Indigo Reports FY23 Third Quarter Financial Results

Indigo delivers Q3 net earnings of $34.3M and Adjusted EBITDA of $40.8M

TORONTO, Feb. 9, 2023 /CNW/ – Indigo Books & Music Inc. (TSX: IDG), Canada’s largest book and lifestyle retailer, reported financial results for the 13-week period ended December 31, 2022 compared to the 13-week period ended January 1, 2022.

Following strong top-line performance in the first half of the fiscal year, sales for the third quarter reflected the pressures of the current macro-economic environment. The Company recognized total revenue of $422.7 million in the quarter, compared to $430.7 million in the same period last year, a decrease of 1.9%. While softer demand adversely impacted sales in the beginning of the quarter, the Company generated revenue growth from Black Friday onward. In the retail channel, where December sales exceeded the prior year, the Company also achieved a record-breaking Boxing week.¹ The online channel, which experienced a decline compared to the prior year, sustained 63% sales growth to the comparable pre-pandemic quarter and had a record-breaking Black Friday.

The Company delivered growth in its general merchandise business, demonstrating the ongoing success of an evolving product assortment. Double-digit growth was achieved in the baby, toys and wellness categories. Despite revenue declining year-over-year, the print business grew in sales and market share relative to the comparable pre-pandemic period.²

Commenting on the results, CEO Peter Ruis said: “Despite a recessionary external environment, we generated a creditable result as consumers cut back in response to the inflationary pressures. We continue to take strategic steps to increase productivity and generate sustainable and profitable growth. Our strength in the month of December demonstrates the power of our brand and Indigo’s position as a key gifting destination for Canadians.”

Adjusted EBITDA for the quarter was $40.8 million compared to $52.0 million in the same period last year. The impact of the current macro-economic environment extended past revenue, adversely effecting costs. The Company incurred increased cost of inventories, and incremental international freight, amongst other inflationary pressures. Customers shopped late, waiting for Black Friday deals. Adjusted EBITDA was further impacted by additional investment to support modernized ecommerce technology, as well as higher amortization of the Company’s right-of-use assets, as the prior year amortization was reduced by lease modifications recognized. Net earnings for the quarter totaled $34.3 million ($1.23 net earnings per basic common share), compared to $45.1 million ($1.62 net earnings per basic common share) in the same period in the prior year.

Indigo experienced a cybersecurity incident commencing on February 8th, 2023, resulting in internal operational disruptions and service disruptions to both the ecommerce and retail channels. The Company is working alongside third-party experts to resolve the situation and to understand if customer data has been accessed. Indigo’s main priorities are to protect customer data, limit the operational and financial impacts of this incident and safely resume full operations as quickly as possible.

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

To join the conference call without operator assistance, you may register and enter your phone number at https://bit.ly/3VZWeqe 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 50832338.            

A playback of the call will also be available by telephone until 11:59 p.m. (ET) on February 17^th, 2023. The call playback can be accessed after 12:00 p.m. (ET) on February 10^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 832338#. The conference call transcript will be archived in the Investor Relations section of the Indigo website, www.indigo.ca.

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; 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 2, 2022 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.

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).

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, baby, kids, wellness and lifestyle products, that support their customers every day and at key life stages by simplifying their journey to live with intention. 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 runs two annual national granting programs: the Literacy Fund Grant, which is a multi-year grant provided to high-needs schools across the country; and the Adopt a School program, a grassroots fundraising initiative that unites Indigo, its retail stores, Indigo’s staff, local schools, and their communities. In the wake of the COVID-19 pandemic and the unprecedented nation-wide school closures, the Foundation committed $1.0 million to provide books to families in need. With the support of the Company, its customers, employees, and suppliers, the Foundation has committed over $35.0 million to more than 3,500 high-needs elementary schools across Canada since 2004. The Foundation is dedicated to raising awareness about the critical importance of children’s literacy while providing essential literary support to high-needs children across Canada.

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

SOURCE Indigo Books & Music Inc.

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