Online Sales grow by 17.9%
Earnings
improve by $19.8M
TORONTO, Feb. 2, 2016 /CNW/ - Indigo Books &
Music Inc. (TSX: IDG), Canada's
largest book, gift and specialty toy retailer reported 12.9% growth
in revenue for its third quarter ended December 26, 2015, marking Indigo's ninth
consecutive quarter of growth.
Revenue for the quarter was $383.2
million, up $43.8 million from
last year, despite operating one less superstore and four fewer
small format stores. On a comparable store basis, Indigo and
Chapters superstores posted 15.5% growth, while Coles and
Indigospirit small format stores increased by 13.4%. Sales
from Indigo's online channel, indigo.ca, grew by 17.9%.
Revenue growth was driven by continued double digit growth in
the general merchandise business and high single digit growth in
the core book business.
Commenting on the results, CEO Heather
Reisman said, "We're delighted to be reporting such a
meaningful improvement in our financial results for Q3. As
with every retailer, our third quarter is critical to the business
and Indigo performed strongly across all categories and in all
channels. We're incredibly proud of the Indigo team for
delivering an outstanding assortment of books, gifts and toys,
coupled with amazing service to our customers for the
holidays."
Indigo recognized net earnings of $52.8
million which is $2.03 net
earnings per common share for the quarter, compared to net earnings
of $33.0 million, or $1.28 net earnings per common share for the same
period last year. The improvement of $19.8 million was primarily driven by increased
revenues at a higher margin rate and a lower tax expense.
During the quarter, Indigo launched two expanded IndigoKids
locations, at Chapters Chinook Centre in Calgary and Chapters West Edmonton Mall in
Edmonton, bringing the best kids'
books and toys, as well as the highly popular American Girl®
Specialty Boutique to both locations in time for holiday gift
giving.
Also in the quarter, the Indigo Love of Reading Foundation
celebrated the global movement of Giving Tuesday by distributing
over $1 million in Indigo e-gift
cards to over 400 high needs elementary schools. Our Indigo,
Chapters and Coles store teams across the country were delighted to
deliver this incredible surprise to some of their local schools,
who will use the money to bolster their libraries with books,
learning tools and educational resources. These gifts would not
have been possible without the generous donations and support from
Indigo customers.
Analyst/Investor Call
Indigo will host a conference call for analysts and investors to
review these results at 9:00 a.m. (ET)
tomorrow, February 3,
2016. The call can be accessed by dialling 416-764-8688 from
within the Toronto area, or
1-888-390-0546 outside of Toronto. The eight digit
participant code is 53408737#.
A playback of the call will also be available by telephone until
10:00 a.m. (ET) on Wednesday February 10, 2016. The call
playback can be accessed after 11:00 a.m.
(ET) on February 3, 2016, 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
408737#. 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 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; 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.
Indigo founded the Indigo Love of Reading Foundation in
2004 to address the underfunding of public elementary school
libraries. Every year the Indigo Love of Reading Foundation
grants $1.5 million to 20 high-needs elementary schools
so they can transform their libraries with the purchase of new
books and education resources. To date, the Indigo Love of Reading
Foundation has committed over $22.9
million to over 2,000 schools through our signature
programs.
To learn more about Indigo, please visit the Our Company section
at indigo.ca.
Consolidated
Balance Sheets
|
(Unaudited)
|
|
|
|
|
|
|
|
|
As
at
|
As at
|
As at
|
|
|
December
26,
|
December
27,
|
March 28,
|
(thousands of
Canadian dollars)
|
|
2015
|
2014
|
2015
|
|
|
|
|
|
ASSETS
|
|
|
|
|
Current
|
|
|
|
|
Cash and cash
equivalents
|
|
312,254
|
287,227
|
203,162
|
Accounts
receivable
|
|
22,354
|
20,784
|
4,896
|
Inventories
|
|
220,507
|
223,260
|
208,395
|
Income taxes
recoverable
|
|
-
|
-
|
25
|
Prepaid
expenses
|
|
4,576
|
5,864
|
5,477
|
Total current
assets
|
|
559,691
|
537,135
|
421,955
|
Property, plant, and
equipment
|
|
58,340
|
56,771
|
54,886
|
Intangible
assets
|
|
15,593
|
17,902
|
16,587
|
Equity
investment
|
|
2,426
|
1,684
|
726
|
Deferred tax
assets
|
|
46,332
|
40,766
|
44,241
|
Total
assets
|
|
682,382
|
654,258
|
538,395
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Current
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
241,539
|
248,881
|
160,645
|
Unredeemed gift card
liability
|
|
68,735
|
64,232
|
48,211
|
Provisions
|
|
43
|
885
|
913
|
Deferred
revenue
|
|
13,414
|
13,380
|
13,298
|
Income taxes
payable
|
|
25
|
26
|
-
|
Current portion of
long-term debt
|
|
84
|
187
|
172
|
Total current
liabilities
|
|
323,840
|
327,591
|
223,239
|
Long-term accrued
liabilities
|
|
2,596
|
2,335
|
3,841
|
Long-term
provisions
|
|
83
|
99
|
110
|
Long-term
debt
|
|
9
|
94
|
56
|
Total
liabilities
|
|
326,528
|
330,119
|
227,246
|
Equity
|
|
|
|
|
Share
capital
|
|
207,897
|
204,970
|
205,871
|
Contributed
surplus
|
|
10,455
|
9,715
|
9,770
|
Retained
earnings
|
|
137,502
|
109,454
|
95,508
|
Total
equity
|
|
355,854
|
324,139
|
311,149
|
Total liabilities
and equity
|
|
682,382
|
654,258
|
538,395
|
Consolidated
Statements of Earnings and Comprehensive Earnings
|
(Unaudited)
|
|
|
|
|
|
|
|
13-week
|
13-week
|
39-week
|
39-week
|
|
period
ended
|
period
ended
|
period
ended
|
period
ended
|
|
December
26,
|
December
27,
|
December
26,
|
December
27,
|
(thousands of
Canadian dollars, except per share data)
|
2015
|
2014
|
2015
|
2014
|
|
|
|
|
|
Revenue
|
383,171
|
339,389
|
773,787
|
709,221
|
Cost of
sales
|
(214,057)
|
(191,709)
|
(429,669)
|
(398,265)
|
Gross
profit
|
169,114
|
147,680
|
344,118
|
310,956
|
Operating, selling,
and administrative expenses
|
(121,162)
|
(113,012)
|
(306,963)
|
(298,997)
|
Operating
profit
|
47,952
|
34,668
|
37,155
|
11,959
|
Interest on long-term
debt and financing charges
|
(4)
|
(19)
|
(9)
|
(48)
|
Interest income on
cash and cash equivalents
|
330
|
465
|
1,057
|
1,253
|
Share of earnings
from equity investment
|
2,426
|
1,684
|
1,700
|
1,086
|
Earnings before
income taxes
|
50,704
|
36,798
|
39,903
|
14,250
|
Income tax recovery
(expense)
|
2,091
|
(3,838)
|
2,091
|
(3,838)
|
Net earnings and
comprehensive earnings for the period
|
52,795
|
32,960
|
41,994
|
10,412
|
|
|
|
|
|
Net earnings per
common share
|
|
|
|
|
Basic
|
$
|
2.03
|
$
|
1.28
|
$
|
1.62
|
$
|
0.41
|
Diluted
|
$
|
2.02
|
$
|
1.27
|
$
|
1.61
|
$
|
0.40
|
Consolidated
Statements of Cash Flows
|
(Unaudited)
|
|
|
|
13-week
|
13-week
|
39-week
|
39-week
|
|
period
ended
|
period
ended
|
period
ended
|
period
ended
|
|
December
26,
|
December
27,
|
December
26,
|
December
27,
|
(thousands of
Canadian dollars)
|
2015
|
2014
|
2015
|
2014
|
|
|
|
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
|
|
|
|
Net earnings for the
period
|
52,795
|
32,960
|
41,994
|
10,412
|
Add (deduct) items
not affecting cash
|
|
|
|
|
|
Depreciation of
property, plant, and equipment
|
3,666
|
3,703
|
10,830
|
11,036
|
|
Amortization of
intangible assets
|
2,210
|
3,032
|
6,870
|
8,881
|
|
Net reversal of
capital assets
|
(1,619)
|
(458)
|
(1,619)
|
(458)
|
|
Loss on disposal of
capital assets
|
236
|
25
|
896
|
34
|
|
Share-based
compensation
|
341
|
315
|
951
|
813
|
|
Directors'
compensation
|
98
|
86
|
294
|
252
|
|
Deferred tax
assets
|
(2,091)
|
3,838
|
(2,091)
|
3,838
|
|
Other
|
(665)
|
(175)
|
(3,316)
|
(716)
|
Net change in
non-cash working capital balances
|
91,397
|
101,386
|
70,723
|
109,546
|
Interest on long-term
debt and financing charges
|
4
|
19
|
9
|
48
|
Interest income on
cash and cash equivalents
|
(330)
|
(465)
|
(1,057)
|
(1,253)
|
Income taxes
received
|
50
|
26
|
50
|
26
|
Share of earnings
from equity investment
|
(2,426)
|
(1,684)
|
(1,700)
|
(1,086)
|
Cash flows from
operating activities
|
143,666
|
142,608
|
122,834
|
141,373
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
|
|
|
|
Purchase of property,
plant, and equipment
|
(7,665)
|
(4,196)
|
(13,562)
|
(8,907)
|
Addition of
intangible assets
|
(2,106)
|
(1,384)
|
(5,880)
|
(5,196)
|
Proceeds from
disposal of capital assets
|
-
|
-
|
5
|
-
|
Interest
received
|
284
|
207
|
770
|
995
|
Cash flows used in
investing activities
|
(9,487)
|
(5,373)
|
(18,667)
|
(13,108)
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES
|
|
|
|
|
Repayment of
long-term debt
|
(40)
|
(170)
|
(135)
|
(536)
|
Interest
paid
|
(17)
|
(19)
|
(51)
|
(50)
|
Proceeds from share
issuances
|
1,209
|
317
|
1,466
|
988
|
Cash flows from
financing activities
|
1,152
|
128
|
1,280
|
402
|
|
|
|
|
|
Effect of foreign
currency exchange rate changes on cash and cash equivalents
|
724
|
435
|
3,645
|
982
|
|
|
|
|
|
Net increase in
cash and cash equivalents during the period
|
136,055
|
137,798
|
109,092
|
129,649
|
Cash and cash
equivalents, beginning of period
|
176,199
|
149,429
|
203,162
|
157,578
|
Cash and cash
equivalents, end of period
|
312,254
|
287,227
|
312,254
|
287,227
|
SOURCE Indigo Books & Music
Inc.