TORONTO, June 2, 2022
/CNW/ - Indigo Books & Music
Inc. (TSX: IDG), Canada's largest
book and lifestyle retailer reported financial results for the
52-week period ended April 2, 2022
compared to the 53-week period ended April
3, 2021.
Revenue increased $157.6 million
or 17.4% to $1.06 billion from
$904.7 million last year. These
top-line results also outperformed the preceding three fiscal years
including the pre-COVID year. These results were achieved
amidst challenging operational and market conditions that included
rolling store closures in the Company's first quarter and the
re-emergence of severe pandemic conditions from the Omicron wave
during its seasonally important third quarter. The success of the
Company's product strategy and strong revenue performance drove the
Company's return to profitability, with adjusted EBITDA of
$32.5 million and net earnings of
$3.3 million, an improvement of
$60.8 million and $61.2 million, respectively.
Revenue growth was driven by the success of Indigo's omnichannel
business, with the first good push of recovery delivered by the
Company's retail channel and an ecommerce business that nearly
doubled since the onset of the pandemic. Specifically, the online
channel sustained incremental growth of 98% to fiscal 2020 sales
levels. Demonstrating evolving omnichannel behaviours, Indigo's
digital platforms are also increasingly where customers begin
product discovery, bolstering in-store conversion.
Demand in the Company's core book business notably lifted by 8%,
fueled by the popularity of reading on TikTok. Customers' strong
reception to the Company's expanding general merchandise offering
further buoyed results, with assortment expansion driving sales
growth at or above 30% for its lifestyle and baby categories.
Indigo's proprietary brands also delivered outstanding sales, with
OUI (home) and NÓTATM (paper) together generating over a
quarter of the total revenue growth to last year, demonstrating the
value of the Company's exclusive brand portfolio in its long-term
strategy.
Commenting on the results, CEO Heather
Reisman said: "As a business, we were relentlessly focused
on evolving and driving performance – which together with
Canadians' affinity for the Indigo brand – yielded the beginning of
improved results. This COVID period though challenging, has
spurred creative thinking and we are energized by the opportunities
ahead of us."
Adjusted EBITDA for the year was $32.5
million compared to a loss of $28.3
million for the same period last year. The improvement of
$60.8 million was driven by robust
sales and strong merchandise margins, a result of a refined
promotional program and higher full-priced sell-through rates. It
should be noted that these results were achieved against lower
external COVID-19 labour support, with a corresponding increase in
retail operating expenses, and inflationary cost increases. These
downward pressures were partially off-set by a one-time payment of
$17.0 million, resulting from the
renegotiation of the Company's partnership with one of its café
vendors.
Indigo reported net earnings of $3.3
million ($0.12 net earnings
per basic common share) compared to a net loss of $57.9 million ($2.09 net loss per basic common share) last year,
for the reasons discussed.
Revenue for the fourth quarter was $220.7
million compared to revenue of $199.0
million for the same quarter last year, an increase of
10.9%. Strong omnichannel sales drove highest fourth-quarter
revenue in Company history, and improved pricing strategies
strengthened merchandise margins despite inflationary and fuel cost
pressures experienced in the period. Net loss for the fourth
quarter was $23.4 million compared to
a net loss of $39.5 million last
year, an improvement of $16.1
million.
With no outstanding debt and a cash balance of $86.5 million, the Company continues to be well
positioned to manage through any further macro-economic conditions,
including the COVID-19 pandemic and impacts of geopolitical
unrest.
Analyst/Investor
Call
Indigo will host a conference call for analysts and investors to
review these results at 10:00 a.m. (Eastern
Time) tomorrow, June 3rd,
2022. 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 83478049.
A playback of the call will also be available by telephone until
11:59 p.m. (ET) on June 10th, 2022. The call playback can be
accessed after 12:00 p.m. (ET) on
June 3rd, 2022, 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 478049 #. 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, which include geopolitical
events such as war, acts of terrorism, and civil disorder and the
adverse impacts of inflationary pressures; 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 2, 2022 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.
The Company supports a separate registered charity, called the
Indigo Love of Reading Foundation (the "Foundation"), which is
committed to addressing educational inequality, and more
specifically the literacy crisis in Canada. The Foundation runs two annual
national granting programs: the Literacy Fund Grant, which is a
multi-year grant provided to high-needs schools across the country;
and the Adopt a School program, a grassroots fundraising initiative
that unites Indigo, its retail stores, Indigo's staff, local
schools, and their communities. In the wake of the COVID-19
pandemic and the 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 $33.0 million to more
than 3,000 high-needs elementary schools across Canada since 2004. The Foundation is dedicated
to raising awareness about the critical importance of children's
literacy while providing essential literary support to high-needs
children across Canada.
To learn more about Indigo, please visit the "Our Company"
section at indigo.ca.
|
|
|
Consolidated Balance
Sheets
|
|
|
As
at
|
As
at
|
|
April
2,
|
April
3,
|
(thousands of Canadian
dollars)
|
2022
|
2021
|
|
|
|
ASSETS
|
|
|
Current
|
|
|
Cash and cash
equivalents
|
86,469
|
84,935
|
Accounts
receivable
|
12,941
|
22,976
|
Inventories
|
273,849
|
215,114
|
Prepaid
expenses
|
13,508
|
12,278
|
Other assets
|
3,246
|
2,120
|
Total current
assets
|
390,013
|
337,423
|
Property, plant, and
equipment, net
|
64,319
|
77,131
|
Right-of-use assets,
net
|
333,767
|
361,864
|
Intangible assets,
net
|
21,171
|
20,916
|
Equity investment,
net
|
97
|
2,156
|
Total
assets
|
809,367
|
799,490
|
LIABILITIES AND
EQUITY
|
|
|
Current
|
|
|
Accounts payable and
accrued liabilities
|
178,138
|
145,193
|
Unredeemed gift card
liability
|
62,653
|
58,053
|
Provisions
|
472
|
2,365
|
Deferred
revenue
|
20,699
|
16,486
|
Short-term lease
liabilities
|
69,100
|
67,603
|
Derivative
liabilities
|
631
|
1,622
|
Total current
liabilities
|
331,693
|
291,322
|
Long-term accrued
liabilities
|
1,068
|
2,090
|
Long-term
provisions
|
702
|
827
|
Long-term lease
liabilities
|
448,084
|
482,671
|
Total
liabilities
|
781,547
|
776,910
|
Equity
|
|
|
Share
capital
|
227,090
|
226,986
|
Contributed
surplus
|
14,618
|
13,782
|
Retained
deficit
|
(213,403)
|
(216,668)
|
Accumulated other
comprehensive loss
|
(485)
|
(1,520)
|
Total
equity
|
27,820
|
22,580
|
Total liabilities
and equity
|
809,367
|
799,490
|
|
|
|
Consolidated
Statements of Earnings (Loss) and Comprehensive Earnings
(Loss)
|
|
|
52-week
|
53-week
|
|
period
ended
|
period ended
|
|
April
2,
|
April 3,
|
(thousands of Canadian
dollars, except per share data)
|
2022
|
2021
|
|
|
|
Revenue
|
1,062,250
|
904,738
|
Cost of
sales
|
(619,212)
|
(567,902)
|
Gross
profit
|
443,038
|
336,836
|
Operating, selling, and
other expenses
|
(414,020)
|
(368,705)
|
Operating profit
(loss)
|
29,018
|
(31,869)
|
Net interest
expense
|
(23,694)
|
(24,784)
|
Share of loss from
equity investment
|
(32)
|
(197)
|
Impairment loss from
equity investment
|
(2,027)
|
-
|
Earnings (loss)
before income taxes
|
3,265
|
(56,850)
|
Income tax
expense
|
-
|
(1,017)
|
Net earnings
(loss)
|
3,265
|
(57,867)
|
|
|
|
Other comprehensive
income (loss)
|
|
|
Items that are or may
be reclassified subsequently to net earnings
(loss), net of taxes:
|
|
|
Change in fair value of
cash flow hedges
|
(639)
|
(4,507)
|
Reclassification of
realized loss
|
1,630
|
108
|
Foreign currency
translation adjustment
|
44
|
(119)
|
Other comprehensive
income (loss)
|
1,035
|
(4,518)
|
|
|
|
Total comprehensive
earnings (loss)
|
4,300
|
(62,385)
|
|
|
|
Net earnings (loss)
per common share
|
|
|
Basic
|
$
0.12
|
$
(2.09)
|
Diluted
|
$
0.12
|
$
(2.09)
|
|
|
|
|
|
Consolidated
Statements of Cash Flows
|
|
|
|
|
52-week
|
53-week
|
|
|
period
ended
|
period
ended
|
|
|
April
2,
|
April
3,
|
|
(thousands of Canadian
dollars)
|
2022
|
2021
|
|
|
|
|
|
OPERATING
ACTIVITIES
|
|
|
|
Net earnings
(loss)
|
3,265
|
(57,867)
|
|
Adjustments to
reconcile net earnings (loss) to cash flows from
operating activities
|
|
|
|
Depreciation of
property, plant, and equipment
|
16,006
|
17,158
|
|
Depreciation of
right-of-use assets
|
36,144
|
42,990
|
|
Amortization of
intangible assets
|
11,886
|
12,885
|
|
Loss on disposal of
capital assets
|
29
|
399
|
|
Share-based
compensation
|
864
|
666
|
|
Directors' compensation
recognized in contributed surplus
|
-
|
294
|
|
Deferred income tax
expense
|
-
|
1,017
|
|
Rent
concessions
|
-
|
(4,141)
|
|
Share of loss from equity investment
|
32
|
197
|
|
Impairment loss from equity investment
|
2,027
|
-
|
|
Other
|
(328)
|
(784)
|
|
Net change in non-cash
working capital balances related to
operations
|
(12,338)
|
150
|
|
Interest
expense
|
24,514
|
25,706
|
|
Interest
income
|
(820)
|
(922)
|
|
Cash flows from
operating activities
|
81,281
|
37,748
|
|
|
|
|
|
INVESTING
ACTIVITIES
|
|
|
|
Net purchases of
property, plant, and equipment
|
(3,248)
|
(4,093)
|
|
Addition of intangible
assets
|
(12,143)
|
(9,245)
|
|
Proceeds from disposal
of equity investment
|
1,032
|
-
|
|
Interest
received
|
820
|
922
|
|
Cash flows used for
investing activities
|
(13,539)
|
(12,416)
|
|
|
|
|
|
FINANCING
ACTIVITIES
|
|
|
|
Repayment of principal
on lease liabilities
|
(41,641)
|
(36,535)
|
|
Interest
paid
|
(24,514)
|
(25,706)
|
|
Proceeds from share
issuances
|
76
|
-
|
|
Cash flows used for
financing activities
|
(66,079)
|
(62,241)
|
|
|
|
|
|
Effect of foreign
currency exchange rate changes on cash and
cash equivalents
|
(129)
|
1,371
|
|
|
|
|
|
Net increase
(decrease) in cash and cash equivalents during the
period
|
1,534
|
(35,538)
|
|
Cash and cash
equivalents, beginning of period
|
84,935
|
120,473
|
|
Cash and cash
equivalents, end of period
|
86,469
|
84,935
|
Non-IFRS Financial Measures
|
|
The following table
reconciles adjusted EBITDA to net earnings (loss) before income
taxes, the most comparable IFRS measure:
|
|
|
|
|
|
|
52-week
|
|
53-week
|
|
|
period
ended
|
|
period ended
|
|
|
April
2,
|
|
April 3,
|
|
(millions of Canadian
dollars)
|
2022
|
%
Revenue
|
2021
|
% Revenue
|
Revenue
|
1,062.3
|
100.0
|
904.7
|
100.0
|
Cost of
sales
|
(619.2)
|
58.3
|
(567.9)
|
62.8
|
Cost of
operations
|
(245.7)
|
23.1
|
(212.8)
|
23.5
|
Selling, general and
administrative expenses
|
(104.3)
|
9.8
|
(83.6)
|
9.2
|
Depreciation of
right-of-use assets
|
(36.1)
|
3.4
|
(43.0)
|
4.8
|
Finance charges related
to leases
|
(24.5)
|
2.3
|
(25.7)
|
2.8
|
Adjusted
EBITDA1
|
32.5
|
3.1
|
(28.3)
|
3.1
|
Depreciation of
property, plant and equipment
|
(16.0)
|
1.5
|
(17.2)
|
1.9
|
Amortization of
intangible assets
|
(11.9)
|
1.1
|
(12.9)
|
1.4
|
Gain (loss) on disposal
of capital assets
|
0.0
|
0.0
|
0.8
|
0.1
|
Net interest
income
|
0.8
|
0.1
|
0.9
|
0.1
|
Share of loss from
equity investment
|
0.0
|
0.0
|
(0.2)
|
0.0
|
Impairment loss from
equity investment
|
(2.0)
|
0.2
|
-
|
-
|
Earnings (loss)
before income taxes
|
3.3
|
0.3
|
(56.9)
|
6.3
|
1
Earnings before interest, taxes,
depreciation, amortization, asset disposals, share of loss from
equity investment and impairment, and includes IFRS 16 right-of-use
asset depreciation and associated finance charges.
|
SOURCE Indigo Books & Music
Inc.