TORONTO — Shares of Indigo Books & Music Inc. were down more than 14 per cent in late-morning trading Wednesday as the company missed earnings expectations amid a strategy change.
The Toronto-based retailer said its revenue dropped and its loss widened in its first quarter as it worked to cut promotions and low-margin merchandise, as well as remodel stores and offerings.
CEO Heather Reisman said the transition pressures have led to lower sales, but are already helping with margins.
“We have strategically moved to be far less promotional” she said.
“We just have to live through it this year, we just have to live through it.”
The bookseller said its revenue totalled $192.6 million for the period ended June 29, down $12.8 million from $205.4 million for the same quarter the previous year.
Comparable sales, including stores and e-commerce, fell 7.6 per cent.
Reisman said the pullback on lower priced items and promotions was having an impact online, where customers are more price sensitive. It has also somewhat affected sales in stores, though the company is still seeing steady foot traffic.
“We are seeing our customers come in, but they’re spending a bit less.”
Reisman said products led by new chief creative officer Nathan Williams, who started June 3, would start rolling out in about nine months.
The revamped and selective product offerings are part of Indigo’s efforts to differentiate itself from online retailer Amazon, which Indigo generally matches on book prices.
“There’s no question that the intensity with which Amazon is in the market is huge and we have several categories that are up against them,” Reisman said.
Indigo’s net loss came in at $19.1 million or 69 cents per common share in the quarter compared with a net loss of $15.4 million or 57 cents per share in the first quarter of its 2019 financial year.
Analysts surveyed by financial markets data firm Refinitiv expected revenue of $237.2 million, and adjusted net loss of $12.45 million or 46 cents per share. The company didn’t provide an adjusted loss for the quarter.
The company’s shares were trading down $1.18, or 14.99 per cent, at $6.69 mid-morning on the Toronto Stock Exchange.
Companies in this story: (TSX:IDG)
The Canadian Press