Indigo Books and Music’s latest quarterly results revealed a turnaround for the company after it suffered a downturn in sales mainly due to the rise of e-reading and online book sales, and the formidable presence of Amazon.
For the first time in years, the company is adopting a “growth” approach to combat the slump that resulted after traditional bricks-and-mortar book sales declined.
The industry is starting to shift again. According to David Schick, retail analyst and managing director of equity research at Stifel Financial Corp., “E-books had a huge surge that has ended.”
In 2009, Indigo developed its own e-reader, the Kobo, and subsequently sold it to Japanese firm Rakuten for $315 million.
Indigo Chief Executive Officer Heather Reisman said that people who were initially reading 80 per cent digitally are starting to revert back to physical books and are now reading about half and half.
The company has made a concentrated effort to increase sales of electronics, gifts, paper, home décor items and toys to diversify its business.
Reisman has been busy developing the company’s “cultural department store” model and she will unveil this new store model next year.
Recently, the company has formed alliances with Apple and Mattel to bring new products to stores.
Mattel owns American Girl, the provider of unique and high quality dolls and accessories. This strategic venture has proven to be successful thus far. Indigo has opened several 2,000 square-foot American Girl doll boutiques within its top locations.
Lifestyle products make up approximately 30 per cent of sales and the company designs about 50 per cent of these products at its own design firm in New York.
Another initiative is the company’s new online tool that lets customers try out and print different wall art combinations from a variety of Getty Image photographs.
Revenues for the fourth quarter ended March 28th were $186.2 million, up one percent over last year, and same store sales rose 6.8 per cent at Chapters and Indigo Superstores.
The company performed well last year even though it did not have a hit book such as the popular 50 Shades of Grey the previous year.
In an effort to reorganize, the company closed down some major locations last year including Indigo’s World’s Biggest Bookstore in downtown Toronto and the historic Chapters Runnymede theatre location.
These store closures and the trimming and adjusting of operations will allow Indigo to move in another direction.
The company is currently reviewing potential closures and Reisman stated, “We may end up closing two and opening four.” There are plans to open stores in Toronto and Vancouver.
Four large Chapters stores are currently awaiting an Indigo rebrand and the company is also planning to build more stores under the Indigo banner.
As at December 31, 2014, the store owned 221 stores under the Indigo, Chapters and Coles brands.