Low loonie has Indigo feeling blue
TORONTO — A weaker Canadian dollar left a mark on the bottom line of Indigo Books & Music Inc. in the latest quarter.
The company’s chief financial officer Laura Carr says the company took a $3-million hit during the first quarter ended June 27, a direct impact from the exchange rate with the U.S. dollar.
The details were disclosed in a conference call with analysts on Wednesday after Indigo reported its financial results a day earlier.
Carr said Indigo managed to absorb the effect of the exchange rate by funnelling the costs into its book and merchandise prices and securing better agreements with its suppliers by increasing the volume of its orders.
Book and magazine prices are often a hot topic when currency exchange rates dramatically fluctuate, partly because it’s one of the few retail goods that lists how much they cost in each currency on the same product. When the value of the loonie soared to near par with the American dollar several years ago, some consumers complained they were paying excessive markups on books when factoring in the better exchange rate.
Eventually, publishers and retailers made changes to factor in at least some of the improved currency rates.
However, as the loonie sits around 76 cents US, retailers are facing the challenge of recouping lost profit margins. Late Tuesday, Indigo reported it tightened losses by more than 35 per cent over a year ago, helped by growth in its general merchandise business. Indigo Books & Music operates 90 large format stores under the Chapters and Indigo banners, as well as 126 smaller locations.