Indigo Books and Music is reporting a $7.3 million or 1.7 per cent revenue decrease in its third quarter, ending Dec. 29, 2018. Revenue was down to $426 million compared to $433.3 million for the same period in 2017, which saw the company’s highest quarterly revenue to date. Net earnings fell to $21.5 million compared to $42.6 million in 2017, representing approximately a 50 per cent drop.
In an investor statement, the decrease was attributed to the “residual impact of delayed renovations” and the Canada Post strike, which began on Oct. 23 and ended a month later after the federal government ordered back-to-work legislation.
The statement also pointed to lower profits due to the expansion of Indigo’s distribution facilities in Calgary, minimum wage increases in some provinces across Canada, and an increase in inventory in anticipation of a strong holiday quarter.
On a Feb. 5 phone call with investors and financial analysts, Indigo chief executive officer Heather Reisman spoke about the retailer’s dependency on Canada Post. “The strike severely hurt our ability to serve our customers in a manner that today’s retail environment demands. As a result, to some extent, customers chose not to shop online or when they did shop online and we sent them to our stores to pick up the product, our cost to transfer the product was often quite high as we had to use a number of alternative carriers.”
As Indigo continued to rollout its ambitious “cultural department store” concept over 2018, two stores were closed and seven locations underwent renovations. Indigo also opened its first U.S. location at the luxury Mall at Short Hills in New Jersey. In Feb. 2018, Indigo reported that 20 stores were planned for the 2019 fiscal year. On the call, Reisman said that Indigo would hold off on major renovations to allow the company time to “absorb some of what has happened.”
Reisman said recovery will take time, but “we remain optimistic about our position in the market.”