Indigo Books & Music Inc., Canada's leading book retailer, released its fourth quarter results for the quarter ending April 1, 2023 and full year results for the 52-week period also ending on April 1. For the year, Indigo saw revenue of C$1.058 billion, compared to C$1.062 billion in the prior year, a 0.4% decline. The company also reported a net loss of C$49.6 million for the year, compared against net profit of C$3.3 million the prior year.
The business was impacted by continuing inflation, which resulted in higher expenses, as well as a ransomware attack that impacted the company's online sales and internal logistics starting on February 8 and lasting for more than a month, Indigo said. As a result, fourth quarter sales fell about 12%, to C$194.2 million from the comparable period in 2022. Although Indigo said it could not quantify how much the ransomware attack hurt revenue, it did say costs associated with dealing with the crisis amounted to C$5.2 million. Indigo said it was talking to its insurance agency to try to recoup some of the expenses.
"This has been a turbulent year for Indigo, as the progress gained from our post-pandemic re-emergence was negatively impacted by adverse macro-economic factors," CEO Peter Ruis said. "These headwinds were furthered by the ransomware attack in our fourth quarter. I am incredibly thankful for our incredible teams, who have been working tirelessly to bring operations back to normal."
For the full year, online revenue decreased by C$68.6 million or 21.3% to C$253.1 million, while retail revenue was up $73.2 million or 10.6% to $761.8 million for the year. The shift, the company said, was largely a result of customers returning to in-store shopping as pandemic restrictions receded.
As far a sales trends at the company, print book sales declined by 3.7%, which the company blamed on its difficulty replenishing stock during the period is was recovering from the cyberattack. Non-book items and general merchandise sales were up 5.8%. Items in the paper, baby and wellness categories saw double-digit growth.
Looking ahead, "people are being more cautious," Ruis said on a call with analysts, noting they are showing price sensitivity and are looking for sales. He said that one are where the ransomware attack affected the company was in replenishment of stock, which was also impacted by higher expenses and slower deliveries as the global supply chain continued to recover from the pandemic. This was even more difficult as a result of delays at the port of Vancouver and rail deliveries in western Canada.
Ruis said the company hoped to save C$15 million in expenses in the coming year, in part from a flattening of shipping costs and by ordering less. "Our plan is to keep inventory lower than last year," he said.
Earlier this month, Indigo announced that founder Heather Reisman will be retiring and stepping down as executive chair and as a director of Indigo effective August 22. In addition, four board members resigned: Frank Clegg, Howard Grosfield, Anne Marie O'Donovan, and Dr. Chika Stacy Oriuwa.
Today, the chain announced it added Donald Lewtas, Joel Silver, and Markus Dohle, former global CEO of Penguin Random House, to the board of directors.
In the past year, Indigo opened one superstore and closed two others, as well as closing one small format store. In all, it now operates 170 stores in Canada, and one in New Jersey.