Indigo Books & Music’s efforts to remake its inventory mix to include much more than books proved expensive for the fiscal year ended March 29, 2014. The Canadian chain reported a net loss of C$31 million in the year compared to net earnings of C$4.3 million in fiscal 2013. Sales slipped 1.3%, to C$868 million.
Indigo attributed the large loss to “ significant” investments made to accelerate its transformation into a broader-based retailer plus higher severance costs due to a fourth-quarter reorganization of its workforce. Other noncash impairment charges and somewhat lower margin rates due to a more competitive retail environment also contributed to the loss. The drop in sales was due to the lack of bestsellers that matched the scope of Fifty Shades and Hunger Games in fiscal 2013, lower e-reader sales and a net loss of five outlets, Indigo reported. Excluding the impact of the Fifty Shades and Hunger Game trilogies, revenue increased 1.3%.
On a comparable store basis, Indigo and Chapters superstore revenue decreased 0.9%, while Coles and Indigospirit small format store revenue decreased 5.0%. Excluding the blockbuster titles, comparable store sales increased 1.3% in superstores and 0.4% in small format stores.
Commenting on the results, CEO Heather Reisman said in a statement, “We feel strongly that the investments made to accelerate our transformation are absolutely right to ensure Indigo remains a strong, vibrant and valued brand for customers, employees and shareholders. Based on performance so far this quarter, we are certainly seeing the traction we hoped for with our investments."
Indigo’s transformation efforts included the launch of the first two American Girl Specialty Boutiques in its Yorkdale Mall location, and Chapters on Robson Street in Vancouver.