Indigo Books & Music reported a 1.1% drop in revenue, to C$202 million, in the first quarter ended July 2 compared with the same quarter last year. Indigo attributed the drop to lower print book sales, but noted that its digital business grew by 170%, accelerating late in the quarter following the launch of the Kobo Touch eReader. (Kobo was spun off as a separate company in December 2009, but Indigo maintains a controlling interest.)
"We are very pleased with the growth in our digital business,” Indigo CEO Heather Reisman said. “In the short term our retail business will be challenged. However we are confident that our strategy to transition to become a full lifestyle retailer will bear fruit." This fall, the company intends to officially launch its own brand of gift and lifestyle products, which means that less space will be devoted to books. Indigo said it established a C$3.2 million inventory provision for its annual summer clearance sale because it intends to discount more aggressively to clear a larger amount of product than in prior years.
On a comparable store basis, Indigo and Chapters superstores posted a 5.4% drop, while Coles and IndigoSpirit small format stores were down 5.2%.
The net loss attributable to shareholders for the quarter was C$18 million compared to C$5 million last year. Reisman said: "The results were expected as we invest both in the growth of our digital business and in preparing to launch our proprietary gift and lifestyle business in the fall of this year."
