It is funny after the Chapters Indigo merger they were supposed to divest themselves of 22-25 superstores. But we never found out which ones these were.
Indigo pens next chapter
EXPANSION; TV, film, Web site and 'green' focus all in plan
Hollie Shaw, Financial Post
Published: Friday, June 22, 2007
Indigo Books and Music Inc. is in growth mode, building superstores, launching a completely new retail chain with a "green" theme, and going multimedia with an in-store television station, a documentary film and the launch of a social-networking Web site catering to book lovers.
"We have a big, hairy, audacious goal of where we want to see this business go in the next five years," Heather Reisman, chief executive, told shareholders yesterday at the company's annual general meeting.
"The business is in great shape, and we are ready to start innovating and experimenting for growth."
Ms. Reisman said little about the new retail format other than it will "fill what we see as 'white space' in the consumer channel," and hinting at a concept built around environmental sustainability: "Think green."
She did not give a timeline for store openings.
Since acquiring rival Chapters Inc. six years ago, Ms. Reisman has transformed Canada's biggest book chain from a $48-million loss in fiscal 2002 to a $30-million profit in fiscal 2006, an increase of 18% over the prior year.
She has poured in capital, improving disorderly supply chain and warehouse systems, and increased sales through loyalty programs and incorporating more high-margin gift items, stationery, educational toys and games into the stores.
The retailer's shares hit a five-year high of $17.88 last week on the heels of an announced sale of 1.5-million shares by Gerry Schwartz, Ms. Reisman's husband and chief executive of conglomerate Onex Corp.
Together they owned 18.7-million shares and will now own 17.2-million, lowering their stake to 70% from about 76% .
"We didn't want to sell ... our advisors told us that greater liquidity would help the company," said Ms. Reisman, who has said over the past year that the retailer's recovery has attracted investors and that she would need to enlarge the public float.
Ms. Reisman said the chain plans to open at least six large superstores and six smaller stores in the next 12 to 18 months and will expand some stores in Toronto and Montreal. Indigo has 88 big-box stores across Canada and 158 smaller locations under the Coles banner.
Indigo is also trying to forge stronger ties with consumers by launching a discrete social-networking site for book lovers through its chapters.indigo.ca Web portal in September and an online photo album site to upload and display digital pictures.
Indigo plans to test launch an "Indigo TV" channel at certain stores, featuring author interviews and book-related programming to be broadcast on monitors throughout the outlets. That same month, Indigo will promote a documentary film it commissioned on literacy in Canada and distribute it through YouTube and other online channels.
David Gray, president of Vancouver-based retail consultancy Sixth Line Solutions, cautioned that there is a "lot of hype" right now about both social networking and the green movement.
"Everyone is rushing to do the next Facebook, and people only have so much time.
"But the fact [that Indigo] is trying a number of different things points to an underlying culture of innovation and that's exciting," he said, particularly for a retailer that is trying to be "a purveyor of culture, even though they are still a very mass-oriented Starbucks of books."
Ms. Reisman said the company will begin building and refurbishing the chain's superstores into a format dubbed "Indigo 2.0."
"The basic format that consumers experience today is 10 to 12 years old," she said.
The news comes as Toronto-based Indigo prepares for the release of the final Harry Potter book next month, which guarantees a sales boom.
Ms. Reisman said staging events such as parties leading up to the release means that the business will not have to mimic the steep discounts that some U.S. retailers will have to employ. The discounts drive up sales but could keep profits low.