Indigo Books & Music's strategy of relying less on printed books was evident in the second quarter as Canada’s largest bookstore chain reported that it had strong gains in its digital, gift and toy businesses, while its core book business “experienced a challenging quarter against a very strong line up of titles in the same period last year.” Overall, Indigo revenue rose 3.8%, to C$214.8 million, and the company had a net loss of C$1.8 million compared to earnings of C$2.2 million in last year’s second quarter. Indigo said the loss was the result of continued investment in Indigo’s digital initiatives—it remains a 59% owner of Kobo—plus costs associated with expanding its gift and toy operations.
In the quarter ended October 2, 2010, same store sales for Indigo’s superstores fell 0.7%, while comp sales at its smaller format stores dropped 4.8%. The strong performance of toys and games in the quarter, “reinforced our decision to expand these categories meaningfully in a majority of stores moving forward,” Indigo CEO Heather Reisman said in a statement. During the quarter, Indigo expanded toy sections in six stores and the company said it expects to be the largest specialty toy retailer in Canada in time for the holidays.
And while Indigo said sales of Kobo e-readers and e-books grew rapidly in the quarter, the company reported that to help cover additional working capital needs for Kobo, a private placement is being planned. Terms and the amount to be raised will be announced at a later date.
For the first half of fiscal 2011, total revenue rose 4.6%, to C$419 million, and the retailer had a loss of C$7.1 million compared to a loss of C$104,000 last year.
