Total revenues at Chapters Inc. rose 22.4% to C$148.1 million for the second quarter ended October 2, 1999. Net income in the period was C$27.8 million, a figure that includes a C$35.9 million gain from the sale of an 11% stake in Chapters Online to Sequoia Capital as well as proceeds from Chapters Online's initial public offering. Excluding those one-time gains, Chapters would have had a net loss of C$8.1 million, compared to a loss of C$1.6 million in the second quarter in fiscal 1999. The loss in the most recent quarter was composed of a C$1.3 million loss from its retail operations, a C$5.2 million loss from Chapters Online and a C$1.6 million loss from the startup of Pegasus, the wholesaler in which Chapters has an 82% stake.
During the quarter, total retail sales increased 17.5% to C$134.7 million, with superstore sales increasing 39.1% to C$86.8 million despite a 0.3% decline in comparable store sales. Sales from traditional stores fell 8.2% to C$47.9 million, due to the closing of 30 stores and a drop of 0.7% in same store sales.
Revenues at Chapters Online hit C$6.4 million in the quarter, with the customer count up to 262,000. For the first half of the year, sales at Chapters Online hit C$10.1 million.
Regarding Pegasus, Dennis Zook, president of the wholesaler, said that the majority of publishers have now signed agreements and that he "looks forward to smoother operations going forward." He acknowledged that it had taken longer than expected to finalize terms with some major publishers and as a result Pegasus was caught without stock on some titles.
For the first six months of the year, total sales were up 22% to C$270.5 million, and the company reported net income, including extraordinary gains, of C$18.3 million, compared to a loss of C$4.9 in the first half of fiscal 1999.
