Total revenue at Indigo Books & Music rose 1.3% for the third quarter ended December 28, to C$277.4 million ($180 million). Profits, however, jumped in the period with operating earnings rising 16.6%, to C$40.7 million, and net income increasing 63.8%, to C$30.8 million.
The profit improvement was due to Indigo's ability to increase sales while operating fewer stores than a year ago. The company finished the quarter with 89 superstores compared to 93 on December 29, 2001, and the number of mall stores dropped to 181 from 190. Offsetting the decline in the number of outlets was a 3.5% increase in comparable-store sales driven by a 5% increase in same-store sales at Indigo's superstores. Comparable-store sales fell 1.8% at mall stores because of weak customer traffic. The closing of 14 outlets helped to reduce Indigo's distribution costs in the quarter and, along with a better product mix, contributed to higher margins at the bookstore chain.
For the first nine months of fiscal 2003, revenue rose 7.1%, to C$605 million, and operating earnings increased 17.2%, to C$40.1 million. Net income was C$10 million in those nine months compared to a loss of C$21.1 million a year ago, a figure that includes a C$21.2 million restructuring charge. Indigo said the sales gain was primarily the result of a 5.1% increase in comparable-store sales and improvement in its online unit, which reported a 19.7% increase in sales in the year to date.