Indigo Books & Music Inc. says its fourth-quarter results swung to a profit due to the sale of its Kobo e-reader business, even as revenue slid amid a continued decline in book sales.
Canada’s largest book, gift and specialty toy retailer reported Tuesday that net earnings attributable to shareholders in its fourth quarter amounted to $131.5-million, or $5.16 per diluted share, rebounding from a loss of $19.4-million, or 78 cents per share, in the year-earlier.
However, on an adjusted basis, which excludes one-time items like the Kobo gain, its fourth-quarter loss widened to $15.3-million from $13.7-million in the year earlier.
Fourth-quarter revenue slid to $196-million from $200-million in the year earlier.
For the full fiscal year, its results swung to a profit of $93-million, up from a loss of $6-million a year earlier, due to the sale of its Kobo e-reader business. For the full year, the Toronto-based retailer booked a $165-million pre-tax gain on the sale of all of its outstanding shares of Kobo to Toyko-based e-commerce company Rakuten Inc. in January.
“We are enormously proud of Kobo and pleased for Indigo and all Indigo shareholders that this sale represented such an attractive return on our investment,” said CEO Heather Reisman.
“We’ve accelerated our transformation from a bookstore to the world’s first cultural department store and are gratified that our efforts are being positively received by our customers.”
Net earnings attributable to shareholders is used to calculate earnings per share because it does not include the portion of Kobo losses attributable to minority shareholders.
Revenue fell 2.3 per cent to $934-million from $956-million for the full year.
Traditional book sales have been falling as more and more readers switch to e-books like the Kobo or rival Amazon’s Kindle.
Indigo has increasingly been trying to ramp up its assortment of digital, gift, lifestyle, toy offerings to help offset the decline in its book sales.
On a comparable store basis, Indigo and Chapters superstore revenue decreased 1.9 per cent, while Coles and IndigoSpirit small format store revenue decreased 0.8 per cent.
But sales at indigo.ca were up 2.9 per cent compared to last year.
The company also deferred $7-million in revenue during the year for the free plum rewards loyalty program. The revenue will be recognized in future years as customers redeem the points earned on past purchases.