An Indigo bookstore in Laval, Que., on Nov. 4, 2020.Ryan Remiorz/The Canadian Press
Indigo Books & Music Inc. is evaluating its store network, taking into account the accelerated shift in Canadians’ shopping habits that has occurred during the pandemic.
“We are in the process of looking totally anew at the whole role of retail,” chief executive officer Heather Reisman said on a conference call Wednesday to discuss the company’s earnings. “We are fully relooking overall at our retail footprint in light of a whole new model of operating.”
Ms. Reisman also said Indigo expects to return to profitability in its current fiscal year, which began April 4. The Toronto-based retailer has lost money in its last three fiscal years. Like many retailers, it was dealt a blow by pandemic-related shutdowns; in the fourth quarter alone, 98 of Indigo’s 177 stores were closed.
Indigo permanently closed 15 unprofitable small-format stores in May, 2020, and has closed five more in the past eight months. But Ms. Reisman said the company remains “an in-store kind of retailer,” with many of its customers still drawn to brick-and-mortar shopping. In the year ahead, Indigo expects to invest in further developing its e-commerce business, including using stores as an option to pick up online orders.
“We are looking to have the right kind of physical coverage to fully support the customers in a rich, omni-channel way,” Ms. Reisman said.
The pandemic has reshaped Canadians’ shopping habits. More than a million people shopped online with Indigo in the course of its fiscal year ended April 3, leading to a 127-per-cent increase in digital sales.
That bolstered Indigo’s business, offsetting the mandatory shutdowns of some of its stores and contributing to an 11-per-cent revenue increase in the fourth quarter, though sales for the full year declined.
Doing business online can be expensive, with the spending required for logistics and shipping, and the digital shift affected Indigo’s profit margins for the year. The company is improving its online margins, Ms. Reisman said Wednesday.
On Tuesday, the retailer reported $199-million in revenue for the fourth quarter, compared with $178.1-million in the same quarter last year.
Demand continued for many of the categories Indigo sells, including books, wellness-related products and items for at-home learning and entertainment. But store closures contributed to a 5.5-per-cent decline in revenue for the full year, to $904.7-million.
Indigo is still losing money. The company reported a net loss of $57.9-million, or $2.09 per share, for the 53 weeks ended April 3. This compared with a net loss of $185-million, or $6.72 a share, in the prior fiscal year, which included $56.6-million in non-cash impairment losses and a non-cash deferred income tax expense of $84.7-million resulting from a write-down of deferred tax assets.
Indigo has no debt on its books and has a cash balance of $84.9-million.
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