Indigo Books expansion to start in New Jersey mall

UP TO 5 NEW STORES

While Canadian retailers such as Aldo and Lululemon have fared well in the robust U.S. market, venturing south has been a cautionary tale for many more who had to retreat, including Joe Fresh, West 49, Tristan, Grafton Fraser and Canadian Tire.

But the bricks and mortar environment has changed so radically in recent years that a venture into that market, though still risky, might be easier for Canadian businesses wanting to take the plunge because retail malls have seen hundreds of department stores and specialty stores close in the last year.

“There is far more desirable real estate out there,” said Robert Gibson, retail analyst at PI Financial Corp. “Landlords want something like this. Now the options are fantastic.”

The biggest hurdle for Indigo will be raising awareness of its brand, Gibson said.

Though the market still has Barnes and Noble, Indigo’s format, as a “cultural department store” with a high proportion of gifts, baby and lifestyle items, has a different offering from that of a traditional large format book store. “I think initially the issue is going to be to get consumers into the store. In Canada everybody knows In- digo. It is a well-known, topof-mind brand. In the States, nobody knows who they are.”

Indigo said revenue for the quarter climbed 3.5 per cent to $224.5 million in the period ended Sept. 30. The net loss in the second quarter was $4.7 million, or 18 cents per share, compared with a net loss of $1.2 million (four cents) a year ago. Comparable superstore sales rose two per cent and small format comparable sales fell four per cent, while online sales surged 15 per cent.

In the same period that rival Toys “R” Us filed for bankruptcy protection in Canada and the U.S., Indigo had double-digit growth in the general merchandise business and particularly strong sales in its toy and lifestyle categories. General merchandise now accounts for about 38 per cent of the retailer’s annual sales. Excluding the boost from the book release of Harry Potter and the Cursed Child last year, Indigo said the company also increased book sales year-over-year.

Indigo operates 89 superstores and 123 small-format stores across Canada. Shares rose 28 cents Thursday to $18.82 in afternoon trading. ing its satellite TV customers, it added 1,738 TV subscribers overall. It even lost fewer telephone subscribers than expected — 57,381 residential landlines compared to 80,587 in the same period last year.

Bell expects to have enough homes connected in Canada’s largest city to start a mass advertising campaign by early 2018. This will increase competitive intensity, as the upgraded connections enable speeds that Bell’s top rival Rogers Communications Inc. already offers across its entire footprint.

Bell’s overall revenue increased 5 per cent to $5.68 billion and adjusted earnings rose 5.8 per cent to $2.36 billion. Earnings per share dropped one cent to 86 cents per share due to a higher number of shares outstanding from the Bell MTS acquisition. The analysts’ average estimate was 85 cents, according to Thomson Reuters I/B/E/S.

The financial results were in line with analysts’ expectations, although Bell posted better margins than expected.