June 7, 2011, 5:04 PM

E-commerce sales drop 2% for Indigo in fiscal 2011

Total sales grew 4.2% and same-store sales declined 0.3%

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Annual e-commerce sales declined for Canadian books retailer Indigo Books & Music Inc., but the company continues to invest in its online channel.

For the 2011 fiscal year ended April 2, Indigo, No. 177 in the Internet Retailer Top 500 Guide reported:

  • E-commerce sales declined year over year 2.6% to $C90.2 million (US$92.6 million) from $C92.6 million (US$95.0 million).
  • Total sales increased about 4.2% to $C1.01 billion (US$1.03 billion) from $C968.9 million (US$994.4 million) in fiscal 2010.
  • Superstore sales decreased 0.4% to $C667.6 million (US$685.0 million) from $C670.5 million (US$688.0 million) in fiscal 2010.
  • Small-format store sales decreased 5.5% to $C148.7 million (US$152.6 million) from $C157.4 million (US$161.5 million) in fiscal 2010.
  • Other revenue, which includes sales for the Kobo electronic book reader and other sources such as loyalty card sales, increased 126.2% to $C110.4 million (US$113.3 million) from $48.8 million (US$50.1 million) in fiscal 2010.
  • Comparable-store decreased 0.3% in superstores and 3.2% in small-format stores.
  • Net earnings declined year over year 67.6% to $C11.3 million (US$11.6 million) from $C34.9 million (US$35.8 million).

Internet Retailer calculates the web accounted for 8.9% of total sales in fiscal 2011, compared with 9.6% in fiscal 2010.

“We are pleased with our revenue growth, particularly given the significant transition going on in our industry,” says CEO Heather Reisman. “Consumers have embraced our Kobo e-reader and e-book offerings and we are thrilled to be at the forefront of an emerging global industry.”

Indigo did not break out quarterly online and store sales figures in its annual report, but for the fourth quarter did report:

  • Total sales declined 7.7% to $C210.6 million (US$216.1 million) from $C228.2 million (US$234.2 million) in the fourth quarter of fiscal 2010.
  • Net loss was $C11.7 million (US$12.0 million) compared with net earnings of $C497,000 (US$510,019) in the prior year quarter.

Despite the drop in e-commerce sales, Indigo sees a future in electronic book readers and selling digital content. In fiscal 2011, Indigo continued to invest in e-commerce by opening a new Internet fulfillment center with an advanced warehouse management system. In April, Indigo also raised C$50 million (US$53 million) in a new funding round for Kobo Inc., its electronic book reader business.

“The most important thing to report to shareholders is the intensity of work going on within the company to transform and to seize the global growth opportunity in digital reading while at the same time we evolve the offering in our Canadian stores to address the impact of declining physical book sales,” Indigo says in its just released annual report.

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