A number of events combined to drag down sales and earnings in Indigo Books & Music's second quarter ended October 2.

Total revenue slipped by about 1%, to C$168.5 million ($140 million), and the net loss for the period increased to C$8.2 million from C$7.6 million. The sale of Indigo's college bookstore division, the closing of 10 stores and inventory issues associated with the implementation of a new SAP inventory management system all contributed to the sales decline. Sales at superstores open for at least one year inched up 0.1% in the quarter, while comparable-store sales at mall outlets fell 0.7%. For the first half of fiscal 2005, sales fell 3%, to C$324.4 million, and the net loss increased to C$19.5 million from C$19.1 million.

Indigo CEO Heather Reisman said that the company is dealing with the "inevitable adjustments" associated with stabilizing a new inventory system as rapidly as possible. "We are looking forward to medium-term benefits this new tool will provide, from highly targeted inventory for each of our trade areas to enhanced customer service," Reisman said.

Sales at Indigo's e-tailing unit, chapters.indigo.ca, rose 34.7% in the quarter, to C$13.9 million. Earlier this month, Indigo launched a new version of chapters.indigo.ca that features more used books, more music and more DVDs, plus downloads of audio books through a partnership with Audible.