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
5th, 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 of
the Company |
|
347,749 |
251,743 |
355,632 |
| 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 equipment |
4,719 |
4,459 |
| |
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.