In the fiscal year ended Mar. 29, 2014, Indigo lost C$31 million on revenue of C$867.7 million. Three years later, in the fiscal year ended Apr. 1, 2017, the Canadian retail chain has cemented its turnaround: revenue topped C$1 billion for the first time, and net earnings were C$20.9 million.
With a firm financial foundation, Indigo now appears ready to move beyond Canada. Reports surfaced last week that the retailer is likely to open its first American store sometime in early 2018. Although a spokesperson for the chain had no comment, in its annual report Indigo noted that the company continues to look for new opportunities “both within Canada and globally.”
Indigo’s ability to increase sales has been due in part to the broadening of its product mix, which led to the May 2016 decision by CEO Heather Reisman to create what she, in her letter to shareholders, called “our first true cultural department store.” Sales at the first revamped store were 25% higher than the slightly smaller outlet it replaced across the street in Toronto, Reisman said. Indigo executives were encouraged by the results from the newly conceived store; Reisman wrote that Indigo has “set the groundwork this year to begin a major three-year initiative to renovate our entire store network.” In fiscal 2017, Indigo renovated one superstore and three smaller-format stores.
Though Indigo intends to keep books as its core offering, it is also working to “become the premiere year-round gifting destination in Canada,” according to the annual report. To that end, Indigo will continue to expand its lifestyle and paper offerings, as well as the selection of toys and games in all its superstores and online. Upping its proprietary merchandise line—which includes expanding its line of gifts and lifestyle products in areas such as home, paper merchandise, and fashion accessories—is another priority. In fiscal 2017, the general merchandise category had the highest sales gain for the retailer, with a double-digit-percentage sales increase from fiscal 2016.
As a result of the change in buying trends, the sales mix changed in fiscal 2017. The print category accounted for 58.6% of Indigo revenue, down from 61.9% a year earlier, while the general merchandise category accounted for 37.7% of sales, up from 34.5% in the prior year. In terms of books, the company refined its bestseller program and expanded the staff picks and local authors programs. “Print sales remained solid” in fiscal 2017, Indigo said, as sales of Harry Potter and the Cursed Child offset declines in the adult coloring book category.
As well as the stores have done, Indigo’s fastest growth in the year came in its online segment, where sales jumped 12.8% over fiscal 2016, with gains in both print books and general merchandise. Online sales represented 14.5% of all Indigo revenue in fiscal 2017, up from 13.4% the previous year. Indigo said it will continue to improve its e-commerce platform to maintain its position as an omnichannel retailer.
Though Indigo founded Kobo in 2009 (and sold it to the Japanese e-commerce company Rakuten in 2011), sales of digital books and e-readers have never been a significant part of Indigo’s sales mix. Kobo sales fell in fiscal 2017, due, the company said, to industry-wide slowing of digital book sales.
While e-book sales fell last year, Indigo added to its store count for the first time in at least five years. It finished fiscal 2017 with 212 outlets (89 superstores and 123 smaller stores), one superstore more than it had in fiscal 2016. But Indigo hasn’t been immune to the challenges facing physical retailers—in fiscal 2013 it had 97 superstores and 134 smaller stores.
Indigo Fiscal 2016–2017 Results
|Segment Sales (C$ in millions)|
|Segment||Apr. 2, 2016||Apr. 1, 2017||Change||Change Comp Store Sales|
|Online (Including Kiosks)||C$133.3||C$148.2||11.2%||12.8%|
|Sales by Product Line|
1) Includes books, magazines, newspapers, and shipping revenue.
2) Includes lifestyle, paper, toys, calendars, music, DVDs, electronics, and shipping revenue.
3) Includes e-readers, e-reader accessories, Kobo revenue share, and shipping revenue.
4) Includes cafés, gift card breakage, loyalty program breakage, and corporate sales.