E-Reader Launch Slows Down an Otherwise Good Year for Indigo

Indigo's new eReader, kobo
Indigo's new eReader, kobo

The good news for Indigo Books & Music (IDG), the largest bookstore chain in Canada, is that net income for the 53-week-long fiscal year ended April 3, 2010, rose 14% to 34.9 million Canadian dollars ($33.4 million), from CA$30.7 million last year.

The bad news is that this increase might have been even higher if fourth-quarter earnings, for a 14-week period, had been better: They dropped 74% to just CA$500,000 from $1.9 million last year.

The Overall Picture

Revenue for the year was CA$969 million, up 3% from last year. Comparable store sales for brick-and-mortar Indigo and Chapters stores inched up 0.6%, while the smaller stores declined 2.2% and online sales fell more sharply, 4.8%. Fourth-quarter revenue, at CA$13.7 million, was up from the same time last year, but comparable store sales dipped 2.7% and sales from the online side dropped 3.3%.

"The last quarter was a challenging one for us, with no blockbuster hit to compete with last year's over-the-top success of Stephanie Meyer," CEO Heather Reisman said in a statement., referring to the author of the bestselling Twilight vampire romance series. "Our store traffic was also down materially during the two weeks of the Olympics, as Canadians stayed home to cheer on our athletes."

Another big reason for the decline in fourth-quarter fortunes: The significant expense of spinning out the Kobo e-reader, which launches this month, and in which Indigo invested CA$5 million in startup funds.