Revenue at Indigo Books & Music, Canada’s largest book retail chain, fell 0.8% in the first quarter ended June 30, to C$186.5 million, but the chain's net loss was cut to to C$5.5 million from C$12 million last year's comparable period. Improvement in margins and lower costs were cited as the biggest factors in lowering the loss.

Indigo CEO Heather Reisman said in a statement that, “we're encouraged that our efforts to improve margins and drive productivity, two of our top strategic priorities for this year, are clearly showing positive results." Indigo also attributed the improvement to the elimination of losses from discontinued operations as a result of the sale of its digital reading subsidiary company Kobo to the Japanese e-commerce giant Rakuten in January 2012.

The decline in revenue was due to lower sales of Kobo digital reading devices that Indigo attributed to strong sales last year following the launch of the Kobo Touch reader and a delay in the launch of new Kobo devices. Offsetting the declines in digital readers was a 0.6% increase in trade book sales that benefitted from strong sales of the Fifty Shades and Hunger Games trilogies. Reisman also noted that Indigo’s decision to change its product mix in 2011, which reduced book inventory significantly to make room for gift, lifestyle and children’s products, is paying off with “continued double digit growth” in the general merchandise business.

Looking at results by outlet, Indigo and Chapters superstores revenues were down 0.9%, while Coles and IndigoSpirit small format stores were up 6.0% on a comparable store basis.

During the quarter Indigo also completed the upgrade of its retail distribution facility during the quarter.