TORONTO, Ontario
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November 8, 2023
(press release)
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Following a number of executive changes and a massive cyberattack that downed its systems, Indigo Books and Music Inc. says it's embarking on a transformation plan. On a Wednesday call to discuss the company's second quarter, chief executive Heather Reisman mentioned the plan has both short- and long-term initiatives but offered no specifics beyond saying it is meant to “fully re-energize our connection to our customers.” “We have a journey ahead of us,” Reisman said. “However, I'm confident that we will return Indigo to both growth and profitability.” The company reported a $22.4 million net loss in the period ended Sept. 30, compared with a net loss of $15.9 million the year prior. It amounted to a loss of 80 cents per diluted share, compared with a loss of 57 cents during the same quarter last year. Indigo attributed the net loss to a reduction in sales and restructuring costs that were partially offset by Indigo receiving its first proceeds from its insurer following a ransomware attack. “It will take a bit of time before we begin seeing in the numbers what we want to see, but we are definitely headed in the right direction,” Reisman said on the second quarter conference call on Wednesday, where she faced no analyst questions. Her remarks follow a period of upheaval at the 27-year-old books and home goods company she grew into a retail giant that now counts 171 stores in its network. Reisman retired from the business in August, turning it over to Peter Ruis, a retail executive with experience at John Lewis, Anthropologie and Jigsaw, who left Indigo in September. The company never provided a public explanation for his departure. Reisman returned to the chief executive role soon after. Around the same time, Andrea Limbardi, Indigo's president and a 21-year employee of the company, left to take the helm of apparel business Reitmans Canada Ltd. Their departures followed a February cyberattack that took down Indigo's website and reduced sales for weeks. Four of Indigo's 10 directors later left the board, with Dr. Chika Stacy Oriuwa attributing her resignation to a “loss of confidence in board leadership” and “mistreatment.” Indigo never elaborated on Oriuwa's allegations and on a recent media tour of Indigo’s newest store, Reisman refused to discuss what changes she has made as a result of recent events. The company's second quarter was hampered in part by the launch of a new e-commerce platform, which faced disruptions that weighed on online sales. Revenue totalled $206.9 million, down from $236.2 million a year earlier. "Most critical disruptions are fully resolved and we're happy to share that we are now seeing a meaningful improvement in online performance and conversion," Reisman said. On the same call as Reisman, chief financial officer Craig Loudon also alluded to high inflation and interest rates eating into discretionary spending, a category Indigo falls into. "Like the wider retail industry, Indigo continued to be negatively impacted by the current macroeconomic environment, which has put downward pressure on consumer buying behaviour leading to reduced overall demand," he said. "This resulted in higher than anticipated store inventory levels which hindered the positive customer experience." This report by The Canadian Press was first published Nov. 8, 2023. Companies in this story: (TSX:IDG) © 2023 The Canadian Press. All rights reserved.
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