Total revenue at Indigo Books & Music rose 4.5% in the third quarter ended December 31, 2016, over the same period in 2015. Sales were C$400.3 million, up from C$383.2 million in the prior year. Net income fell to C$40 million from C$52.8 million in the third quarter ended December 31, 2015, due mainly to an income tax expense of C$14.5 million.
The sales increase was driven by a 3.8% rise in same store sales, which offset the net loss of three outlets. While sales of books were flat in the quarter, Indigo’s general merchandise business had double-digit gains led by its lifestyles category.
In a statement, Indigo CEO Heather Reisman noted that the sales increase in the most recent quarter followed a 13% gain in the 2015 quarter over the same period in 2014.
As part of its strategy to enhance customer experience, Indigo has begun remodeling four Chapters stores to fit the Indigo model and expects to renovate 10 to 11 stores this year. Changes are being made based on lessons learned from the new concept Sherway Gardens store that opened in suburban Toronto last year.
Overall foot traffic at the stores was down slightly during the quarter but traffic to the online store was up — so much so that Indigo acknowledged during its conference call with investors that it struggled with fulfilling orders.
"We see a tremendous opportunity in online," said Reisman, adding later "There's opportunity in customers buying in both channels."
For the first nine months of fiscal 2017, revenue was up 4.8%, to C$810.3 million, and earnings were C$29.8 million, down from C$42 million in the same period in fiscal 2016.