IDG Indigo Books and Music Inc

TORONTO, Aug. 10, 2023 /CNW/ - Indigo Books & Music Inc. (TSX: IDG), Canada's leading book and lifestyle retailer, reported financial results for the 13-week period ended July 1, 2023 compared to the 13-week period ended July 2, 2022.

Revenue for the quarter totaled $179.2 million, compared to $204.6 million in the prior year, a decrease of $25.4 million or 12%. Sales were negatively affected by the carryover impacts of the ransomware attack that occurred in the fourth quarter of fiscal 2023. Inventory replenishment capabilities were challenged as a result of the attack, which impacted the assortment available in both the retail and online sales channels for the quarter. Furthermore, the ransomware attack impacted Indigo's search engine optimization, which led to a weaker online presence and a decrease in online traffic. As these challenges were addressed throughout the first quarter, the Company generated some recovery in sales momentum, with the decline in year-over-year sales improving every month. Sales were also impacted by the downward pressures of a challenging macro-economic environment, which led to softened demand both in stores and online. Customers demonstrated increased price sensitivity, noted through positive responses to promotions and a lift of sales during promotional periods.

The Company's print business declined compared to the prior period, which had several prominent book releases. The Company noted an increase in sales in the bargain print category, again demonstrating customers' price sensitivity in the current macro-economic environment. The general merchandise business continued to be affected by softer customer demand, spanning across most product categories. Both the print and general merchandise businesses were also impacted by the challenges to inventory replenishment discussed.

Commenting on results, CEO Peter Ruis said: "This quarter continued to be challenged by the impacts of the ransomware attack, and diminished consumer confidence due to the current macro-economic environment. Despite these challenges, we remain committed to delivering exceptional value to our customers, and driving sustainable growth. We are excited to share that we recently launched our re-imagined website, and are eager to provide customers with a much improved online shopping experience."

Adjusted EBITDA for the quarter was a loss of $21.4 million, compared to a loss of $19.2 million in the prior year. Adjusted EBITDA was primarily impacted by the reduced sales volumes. The Company generated cost savings in the quarter, driven by reduced labour, international freight and warehousing and distribution costs. These savings were partially offset by additional costs incurred related to the Company's digital modernization achievements.  Net loss for the quarter totaled $28.5 million ($1.02 net loss per basic common share) compared to a net loss of $25.4 million ($0.91 net loss per basic common share) in the prior year.

On July 31, 2023, pursuant to the commitment letter signed on June 27, 2023, the Company entered into a revolving line of credit facility with a related party, Trilogy Retail Holdings Inc. ("Trilogy"), as lender (the "Credit Facility"). The Credit Facility is for an aggregate principal amount of up to $45.0 million and, with the consent of Trilogy, the amount may be increased by up to $10.0 million. The Credit Facility will be used to finance the seasonal working capital and operational needs of the Company, was issued on reasonable commercial terms, and is not convertible, directly or indirectly, into equity or voting securities.

Analyst/Investor Call 

Indigo will host a conference call for analysts and investors to review these results at 10:00 a.m. (Eastern Time) tomorrow, August 11^th, 2023.

To join the conference call without operator assistance, you may register and enter your phone number at https://emportal.ink/44d72Wz to receive an instant automated call back. 

The call can also be accessed through an operator by dialing 416-764-8659 from within the Toronto area, or 1-888-664-6392 outside of Toronto. The eight-digit participant code is 76179157.

A playback of the call will also be available by telephone until 11:59 p.m. (ET) on August 18^th, 2023. The call playback can be accessed after 12:00 p.m. (ET) on August 11^th, 2023, 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 179157#. 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 information" within the meaning of applicable Canadian securities legislation. To the extent any forward-looking information constitutes "financial outlooks" within the meaning of applicable Canadian securities laws, such information is being provided as preliminary financial and operational results. Financial outlooks, as with forward-looking information generally, are, without limitation, based on the assumptions and subject to various risks and uncertainties that could cause actual results to differ materially from those expressed in or implied in this news release. Among the key factors that could cause such differences are: general economic, market or business conditions, which include geopolitical events such as war, acts of terrorism, and civil disorder and the adverse impacts of inflationary pressures; ongoing impacts from the ransomware attack; the future impacts and government response to the COVID-19 pandemic, including any impact to online and/or retail operations of the Company; competitive actions by other companies; changes in laws or regulations; and other factors, many of which are beyond the control of the Company, as set out in the Company's annual information form dated June 27, 2023 and available on the Company's issuer profile on SEDAR at www.sedar.com.

Undue reliance should not be placed on such forward-looking information and no assurance can be given that such events will occur in the disclosed time frames or at all. Any forward-looking information included in this news release is made as of the date of this news release and the Company does not undertake an obligation to publicly update such forward-looking information to reflect new information, subsequent events or otherwise unless required by applicable securities laws.

Non-IFRS Financial Measures 

The Company prepares its consolidated financial statements in accordance with International Financial Reporting Standards ("IFRS"). In order to provide additional insight into the business, the Company has also provided non-IFRS data, specifically Adjusted EBITDA, in this news release. These measures do not have standardized meanings prescribed by IFRS and are therefore specific to Indigo and may not be comparable to similar measures presented by other companies. 

For additional context see "Results of Operations" and "Non-IFRS Financial Measures" in the Management's Discussion and Analysis (which can be found at www.indigo.ca/investor-relations or www.sedar.com).

About Indigo Books & Music Inc. 

Indigo is a publicly traded Canadian company listed on the Toronto Stock Exchange (IDG). Indigo is Canada's leading book and lifestyle retailer, offering a curated assortment of books, gifts, home, wellness, fashion, paper, baby and kids products, that support customers by simplifying their journey to Living with Intention. The Company operates retail stores in all ten provinces and one territory in Canada, and also has retail operations in the United States through a wholly-owned subsidiary, operating one retail store in Short Hills, New Jersey. Retail operations are seamlessly integrated with the Company's digital channels, including the www.indigo.ca website and the mobile applications, which are extensions of the physical stores and offer customers an expanded assortment of book titles, along with a meaningfully curated assortment of general merchandise. Indigo believes in real books, in living life fully and generously, in being kind to each other and that stories – big and little – connect us.

The Company supports a separate registered charity, called the Indigo Love of Reading Foundation (the "Foundation"), which is committed to addressing educational inequality, and more specifically, the literacy crisis in Canada. The Foundation provides resources including new books and learning materials, training and year-round curation support to help ensure teachers, education staff, school administrators and other key stakeholders have the tools they need to promote literacy in their communities. With the support of the Company, its customers, employees, and suppliers, the Foundation has committed over $35.0 million to more than 1,000,000 students across Canada since 2004.

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

SOURCE Indigo Books & Music Inc.