Indigo Reports Full Year Results: Record revenues and impressive comparable growth of 6.2%

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Indigo Reports Full Year Results: Record revenues and impressive comparable growth of 6.2%

Canada NewsWire

TORONTO, May 29, 2018 /CNW/ - Indigo Books & Music Inc. (TSX: IDG), Canada's largest book, gift and specialty toy retailer reported revenue of $1,079.4 million for its fiscal year ended March 31, 2018. Total revenue increased by $59.6 million or 5.8% compared to the previous year. Total comparable sales, including both online sales and comparable store sales, increased by 6.2%.

Revenue growth was driven by continued double-digit growth in general merchandise, most notably lifestyle products and toys, while book sales experienced a slight decline cycling over the blockbuster release of Harry Potter and the Cursed Child last year.

Commenting on the results, CEO Heather Reisman said: "We are happy to report the biggest year in our history and the eighteenth straight quarter of comparative growth – something we are extremely proud of, especially in light of the difficult retail climate. When we set out to create a book lover's cultural department store, our goal was to conceive a space that inspired and enriched customers. The enthusiasm and engagement we have seen from our customers as we have transformed our stores confirms that we are fully realizing that goal. We look forward to the year ahead as we continue to invest in our retail, online and supply chain operations, and we open our very first store in the US, where we are excited to bring our brand to the largest retail market in the world."

Indigo reported net earnings of $21.8 million ($0.81 net earnings per common share) compared to $20.9 million ($0.79 net earnings per common share) last year. The improvement in net earnings was driven by improved revenue, partially offset by lower margin rates as a result of a business shift to the online channel and increased operating, selling and administrative expenses. Higher costs were driven by higher volumes and investments in the Company's long-term growth, such as the continued redevelopment of its stores, as well as the expansion of its distribution centres and digital teams. A change in accounting estimates for breakage also contributed to earnings growth in fiscal 2018. Indigo ended the year in a very strong financial position with cash and short-term investments of $210.3 million and no debt.

Revenue for the fourth quarter was $215.3 million, up $5.8 million from the same quarter last year. Total comparable sales, including both online sales and comparable store sales, increased by 6.2% in the fourth quarter. Net loss for the quarter was $10.8 million compared to a net loss of $8.9 million last year. The improvement in revenue was offset by higher operating costs driven by the Ontario minimum wage increase and higher fixed costs due to expansion of the Company's distribution centres in Ontario and Alberta. 

The Company rolled out its new store concept to nine more stores in fiscal 2018.  The acceleration of the Company's retail transformation will continue in the coming year, including the opening of its first location in the U.S. Additionally, the Company expanded its online distribution facilities in Ontario and acquired a new facility in Alberta to support its growth and to provide faster, more efficient service to its customers across Canada.

In fiscal 2018, Indigo again reached record-high employee engagement and customer satisfaction scores with a 90% engagement level and Net Promoter Score of 75%. Indigo was also named the top Canadian retail employer brand, and number four Canadian employer brand overall, according to the annual award given by Randstad Canada, a staffing, recruitment, and HR company. Furthermore, Indigo was voted fourth best company to work for in Ontario by Indeed, a leading search engine for job-listings.

Also in May 2018, the Indigo Love of Reading Foundation granted an additional $1.5 million to 30 high-needs elementary schools across Canada, bringing the total committed by the Foundation to $28 million since its inception in 2004.

Analyst/Investor Call

Indigo will host a conference call for analysts and investors to review these results at 5:30 p.m. (Eastern Time) today, May 29th, 2018. The call can be accessed by dialing 416-764-8688 from within the Toronto area, or 1-888-390-0546 outside of Toronto. The eight digit participant code is 47198928.

A playback of the call will also be available by telephone until 11:59 p.m. (ET) on Tuesday, June 5th, 2018. The call playback can be accessed after 7:00 p.m. (ET) on Tuesday, May 29st, 2018, by dialing 416-764-8677 from within the Toronto area, or 1-888-390-0541 outside of Toronto. The six-digit replay passcode number is 198928#. The conference call transcript will be archived in the Investor Relations section of the Indigo website, www.indigo.ca.

Forward-Looking Statements

Statements contained in this news release that are not historical facts are forward-looking statements which involve risk and uncertainties that could cause results to differ materially from those expressed in the forward-looking statements. Among the key factors that could cause such differences are: general economic, market or business conditions; competitive actions by other companies; changes in laws or regulations; and other factors, many of which are beyond the control of the Company.

Non-IFRS Financial Measures

The Company prepares its consolidated financial statements in accordance with International Financial Reporting Standards ("IFRS"). In order to provide additional insight into the business, the Company has also provided non-IFRS data, including total comparable sales, in the press release above. This measure does not have a standardized meaning prescribed by IFRS and is therefore specific to Indigo and may not be comparable to similar measures presented by other companies. Total comparable sales is a key indicator used by the Company to measure performance against internal targets and prior period results. This measure is commonly used by financial analysts and investors to compare Indigo to other retailers.

Total comparable sales is based on comparable retail store sales and includes online sales for the same period. Comparable retail store sales are defined as sales generated by stores that have been open for more than 52-weeks.

About Indigo Books & Music Inc.

Indigo is a publicly traded Canadian company listed on the Toronto Stock Exchange (IDG). As the largest book, gift and specialty toy retailer in Canada, Indigo operates in all provinces under different banners including Indigo Books & Music; Indigospirit; Chapters; and Coles. The online channel, indigo.ca, offers a one-stop online shop with a robust selection of books, toys, home décor, stationery, and gifts.

Indigo founded the Indigo Love of Reading Foundation in 2004 to address the underfunding of public elementary school libraries.  Every year the Indigo Love of Reading Foundation provides grants to high-needs elementary schools so they can transform their libraries with the purchase of new books and educational resources. To date, the Indigo Love of Reading Foundation has committed over $28 million to 3,000 elementary schools, benefitting more than 900,000 students.

To learn more about Indigo, please visit the Our Company section at indigo.ca.

Consolidated Balance Sheets








 As at


 As at



 March 31,


 April 1,

(thousands of Canadian dollars)


2018


2017






ASSETS





Current





Cash and cash equivalents


150,256


130,438

Short-term investments


60,000


100,000

Accounts receivable


6,747


7,448

Inventories


264,586


231,576

Prepaid expenses


4,124


11,706

Derivative assets


1,439


266

Assets held for sale


-


1,037

Total current assets


487,152


482,471

Property, plant, and equipment


82,314


65,078

Intangible assets


24,215


15,272

Equity investments


4,330


1,800

Deferred tax assets


35,563


43,981

Total assets


633,574


608,602

LIABILITIES AND EQUITY





Current





Accounts payable and accrued liabilities 


176,479


170,611

Unredeemed gift card liability


44,218


50,396

Provisions


166


110

Deferred revenue


8,807


12,852

Income taxes payable 


152


360

Derivative liabilities


327


-

Total current liabilities


230,149


234,329

Long-term accrued liabilities


2,283


2,378

Long-term provisions


45


51

Total liabilities


232,477


236,758

Equity





Share capital


221,854


215,971

Contributed surplus


11,621


10,671

Retained earnings 


166,807


145,007

Accumulated other comprehensive income


815


195

Total equity


401,097


371,844

Total liabilities and equity


633,574


608,602


 

Consolidated Statements of Earnings (Loss) and Comprehensive Earnings (Loss)









13-week

13-week

52-week

52-week



period ended

period ended

period ended

period ended



March 31,

April 1,

March 31,

April 1,

(thousands of Canadian dollars, except per share data)


2018

2017

2018

2017







Revenue 


215,323

209,505

1,079,425

1,019,845

Cost of sales 


(122,639)

(116,032)

(604,094)

(565,640)

Gross profit


92,684

93,473

475,331

454,205

Operating, selling, and administrative expenses


(108,668)

(105,706)

(448,909)

(428,981)

Operating profit (loss)


(15,984)

(12,233)

26,422

25,224

Net interest income 


999

669

3,010

2,196

Share of earnings (loss) from equity investments


(356)

(347)

1,049

1,617

Earnings (loss) before income taxes


(15,341)

(11,911)

30,481

29,037

Income tax expense







Current


(399)

(335)

(489)

(335)


Deferred


4,981

3,390

(8,192)

(7,784)

Net earnings (loss)


(10,759)

(8,856)

21,800

20,918







Other comprehensive income (loss)






Items that are or may be reclassified subsequently to net earnings:






Net change in fair value of cash flow hedges


1,470

(519)

(2,648)

1,357


[net of taxes of 897 and (608); 2017 - (496) and (1182)]






Reclassification of net realized (gain) loss


828

(62)

3,268

(1,162)


[net of taxes of (1,194) and (302) ; 2017 - 425 and 23]






Other comprehensive income (loss)


2,298

(581)

620

195







Total comprehensive earnings (loss)


(8,461)

(9,437)

22,420

21,113







Net earnings (loss) per common share






Basic


($0.40)

($0.33)

$0.81

$0.79

Diluted 


($0.40)

($0.33)

$0.80

$0.78


 

Consolidated Statements of Cash Flows





52-week

52-week


period ended

period ended


March 31,

April 1,

(thousands of Canadian dollars)

2018

2017




CASH FLOWS FROM OPERATING ACTIVITIES



Net earnings

21,800

20,918

Adjustments to reconcile net earnings to cash flows from operating activities




Depreciation of property, plant, and equipment 

19,074

16,612


Amortization of intangible assets

7,922

8,573


Net reversal of capital assets

-

(963)


Loss on disposal of capital assets

776

2,770


Share-based compensation

1,588

1,400


Directors' compensation

341

367


Deferred tax assets

8,192

7,784


Disposal of assets held for sale

1,037

(1,037)


Other

1,042

147

Net change in non-cash working capital balances

(29,335)

(17,196)

Interest expense

10

36

Interest income

(3,020)

(2,232)

Income taxes received

-

51

Share of earnings from equity investments

(1,049)

(1,617)

Cash flows from operating activities

28,378

35,613




CASH FLOWS FROM INVESTING ACTIVITIES



Purchase of property, plant, and equipment

(37,080)

(19,774)

Addition of intangible assets 

(16,871)

(10,089)

Change in short-term investments

40,000

(100,000)

Distribution from equity investments

1,233

1,238

Interest received

2,872

1,190

Investment in associate

(2,714)

-

Cash flows used for investing activities

(12,560)

(127,435)




CASH FLOWS FROM FINANCING ACTIVITIES



Repayment of long-term debt

-

(53)

Interest paid

-

(28)

Proceeds from share issuances

4,904

4,966

Cash flows from financing activities

4,904

4,885




Effect of foreign currency exchange rate changes on cash and cash equivalents

(904)

887




Net increase (decrease) in cash and cash equivalents during the period

19,818

(86,050)

Cash and cash equivalents, beginning of period

130,438

216,488

Cash and cash equivalents, end of period

150,256

130,438

 

Non-IFRS Financial Measures

The following table reconciles total comparable sales to revenue, the most comparable IFRS measure.


13-week

13-week


52-week

52-week



period ended

period ended


period ended

period ended



March 31,

 April 1,


March 31,

 April 1,


(millions of Canadian dollars)

2018

2017

% increase

2018

2017

% increase 

Revenue

215.3

209.5

2.8

1,079.4

1,019.8

5.8

Adjustments








Other revenue 1

(3.5)

(8.4)


(30.4)

(28.8)



Stores not in both fiscal periods

(9.6)

(10.6)


(24.3)

(25.6)


Total comparable sales

202.2

190.5

6.2

1,024.7

965.4

6.2

1Includes cafés, irewards, gift card breakage, plum breakage, and corporate sales.

 

SOURCE Indigo Books & Music Inc.

View original content: http://www.newswire.ca/en/releases/archive/May2018/29/c2129.html

Copyright CNW Group 2018

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