News

Indigo profits dip in third quarter

10.02.12 | Lisa Campbell

Indigo Books & Music has reported a fall in profit of C$3.3million (£2.09m) in its third quarter due to high discounting of physical books and increasing sales of "lower margin e-readers."

The Canadian bookselling chain reported a net profit for the quarter ending 31st December of C$23.7m, down from C$27m for the same period in 2010, despite revenues rising by 0.5% to C$352.9m.

Indigo c.e.o Heather Reisman said: "The reduced profit was due to lower gross margins as a result of increased promotional discounts to drive print sales and increased sales of low margin e-readers. This margin impact has not yet been offset by expected growth in the gift, lifestyle and toy businesses." 

In the time period, Indigo sold all its shares in spin-off e-book company Kobo to its new Japanese owner Rakuten for an aggregate price of US$315m, with the company planning to keep the sum "to support its growth and transformation strategy". Indigo received US$146.1m in the sale of Kobo to Rakuten for its shareholding.

The bookselling chain reported it "substantially" changed its product mix during the quarter, reducing its book stock while increasing its gift, home and toys categories.

Reisman added: "We're very pleased with our holiday results. We recorded the highest sales day in the history of our company during December and experienced double digit growth in our gift, lifestyle, and toy businesses."

The third quarter also saw a C$4 million non-cash asset and impairment charge, and without the charge, Reisman said net profit would have increased by C$700,000.

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