty toy retailer said the loss amounted to 33 cents per diluted share, compared with a loss of $10.1 million, or 39 cents, in the same period a year earlier.

Strong sales helped push revenues to $189 million for the 13-week period ended Sept. 27. That’s up about five per cent from $179.4 million year over year.

The Toronto-based company said it saw double-digit growth across its lifestyle, paper, toys and electronics divisions, as well as its core trade book business. Two American Girl speciality boutiques that were open in the second quarter also contributed to the gain in revenue. A third location was launched at the end of the period in Ottawa.

Sales at Indigo and Chapters rose 9.6 per cent in the period, while sales at Coles and Indigospirit climbed by 2.4 per cent. Online sales grew by 13.4 per cent.

Indigo CEO Heather Reisman said these latest results show that customers are responding to the company’s revamp, which includes operating four fewer superstores and two fewer small format stores this latest quarter compared with the prior-year period.

“These results demonstrate that our customers are responding to the investments we have made to transform Indigo. While we still have a long way to go, we feel energized and are looking forward to a joyful holiday season,” she said in a release.

Indigo is nearing the end of a five-year transformation plan to become what it calls the “world’s first cultural department store” by 2015.

These changes will see the traditional bookseller move into other products such as candles, soaps, jewelry, and educational toys. The company also opened kiosks to sell electronics, including iPads and Apple TV.

It also wants to become a destination for more public speaking engagements and author visits, and has hosted notables like former U.S. secretary of state Hillary Rodham Clinton, Hollywood star and politician Arnold Schwarzenegger, singer-songwriter Paul Anka and tattoo artist and television personality Kat Von D.

Indigo first began making changes to its business model in 2010 as the popularity of ebooks and e-readers, like Amazon’s Kindle and its own Kobo, grew. Indigo sold its remaining share in Kobo Inc. in 2012 to Japan’s Rakuten Inc. in a deal worth US$315 million.

Since then, the bookseller has been struggling against intense competition from the likes of Walmart and Target and online giant Amazon.

Indigo operates stores under the banners Chapters and Indigo, Coles, Indigospirit, SmithBooks and The Book Company.

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