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TORONTO, Nov. 6, 2012 /CNW/ - Indigo Books & Music Inc. (TSX: IDG),
Canada's largest book, gift and specialty toy retailer reported a 5.9%
decrease in net revenue for its second quarter ending September 29,
2012. Revenue for the quarter was $185.6 million, down $11.6 million
from last year driven primarily by a delay in the planned launch of the
new Kobo devices. In addition, the Company operated seven fewer Coles
stores. Book sales for the quarter were down only modestly to last
year owing to strong titles as well as effective efforts to drive book
sales both in store and online.
On a comparable store basis, Indigo and Chapters superstores posted a
6.5% decrease in revenue, while Coles and IndigoSpirit small format
stores were down 2.2%.
Commenting on the results, CEO Heather Reisman said, "We are focused on
driving significant margin and productivity improvements and are
pleased that our on-going efforts are reflected in our results. We
will continue to broaden our assortment in our key growth categories to
drive higher top line sales to offset the decline in physical books.
We're also pleased to have the newest Kobo eReaders now in store as top
gift picks for the upcoming holiday season."
The net loss attributable to shareholders of the Company from continuing
operations improved $24.8 million from a loss of $28.8 million last
year to a loss of $4.0 million this year. The significant reduction in
net loss was due to there being no impairment charges in the current
year. In the same period last year, the Company recorded a full write
down of the $25.4 million of goodwill allocated to the Indigo segment.
In addition, the Company experienced improvements in margin and
productivity in the current year.
The net loss per share from continuing operations improved from a loss
of $1.14 per share last year to a loss of $0.16 per share due to the
above noted factors.
In the quarter, the Company's plum rewards program was recognized for
global leadership, earning the award for Loyalty Innovation in Retail at the 3rd Annual COLLOQUY Loyalty Awards. In less than 18 months, five million
Canadians joined the plum rewards program, collecting over seven
billion plum points. Designed in response to customer feedback, plum
rewards help shoppers discover products that match their interests and
passions while rewarding and recognizing their purchases. Plum rewards
members can collect points on virtually every in-store purchase, have
self-service access to personalized recommendations and offers online
or at in-store kiosks, and enjoy special member pricing on online book
purchases.
Also in the second quarter, Indigo launched its award winning annual
Adopt-A-School program, a three week national fundraising campaign that
raised over $580 thousand — the equivalent of over 50 thousand books —
to support 570 participating schools across Canada. Through the program
Indigo helps augment the $1.5 million in grants made annually by the
Indigo Love of Reading Foundation to benefit high needs elementary
schools.
The Board of Directors today approved a quarterly dividend of 11 cents
per common share to be paid on December 5, 2012, to all shareholders of
record as of November 20, 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 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 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
September 29,
October 1,
March 31,
(thousands of Canadian dollars)
2012
2011
2012
ASSETS
Current
Cash and cash equivalents
192,598
45,491
207,601
Accounts receivable
14,092
21,831
12,627
Inventories
247,604
263,918
229,706
Prepaid expenses
4,835
15,285
3,695
Total current assets
459,129
346,525
453,629
Property, plant and equipment
62,111
76,031
67,464
Intangible assets
22,467
31,251
22,810
Goodwill
-
1,216
-
Deferred tax assets
53,986
68,250
48,633
Total assets
597,693
523,273
592,536
LIABILITIES AND EQUITY
Current
Accounts payable and accrued liabilities
198,435
224,159
174,201
Unredeemed gift card liability
37,912
36,292
42,711
Provisions
175
-
232
Deferred revenue
12,882
12,401
11,234
Income taxes payable
111
650
65
Notes payable
-
5,168
-
Current portion of long-term debt
900
1,305
1,060
Total current liabilities
250,415
279,975
229,503
Long-term accrued liabilities
4,448
5,038
5,800
Long-term provisions
391
-
460
Long-term debt
1,045
1,623
1,141
Total liabilities
256,299
286,636
236,904
Equity
Share capital
203,660
202,962
203,373
Contributed surplus
7,570
6,839
7,039
Retained earnings
130,164
4,882
145,220
Total equity attributable to shareholders of Indigo
341,394
214,683
355,632
Non-controlling interest
-
21,954
-
Total equity
341,394
236,637
355,632
Total liabilities and equity
597,693
523,273
592,536
Consolidated Statements of Loss and Comprehensive Loss
(Unaudited)
13-week
13-week
26-week
26-week
period ended
period ended
period ended
period ended
September 29,
October 1,
September 29,
October 1,
(thousands of Canadian dollars, except per share data)
2012
2011
2012
2011
Revenues
185,589
197,248
372,072
385,253
Cost of sales
100,487
111,497
206,875
222,579
Gross profit
85,102
85,751
165,197
162,674
Operating and administrative expenses
90,975
115,579
181,149
208,270
Operating loss
(5,873)
(29,828)
(15,952)
(45,596)
Interest on long-term debt and financing charges
29
39
60
83
Interest expense (income) on cash and cash equivalents
(578)
56
(1,159)
(15)
Loss before income taxes
(5,324)
(29,923)
(14,853)
(45,664)
Income tax recovery
(1,311)
(1,074)
(5,353)
(4,852)
Loss and comprehensive loss for the period from continuing operations
(4,013)
(28,849)
(9,500)
(40,812)
Loss and comprehensive loss for the period from discontinued operations
(net of tax)
-
(11,542)
-
(23,773)
Net loss and comprehensive loss for the period
(4,013)
(40,391)
(9,500)
(64,585)
Net loss and comprehensive loss attributable to:
Shareholders of Indigo
(4,013)
(35,120)
(9,500)
(53,225)
Non-controlling interest
-
(5,271)
-
(11,360)
Net loss per common share from continuing operations
Basic
$(0.16)
$(1.14)
$(0.38)
$(1.62)
Diluted
$(0.16)
$(1.14)
$(0.38)
$(1.62)
Net loss per common share from discontinued operations
Basic
$ -
$(0.25)
$ -
$(0.49)
Diluted
$ -
$(0.25)
$ -
$(0.49)
Net loss per common share
Basic
$(0.16)
$(1.39)
$(0.38)
$(2.11)
Diluted
$(0.16)
$(1.39)
$(0.38)
$(2.11)
Consolidated Statements of Cash Flows
(Unaudited)
13-week
13-week
26-week
26-week
period ended
period ended
period ended
period ended
September 29,
October 1,
September 29,
October 1,
(thousands of Canadian dollars)
2012
2011
2012
2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss from continuing operations for the period
(4,013)
(28,849)
(9,500)
(40,812)
Add (deduct) items not affecting cash
Depreciation of property, plant and equipment
4,329
4,557
9,048
9,016
Amortization of intangible assets
2,515
2,103
4,937
4,184
Impairment of capital assets
-
-
250
-
Impairment of goodwill
-
25,416
-
25,416
Loss on disposal of capital assets
-
11
44
15
Stock-based compensation
200
75
359
670
Directors' compensation
96
118
229
267
Deferred tax assets
(1,311)
(1,250)
(5,353)
(4,852)
Other
510
(2,125)
(243)
(2,411)
Net change in non-cash working capital balances related to continuing
operations
10,667
(18,306)
(897)
(11,501)
Interest on long-term debt and financing charges
29
39
60
83
Interest expense (income) on cash and cash equivalents
(578)
56
(1,159)
(15)
Income taxes received
41
-
45
-
Operating cash flows of discontinued operations
-
(282)
-
(16,813)
Cash flows from (used in) operating activities
12,485
(18,437)
(2,180)
(36,753)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of non-capital tax losses
-
(450)
-
(10,559)
Purchase of property, plant and equipment
(2,764)
(3,651)
(3,548)
(5,848)
Addition of intangible assets
(2,784)
(2,259)
(4,614)
(3,888)
Investing cash flows of discontinued operations
-
(2,488)
-
(4,646)
Cash flows used in investing activities
(5,548)
(8,848)
(8,162)
(24,941)
CASH FLOWS FROM FINANCING ACTIVITIES
Notes payable
-
225
-
5,280
Repayment of long-term debt
(338)
(393)
(684)
(712)
Interest received
565
10
1,124
94
Proceeds from share issuances
142
-
230
578
Purchase of shares in subsidiary
-
-
-
(3,009)
Dividends paid
(2,780)
(2,772)
(5,556)
(5,539)
Financing cash flows of discontinued operations
-
36
-
24,478
Cash flows from (used in) financing activities
(2,411)
(2,894)
(4,886)
21,170
Effect of foreign currency exchange rate changes on cash and cash
equivalents
(523)
2,285
225
2,354
Net increase (decrease) in cash and cash equivalents during the period
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