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A customer pays at the cash of an Indigo Books store in Toronto in this April 8, 2011, file photo.

Fernando Morales/The Globe and Mail

Indigo Books & Music Inc. says its first-quarter loss narrowed to $5.5-million as it cut expenses and sold its e-reader business.

The book retailer said the loss amounted to 22 cents per share, compared with $24.2-million, or 72 cents per share in the year-earlier quarter.

The company said the improvement was due to lower operating costs and better margins. The loss was also reduced because the company no longer booked losses from discontinued operations following the sale of Kobo Inc. in January.

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"While a loss in this quarter is typical for our business, we're encouraged that our efforts to improve margins and drive productivity, two of our top strategic priorities for this year, are clearly showing positive results," CEO Heather Reisman.

Revenue fell to $186.5-million, from $188-million in the 2011 quarter.

Same-store sales at its Indigo and Chapters superstores fell 0.9 per cent, while rising 6 per cent at smaller format stores like Coles and IndigoSpirit.

Indigo said revenue was hit by lower sales of e-readers compared with the year-earlier period, when it reported strong sales of a new Kobo device. Indigo sold Kobo to Japan's Rakuten Inc. for $315-million (U.S.) earlier this year.

However, the company said trade book sales rose 0.6 per cent on the back of strong sales of the Fifty Shares of Grey and Hunger Games trilogies.

Indigo has been trying to ramp up sales of everything from candles to cookie cutters as it looks to offset flagging sales of physical books as more readers turn to digital platforms.

During the quarter, the company finished an upgrade to its retail distribution facility to accommodate growth of its general merchandise business and improve the efficiency of supply chain operations.

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"We are very pleased to see continued double-digit growth in our general merchandise businesses as we expand our exciting gift, lifestyle and IndigoKids categories," Ms. Reisman said.

"We're also happy to see positive comp sales in our small format stores driven by the strong book titles this quarter and the expansion of some general merchandise to our smaller stores."

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