Indigo Books & Music, Canada's leading book retailer, reported strong first quarter results. For the 13-week period ended July 3, 2021, revenue was C$172.1 million, a 27% hike over the same period in 2020. With the increase in revenue, Indigo cut its net loss in the period to C$21.9 million from C$31.6 million a year ago.
The boost in sales comes in a period when stores in Ontario, Canada's most populous province, partially reopened after one of the longest lockdowns in the the world. Nevertheless, over half of Indigo's stores were still impacted by lockdowns, either partial or full, until late in the quarter.
In addition to re-openings, Indigo credited a surge in sales to younger customers fueled by book marketing on TikTok, which prompted sales of backlist titles, an increase in capacity for click-and-collect facilities at stores, as well as a boost in sales of the chain's proprietary line of sidelines.
"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," CEO Heather Reisman, said. "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."
In line with the return to in-store shopping across Canada, online sales fell 17.5% for the 13-week period, dropping from C$90.3 million for the same period in 2020 to C$74.5 million. Sales at superstores soared 113% in the period and sales at small format store jumped 127%.
In a conference call with investors, Craig Louden, Indigo's CFO and executive v-p of supply chain, said that online sales were, "well beyond historic levels" and the company continued to see online sales a "path to growth." He added that they have seen "new, younger customers come to the online channel and expect them to stay there." Online sales, which include sales through store kiosks, accounted for 43% of company revenue in the just concluded quarter, down from 66% in the comparable quarter a year ago.
Reisman said the pandemic will lead to more changes at the store. "This protracted pandemic has changed the consumer. What we are seeing is an evolution of the customers, And we see huge opportunity for both [physical and online] channels evolve. Right now we are focusing all our attention on digital investment."
Asked about possible store closures, Reisman said they have no plans to open or close any further retail stores, leaving the number at 89 small format stores and 89 superstores. "To the extent we are looking at [retail] expansion, we will be looking outside of Canada," she said. Defending criticism of the prior performance of the Indigo store in the Short Hills Mall in New Jersey, currently the chain's only U.S. location and store outside of Canada, Reisman said, "we are seeing wonderful improvements in the performance of that store."
