Indigo CEO calls 2023 a ‘challenging’ year as revenues down in third quarter

globalnews.ca:

Indigo Books & Music Inc.’s chief executive says the retailer’s last year has been “challenging” and it could be a while until its financial results recover.

Speaking Friday on an analyst call, Heather Reisman described 2023 as a year marred by “disruptions” — a ransomware attack that downed its e-commerce operations for a lengthy period, the “premature” launch of a new platform meant to replace it, the overbuying of some merchandise and a “challenging” economic environment.

These events sent Indigo’s third-quarter profits into a tailspin, dropping roughly 70 per cent to $10 million from $34.3 million a year earlier.

Revenues for the quarter ended Dec. 30 were $370.6 million, down from $422.7 million during the same quarter in 2022. Earnings per diluted share were 35 cents, down from $1.22.

Such numbers have made the transformation plan Indigo began last year even more critical. Reisman said steps to advance that plan were carried out during the quarter.

“We made the decision to rightsize and rightshape our general merchandise inventory,” she said.

“This strategic decision to clear unnecessary inventory had a significant impact on margins and therefore profitability, but it was the right decision.”

Chief financial officer and chief operating officer Craig Loudon said that meant Indigo relied more on discounting, which lowered sales figures.

He also acknowledged that some of the problems came down to what the retailer was selling.

“We don’t believe in the home stretch of Christmas that we had the right general merchandise assortment that people were looking for in those final few weeks,” he said.

Indigo, which began as a bookseller, has diversified its product mix significantly in recent years and now offers a range of