TORONTO, Aug. 12, 2021 /CNW/ - Indigo Books & Music Inc. (TSX: IDG),
Canada's largest book and
lifestyle retailer reported financial results for the 13-week
period ended July 3, 2021 compared to
the 13-week period ended June 27,
2020.
Revenue for the quarter increased $37.0
million or 27% to $172.1
million as many regions within the Company's retail channel
rebounded, driving double-digit growth in both the Company's book
and general merchandise businesses. Notably, the Company
experienced a surge in demand for its book business from a younger
demographic, fueled by the popularity of reading on TikTok
(#BookTok.) Revenue was further buoyed by the success of an
expanded assortment under the Company's proprietary lifestyle brand
OUI, showcasing customers' affinity for both core categories and
new product assortment. These results were achieved despite
Ontario closures, with over fifty
percent of the Company's store locations impacted by mandatory
closures in the first nine weeks.
The Company is well-positioned with an omnichannel strategy that
strongly resonated; in addition to the noted retail recovery, the
online business sustained growth around three times its pre-COVID
fiscal 20 levels and revenues through store-pick up capabilities
grew nearly five times from the same period last year.
Commenting on the results, CEO Heather
Reisman said: "our strong first quarter sales performance
reflects the beginning of a welcomed recovery in retail, the
continued strength of online and the Indigo brand in general.
In addition, it is a testament to our teams' successful management
of store re-openings for over half our retail fleet and thoughtful
inventory management. These results validate our ability to
evolve with changes in our environment, as we focus on delivering a
return to full-year adjusted EBITDA profitability."
Adjusted EBITDA for the quarter was a loss of $14.9 million compared to a loss of $23.7 million for the same period last year. This
improvement was driven by strong sales performance and stronger
merchandise margins across all channels as a result of lower
promotional discounting. These year-over-year improvements are also
notable given a decline in external COVID-19 labour support
provided in the current year and an increase in retail operating
expenses associated with store re-openings. Indigo reported a net
loss of $21.9 million ($0.79 net loss per basic common share) compared
to a net loss of $31.6 million
($1.15 net earnings per basic common
share) last year for the reasons discussed.
With no outstanding debt, a cash balance of $81.4 million and a $25.0
million revolving credit facility, the Company continues to
be well positioned to manage through to its full COVID-19
recovery.
Analyst/Investor Call
Indigo will host a conference call for analysts and investors to
review these results at 9:00 a.m. (Eastern
Time) tomorrow, August 13th, 2021. The call
can be accessed by dialing 416-764-8659 from within the
Toronto area, or 1-888-664-6392
outside of Toronto. The
eight-digit participant code
is 57914038.
A playback of the call will also be available by telephone until
11:59 p.m. (ET) on August 20th,
2021. The call playback can be accessed after 12:00 p.m. (ET) on August 13th,
2021, 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 914038. 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 information" within the
meaning of applicable Canadian securities legislation. To the
extent any forward-looking information constitutes "financial
outlooks" within the meaning of applicable Canadian securities
laws, such information is being provided as preliminary financial
and operational results. Financial outlooks, as with
forward-looking information generally, are, without limitation,
based on the assumptions and subject to various risks and
uncertainties that could cause actual results to differ materially
from those expressed in or implied in this news release. Among the
key factors that could cause such differences are: general
economic, market or business conditions; the future impacts and
government response to the COVID-19 pandemic, including any impact
to online and/or retail operations of the Company; competitive
actions by other companies; changes in laws or regulations; and
other factors, many of which are beyond the control of the Company,
as set out in the Company's annual information form dated
June 1, 2021 and available on the
Company's issuer profile on SEDAR at www.sedar.com.
Undue reliance should not be placed on such forward-looking
information and no assurance can be given that such events will
occur in the disclosed time frames or at all. Any forward-looking
information included in this news release is made as of the date of
this news release and the Company does not undertake an obligation
to publicly update such forward-looking information to reflect new
information, subsequent events or otherwise unless required by
applicable securities laws.
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, specifically adjusted
EBITDA, in this press release. These measures do not have
standardized meanings prescribed by IFRS and are therefore specific
to Indigo and may not be comparable to similar measures presented
by other companies.
For additional context see "Results of Operations" and "Non-IFRS
Financial Measures" in the Management's Discussion and Analysis
(which can be found at www.indigo.ca/investor-relations or
www.sedar.com).
About Indigo Books &
Music Inc.
Indigo is a publicly traded Canadian company listed on the
Toronto Stock Exchange (IDG). Indigo is Canada's leading book and lifestyle retailer,
offering a curated assortment of books, gifts, baby, kids, wellness
and lifestyle products, that support their customers every day and
at key life stages by simplifying their journey to live with
intention. Indigo believes in real books, in living life fully and
generously, in being kind to each other and that stories – big and
little – connect us.
Indigo founded the Indigo Love of Reading Foundation in 2004 to
address the underfunding of public elementary school libraries.
Every year the Foundation provides grants to high-needs elementary
schools so they can transform their libraries with the purchase of
new books and educational resources. Most recently, in the wake of
the COVID-19 pandemic and unprecedented nation-wide school
closures, the Foundation committed $1.0
million to provide books to families in need. With the
support of the Company, its customers, employees, and suppliers,
the Foundation has committed over $33
million to more than 3,000 high-needs elementary schools
across Canada since 2004.
|
Consolidated
Balance Sheets
|
|
(Unaudited)
|
|
As
at
|
As
at
|
As
at
|
|
July
3,
|
June
27,
|
April
3,
|
|
(thousands of
Canadian dollars)
|
2021
|
2020
|
2021
|
|
|
|
|
|
ASSETS
|
|
|
|
|
Current
|
|
|
|
|
Cash and cash
equivalents
|
81,412
|
110,563
|
84,935
|
|
Accounts
receivable
|
20,253
|
24,872
|
22,976
|
|
Inventories
|
221,389
|
218,124
|
215,114
|
|
Prepaid
expenses
|
10,005
|
6,747
|
12,278
|
|
Income taxes
receivable
|
-
|
138
|
-
|
|
Derivative
assets
|
-
|
1,622
|
-
|
|
Other
assets
|
1,752
|
2,271
|
2,120
|
|
Total current
assets
|
334,811
|
364,337
|
337,423
|
|
Loan
receivable
|
-
|
446
|
-
|
|
Property, plant, and
equipment, net
|
73,925
|
87,008
|
77,131
|
|
Right-of-use assets,
net
|
350,207
|
372,360
|
361,864
|
|
Intangible assets,
net
|
19,604
|
23,055
|
20,916
|
|
Equity investment,
net
|
2,156
|
2,353
|
2,156
|
|
Total
assets
|
780,703
|
849,559
|
799,490
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Current
|
|
|
|
|
Accounts payable and
accrued liabilities
|
159,931
|
175,130
|
145,193
|
|
Unredeemed gift card
liability
|
59,300
|
51,320
|
58,053
|
|
Provisions
|
2,455
|
2,203
|
2,365
|
|
Deferred
revenue
|
16,139
|
10,718
|
16,486
|
|
Short-term lease
liabilities
|
67,240
|
65,260
|
67,603
|
|
Derivative
liabilities
|
1,572
|
-
|
1,622
|
|
Total current
liabilities
|
306,637
|
304,631
|
291,322
|
|
Long-term accrued
liabilities
|
1,615
|
950
|
2,090
|
|
Long-term
provisions
|
678
|
672
|
827
|
|
Long-term lease
liabilities
|
470,684
|
492,701
|
482,671
|
|
Total
liabilities
|
779,614
|
798,954
|
776,910
|
|
Equity
|
|
|
|
|
Share
capital
|
226,999
|
226,986
|
226,986
|
|
Contributed
surplus
|
14,066
|
13,197
|
13,782
|
|
Retained
deficit
|
(238,614)
|
(190,404)
|
(216,668)
|
|
Accumulated other
comprehensive income (loss)
|
(1,362)
|
826
|
(1,520)
|
|
Total
equity
|
1,089
|
50,605
|
22,580
|
|
Total liabilities
and equity
|
780,703
|
849,559
|
799,490
|
|
Consolidated
Statements of Loss and Comprehensive Loss
|
|
(Unaudited)
|
|
13-week
|
13-week
|
|
period
ended
|
period
ended
|
|
July
3,
|
June
27,
|
|
(thousands of
Canadian dollars, except per share data)
|
2021
|
2020
|
|
|
|
|
Revenue
|
172,080
|
135,081
|
|
Cost of
sales
|
(101,643)
|
(96,944)
|
|
Gross
profit
|
70,437
|
38,137
|
|
Operating, selling,
and other expenses
|
(86,424)
|
(63,456)
|
|
Operating
loss
|
(15,987)
|
(25,319)
|
|
Net interest
expense
|
(5,959)
|
(6,284)
|
|
Loss before income
taxes
|
(21,946)
|
(31,603)
|
|
Income tax
expense
|
-
|
-
|
|
Net
loss
|
(21,946)
|
(31,603)
|
|
|
|
|
Other
comprehensive income (loss)
|
|
|
|
Items that are or may
be reclassified subsequently to net loss, net of taxes:
|
|
|
|
Change
in fair value of cash flow hedges
|
(1,278)
|
(909)
|
|
Reclassification of realized loss (gain)
|
1,328
|
(1,263)
|
|
Foreign
currency translation adjustment
|
108
|
-
|
|
Other
comprehensive income (loss)
|
158
|
(2,172)
|
|
|
|
|
Total
comprehensive loss
|
(21,788)
|
(33,775)
|
|
|
|
|
Net loss per
common share
|
|
|
|
Basic
|
$
|
(0.79)
|
$
|
(1.15)
|
|
Diluted
|
$
|
(0.79)
|
$
|
(1.15)
|
|
Consolidated
Statements of Cash Flows
|
|
(Unaudited)
|
|
13-week
|
13-week
|
|
period
ended
|
period
ended
|
|
July
3,
|
June
27,
|
|
(thousands of
Canadian dollars)
|
2021
|
2020
|
|
|
|
|
OPERATING
ACTIVITIES
|
|
|
|
Net loss
|
(21,946)
|
(31,603)
|
|
Adjustments to
reconcile net loss to cash flows from operating
activities
|
|
|
|
Depreciation of
property, plant, and equipment
|
4,039
|
4,591
|
|
Depreciation of
right-of-use assets
|
10,121
|
10,652
|
|
Amortization of
intangible assets
|
3,303
|
3,208
|
|
Loss on disposal of
capital assets
|
14
|
247
|
|
Share-based
compensation
|
288
|
300
|
|
Directors'
compensation recognized in contributed surplus
|
-
|
75
|
|
Rent
concessions
|
-
|
(2,411)
|
|
Other
|
(753)
|
259
|
|
Net change in
non-cash working capital balances related to operations
|
14,193
|
16,466
|
|
Interest
expense
|
6,257
|
6,498
|
|
Interest
income
|
(298)
|
(214)
|
|
Cash flows from
operating activities
|
15,218
|
8,068
|
|
|
|
|
INVESTING
ACTIVITIES
|
|
|
|
Net purchases of
property, plant, and equipment
|
(839)
|
(498)
|
|
Addition of
intangible assets
|
(1,991)
|
(1,705)
|
|
Proceeds from
disposal of equity investment
|
516
|
-
|
|
Interest
received
|
298
|
214
|
|
Cash flows used
for investing activities
|
(2,016)
|
(1,989)
|
|
|
|
|
FINANCING
ACTIVITIES
|
|
|
|
Repayment of
principal on lease liabilities
|
(10,705)
|
(9,232)
|
|
Interest
paid
|
(6,257)
|
(6,498)
|
|
Proceeds from share
issuances
|
9
|
-
|
|
Cash flows used
for financing activities
|
(16,953)
|
(15,730)
|
|
|
|
|
Effect of foreign
currency exchange rate changes on cash and cash
equivalents
|
228
|
(259)
|
|
|
|
|
Net decrease in
cash and cash equivalents during the period
|
(3,523)
|
(9,910)
|
|
Cash and cash
equivalents, beginning of period
|
84,935
|
120,473
|
|
Cash and cash
equivalents, end of period
|
81,412
|
110,563
|
|
Non-IFRS Financial
Measures
|
|
|
|
|
|
|
The following table
reconciles adjusted EBITDA to net loss before income taxes, the
most comparable IFRS measure:
|
|
|
|
|
|
|
13-week
|
|
13-week
|
|
|
period
ended
|
|
period
ended
|
|
|
July
3,
|
|
June
27,
|
|
|
(millions of Canadian
dollars)
|
2021
|
%
Revenue
|
2020
|
% Revenue
|
|
Revenue
|
172.1
|
100.0
|
135.1
|
100.0
|
|
Cost of
sales
|
(101.6)
|
59.0
|
(96.9)
|
71.7
|
|
Cost of
operations
|
(47.0)
|
27.3
|
(32.1)
|
23.8
|
|
Selling, general and
administrative expenses
|
(22.0)
|
12.8
|
(12.6)
|
9.3
|
|
Depreciation of
right-of-use assets
|
(10.1)
|
5.9
|
(10.7)
|
7.9
|
|
Finance charges
related to leases
|
(6.3)
|
3.7
|
(6.5)
|
4.8
|
|
Adjusted
EBITDA1
|
(14.9)
|
8.7
|
(23.7)
|
17.5
|
|
Depreciation of
property, plant and equipment
|
(4.0)
|
2.3
|
(4.6)
|
3.4
|
|
Amortization of
intangible assets
|
(3.3)
|
1.9
|
(3.2)
|
2.4
|
|
Loss on disposal of
capital assets
|
-
|
-
|
(0.2)
|
0.1
|
|
Net interest
income
|
0.3
|
0.2
|
0.2
|
0.1
|
|
Loss before income
taxes
|
(21.9)
|
12.7
|
(31.6)
|
23.4
|
|
1Earnings
before interest, taxes, depreciation, amortization, asset
disposals, and share of loss from equity investments, and includes
IFRS 16 right-of-use asset depreciation and associated finance
charges.
|
SOURCE Indigo Books & Music
Inc.