TORONTO, June 1, 2021 /CNW/ - Indigo Books &
Music Inc. (TSX: IDG), Canada's
largest book and lifestyle retailer reported financial results for
the 53-week period ended April 3,
2021 compared to the 52-week period ended March 28, 2020.
Indigo's exceptional online growth showed resilience against
severe disruption from the COVID-19 global health crisis and is
driving the Company's transformational strategy. Over 1 million new
and existing customers embraced the Online channel in fiscal 2021,
providing Indigo with a compelling market opportunity to strengthen
its position beyond a COVID-19 recovery. Strength in the Company's
core book business stabilized against macro-economic headwinds,
while the successful launch of proprietary lifestyle brand OUI
showcased customers' affinity for Indigo's evolving product lines
and the success of assortment expansion as a growth lever for the
business.
The impact on revenue from extensive COVID-19 related store
closures was contained to a decline of 5.5% or $53.0 million on full-year results, with Indigo
reporting revenue of $904.7 million
compared to $957.7 million last year.
Key markets like the Greater Toronto
Area were impacted for around six months' time, including
over the critical holiday period. Revenue was buoyed by remarkable
online performance, the delivery of enhanced omnichannel
capabilities and continued demand for core categories of reading,
wellness, and at-home learning and entertainment, which partially
offset the adverse COVID-19 impacts.
Commenting on the results, CEO Heather
Reisman said: "This sustained acceleration in e-commerce
presents an extraordinary opportunity for Indigo. The new
initiatives we are embarking on, from further assortment expansion
to becoming a truly omni-channel retailer, strategically align the
business to deliver profitable growth. With the welcome of our new
President, Peter Ruis, these efforts
strongly position us to build upon the hoped-for COVID-19 recovery
in fiscal 2022."
Adjusted EBITDA for the year was a loss of $28.3 million compared to a loss of $7.3 million last year. This was driven by the
top-line decline resulting from COVID-19 rolling store closures,
pressure on margin stemming from the subsequent need to clear goods
and elevated shipping costs during store closure periods, and other
pandemic-related costs, partially offset by external COVID-19
labour and occupancy support.
Indigo reported a net loss of $57.9
million ($2.09 net loss per
basic common share) compared to a net loss of $185.0 million ($6.72 net earnings per basic common share) last
year. This improvement was a result of cycling over non-cash
impairment losses and the non-cash deferred income tax expense
associated with the write-down of the Company's deferred tax assets
in the prior year.
Revenue for the fourth quarter was $199.0
million compared to revenue of $178.1
million for the same quarter last year, an increase of
11.7%. The Online channel more than doubled, offsetting the adverse
impact of lengthy COVID-19 store closures in the fourth quarter of
fiscal 2021. Net loss for the fourth quarter was $39.5 million compared to a net loss of
$171.3 million last year, an
improvement of $131.8 million as the
Company cycles over impairment and deferred tax charges recorded in
the prior year.
With no outstanding debt and a cash balance of $84.9 million, the Company continues to be well
positioned to manage through these uncertain times.
Analyst/Investor Call
Indigo will host a conference call for analysts and investors to
review these results at 9:00 a.m. (Eastern
Time) tomorrow, June 2, 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 1264749.
A playback of the call will also be available by telephone until
11:59 p.m. (ET) on June 9, 2021.
The call playback can be accessed after 12:00 p.m. (ET) on June 2, 2021, by dialing
416-849-0833 from within the Toronto area, or 1-855-859-2056 outside of
Toronto. The seven-digit replay
passcode number is 1264749. The conference call
transcript will be archived in the Investor Relations section of
the Indigo website, www.indigo.ca.
Forward-Looking Statements
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.
Consolidated
Balance Sheets
|
|
|
|
|
|
|
As
at
|
As
at
|
|
|
April
3,
|
March
28,
|
(thousands of
Canadian dollars)
|
|
2021
|
2020
|
|
|
|
|
ASSETS
|
|
|
|
Current
|
|
|
|
Cash and cash
equivalents
|
|
84,935
|
120,473
|
Accounts
receivable
|
|
22,976
|
7,640
|
Inventories
|
|
215,114
|
241,812
|
Prepaid
expenses
|
|
12,278
|
6,062
|
Income taxes
receivable
|
|
-
|
138
|
Derivative
assets
|
|
-
|
3,794
|
Other
assets
|
|
2,120
|
2,320
|
Total current
assets
|
|
337,423
|
382,239
|
Loan
receivable
|
|
-
|
446
|
Property, plant, and
equipment, net
|
|
77,131
|
91,215
|
Right-of-use assets,
net
|
|
361,864
|
382,146
|
Intangible assets,
net
|
|
20,916
|
24,571
|
Equity investment,
net
|
|
2,156
|
2,353
|
Total
assets
|
|
799,490
|
882,970
|
LIABILITIES AND
EQUITY
|
|
|
|
Current
|
|
|
|
Accounts payable and
accrued liabilities
|
|
145,193
|
164,294
|
Unredeemed gift card
liability
|
|
58,053
|
51,673
|
Provisions
|
|
2,365
|
2,034
|
Deferred
revenue
|
|
16,486
|
10,682
|
Short-term lease
liabilities
|
|
67,603
|
68,402
|
Derivative
liabilities
|
|
1,622
|
-
|
Total current
liabilities
|
|
291,322
|
297,085
|
Long-term accrued
liabilities
|
|
2,090
|
1,196
|
Long-term
provisions
|
|
827
|
469
|
Long-term lease
liabilities
|
|
482,671
|
500,215
|
Total
liabilities
|
|
776,910
|
798,965
|
Equity
|
|
|
|
Share
capital
|
|
226,986
|
226,986
|
Contributed
surplus
|
|
13,782
|
12,822
|
Retained
deficit
|
|
(216,668)
|
(158,801)
|
Accumulated other
comprehensive income (loss)
|
|
(1,520)
|
2,998
|
Total
equity
|
|
22,580
|
84,005
|
Total liabilities
and equity
|
|
799,490
|
882,970
|
Consolidated
Statements of Loss and Comprehensive Loss
|
|
|
53-week
|
52-week
|
|
period
ended
|
period
ended
|
|
April
3,
|
March
28,
|
(thousands of
Canadian dollars, except per share data)
|
2021
|
2020
|
|
|
|
Revenue
|
904,738
|
957,722
|
Cost of
sales
|
(567,902)
|
(553,627)
|
Gross
profit
|
336,836
|
404,095
|
Operating, selling,
and other expenses
|
(368,705)
|
(422,624)
|
Impairment
losses
|
-
|
(56,582)
|
Operating
loss
|
(31,869)
|
(75,111)
|
Net interest
expense
|
(24,784)
|
(23,524)
|
Share of loss from
equity investments
|
(197)
|
(1,651)
|
Loss before income
taxes
|
(56,850)
|
(100,286)
|
Income tax
expense
|
(1,017)
|
(84,712)
|
Net
loss
|
(57,867)
|
(184,998)
|
|
|
|
Other
comprehensive income (loss)
|
|
|
Items that are or may
be reclassified subsequently to net loss, net of taxes:
|
|
|
Change
in fair value of cash flow hedges
|
(4,507)
|
2,492
|
Reclassification of realized loss (gain)
|
108
|
(497)
|
Foreign
currency translation adjustment
|
(119)
|
445
|
Other
comprehensive income (loss)
|
(4,518)
|
2,440
|
|
|
|
Total
comprehensive loss
|
(62,385)
|
(182,558)
|
|
|
|
Net loss per
common share
|
|
|
Basic
|
$
|
(2.09)
|
$
|
(6.72)
|
Diluted
|
$
|
(2.09)
|
$
|
(6.72)
|
Consolidated
Statements of Cash Flows
|
|
|
|
|
|
|
53-week
|
52-week
|
|
|
period
ended
|
period
ended
|
|
|
April
3,
|
March
28,
|
(thousands of
Canadian dollars)
|
|
2021
|
2020
|
|
|
|
|
OPERATING
ACTIVITIES
|
|
|
|
Net loss
|
|
(57,867)
|
(184,998)
|
Adjustments to
reconcile net loss to cash flows from operating
activities
|
|
|
|
Depreciation of
property, plant, and equipment
|
|
17,158
|
23,005
|
Depreciation of
right-of-use assets
|
|
42,990
|
40,101
|
Amortization of
intangible assets
|
|
12,885
|
13,374
|
Gain on disposal of
equity investment
|
|
-
|
(1,484)
|
Loss on disposal of
capital assets
|
|
399
|
1,932
|
Impairment
losses
|
|
-
|
56,582
|
Share-based
compensation
|
|
666
|
1,268
|
Directors'
compensation
|
|
294
|
293
|
Deferred income tax
expense
|
|
1,017
|
84,712
|
Rent
concessions
|
|
(4,141)
|
-
|
Other
|
|
(784)
|
377
|
Net change in
non-cash working capital balances related to operations
|
|
150
|
4,512
|
Interest
expense
|
|
25,706
|
25,585
|
Interest
income
|
|
(922)
|
(1,714)
|
Share of loss from
equity investments
|
|
197
|
1,651
|
Cash flows from
operating activities
|
|
37,748
|
65,196
|
|
|
|
|
INVESTING
ACTIVITIES
|
|
|
|
Net purchases of
property, plant, and equipment
|
|
(4,093)
|
(2,223)
|
Addition of
intangible assets
|
|
(9,245)
|
(8,397)
|
Change in short-term
investments
|
|
-
|
87,150
|
Principal payment on
loan receivable
|
|
-
|
719
|
Interest
received
|
|
922
|
2,034
|
Cash flows from
(used for) investing activities
|
|
(12,416)
|
79,283
|
|
|
|
|
FINANCING
ACTIVITIES
|
|
|
|
Repayment of
principal on lease liabilities
|
|
(36,535)
|
(40,391)
|
Interest
paid
|
|
(25,706)
|
(25,585)
|
Cash flows used
for financing activities
|
|
(62,241)
|
(65,976)
|
|
|
|
|
Effect of foreign
currency exchange rate changes on cash and cash
equivalents
|
|
1,371
|
680
|
|
|
|
|
Net increase
(decrease) in cash and cash equivalents during the
period
|
|
(35,538)
|
79,183
|
Cash and cash
equivalents, beginning of period
|
|
120,473
|
41,290
|
Cash and cash
equivalents, end of period
|
|
84,935
|
120,473
|
Non-IFRS Financial
Measures
|
|
The following table
reconciles adjusted EBITDA to net loss before income taxes, the
most comparable IFRS measure:
|
|
|
|
|
|
|
53-week
|
|
52-week
|
|
|
period
ended
|
|
period
ended
|
|
|
April
3,
|
|
March
28,
|
|
(millions of Canadian
dollars)
|
2021
|
% Revenue
|
2020
|
% Revenue
|
Revenue
|
904.7
|
100.0
|
957.7
|
100.0
|
Cost of
sales
|
(567.9)
|
62.8
|
(553.6)
|
57.8
|
Cost of
operations
|
(212.8)
|
23.5
|
(255.6)
|
26.7
|
Selling, general and
administrative expenses
|
(83.6)
|
9.2
|
(90.1)
|
9.4
|
Depreciation of
right-of-use assets
|
(43.0)
|
4.8
|
(40.1)
|
4.2
|
Finance charges
related to leases
|
(25.7)
|
2.8
|
(25.6)
|
2.7
|
Adjusted
EBITDA1
|
(28.3)
|
3.1
|
(7.3)
|
0.8
|
Depreciation of
property, plant and equipment
|
(17.2)
|
1.9
|
(23.0)
|
2.4
|
Amortization of
intangible assets
|
(12.9)
|
1.4
|
(13.4)
|
1.4
|
Gain (loss) on
disposal of capital assets and equity investments
|
0.8
|
0.1
|
(0.4)
|
-
|
Impairment
losses
|
-
|
-
|
(56.6)
|
5.9
|
Net interest
income
|
0.9
|
0.1
|
2.1
|
0.2
|
Share of loss from
equity investments
|
(0.2)
|
-
|
(1.7)
|
0.2
|
Loss before income
taxes
|
(56.9)
|
6.3
|
(100.3)
|
10.5
|
1 Earnings
before interest, taxes, depreciation, amortization, impairment,
asset disposals, and share of loss from equity investments, and
includes IFRS 16 right-of-use asset depreciation and associated
finance charges.
|
SOURCE Indigo Books & Music
Inc.