Press Release: Indigo Reports Fiscal 2021 Third Quarter Financial Results - Exceptional holiday sales momentum dampened by government-mandated retail closures and capacity restrictions
Indigo Reports Fiscal 2021 Third Quarter Financial Results - Exceptional holiday sales momentum dampened by government-mandated retail closures and capacity restrictions
TORONTO, Feb. 4, 2021
TORONTO, Feb. 4, 2021 /CNW/ - Indigo Books & Music Inc. (TSX: IDG), Canada's largest book and lifestyle retailer, reported third quarter financial results.
Double-digit revenue growth in the first seven weeks of the quarter provided some cushion but could not overcome the severe impact of new government-mandated closures in several provinces, as well as severe customer capacity restrictions in markets with open stores. As a result, revenue for the third quarter ended December 26, 2020, initially headed to show real growth, came in at $365.4 million compared to revenue of $383.7 million in the same period last year, a decrease of $18.3 million or 5 percent.
Revenues were challenged by a significant wave of mandated COVID-19 store closures in Manitoba, Ontario and Quebec during the second part of November and December, a critical period of sales. The Company achieved exceptional e-commerce revenue growth of 92%, and the success of the Company's enhanced omnichannel capabilities, including click-and-collect, curbside pickup and Instacart, did blunt some of the effects of mandated re-closures. Bright spots in the quarter also included double-digit growth in the Company's baby and wellness categories and continued strength in its proprietary lifestyle brand OUI, showcasing customers' affinity for both core categories and new product assortment.
Commenting on the results, CEO Heather Reisman said: "These results are a testament to the demonstrated resilience of our teams and a deep affinity for our brand, achieved against massive disruption from mandated shut-downs and store limitations during the most important six weeks of our year. These shutdowns created a particularly uneven playing field in Ontario with 'essential' retailers selling all non-essential items, a practice disallowed by other provinces. Nevertheless, we remain energized by the momentum we saw pre-closures and look forward to having COVID-19 behind us."
Adjusted EBITDA for the period was $37.8 million for the 13-week period ended December 26, 2020, compared to $43.3 million for the same period last year. In the quarter, the Company recognized $9.7 million in occupancy expense abatement to share the financial burden of COVID-19 and $3.2 million in government support from the Canada Emergency Wage Subsidy.
Indigo reported net earnings of $30.7 million ($1.11 net earnings per basic common share) for the third quarter ended December 26, 2020, compared to net earnings of $25.8 million ($0.94 net earnings per basic common share) last year. This improvement was a result of income taxes and the application of previously unrecognized income tax losses.
With no outstanding debt and a cash balance of $229.4 million, the Company continues to be well positioned to manage through these uncertain times.
Indigo will host a conference call for analysts and investors to review these results at 9:00 a.m. (Eastern Time) tomorrow, February 5th, 2021. The call can be accessed by dialing 647-427-7450 from within the Toronto area, or 1-888-231-8191 outside of Toronto. The seven-digit participant code is 6671095.
A playback of the call will also be available by telephone until 11:59 p.m. (ET) on February 12, 2021. The call playback can be accessed after 12:00 p.m. (ET) on February 6, by dialing 416-849-0833 from within the Toronto area, or 1-855-859-2056outside of Toronto. The seven-digit replay passcode number is 6671095. The conference call transcript will be archived in the Investor Relations section of the Indigo website, www.indigo.ca.
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; 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 23, 2020 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 the world's first Cultural Department Store -- a physical and digital meeting place inspired by and filled with books, music, art, ideas, and beautifully designed lifestyle products. 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.
Indigo founded the Indigo Love of Reading Foundation in 2004 to address the underfunding of public elementary school libraries. Every year the Foundation provides grants to high-needs elementary schools so they can transform their libraries with the purchase of new books and educational resources. To date, the Foundation has committed over $32 million to more than 3,000 elementary schools, benefitting more than 1,000,000 students. Most recently in April 2020, in the wake of the COVID-19 pandemic and unprecedented nation-wide school closures, the Foundation committed $1.0 million to provide books to families in need. To learn more about Indigo, please visit the "Our Company" section at indigo.ca.
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