BUSINESS

American Girl dolls, lifestyle products boost Indigo's Q3 results

02/03/2015 04:54 EST | Updated 04/05/2015 05:59 EDT
TORONTO - Strong sales of American Girl dolls and gift products like candles and blankets helped pushed up profits at Indigo Books and Music Inc. (TSX:IDG) to $33 million in the third quarter.

The net earnings amounted to $1.28 per diluted common share for the three-month period ended Dec. 27, versus profits of $8.5 million or 33 cents per share in the same period a year ago.

The country's largest book, gift and specialty toy retailer says the profits were also helped by improved margins, lower operating costs and lower tax expenses.

Revenue for the period was up two per cent to $339.4 million versus $332.4 million a year ago. The gain came despite the company operating five fewer superstores and one less small format store that in the year-earlier quarter.

Indigo says sales from its Indigo and Chapter locations grew 5.5 per cent year over year, while sales its smaller Coles and Indigospirit stores were flat. Online sales grew 10.6 per cent.

"We are pleased with these results which show both top line growth and improvements in profitability," chief executive Heather Reisman said in a statement.

"We're confident these results demonstrate customer affection for our brand. Our entire team is focused on continuing to position this vibrant Canadian business for long-term growth and success."

Indigo is nearing the end of its five-year transformation from mainly a bookseller to a retailer that offers a variety of gift and toy products.

Indigo first began making changes to its business model in 2010 as the popularity of ebooks and e-readers, like Kodbo and Amazon's Kindle, grew. Since then, the bookseller has been dealing with intense competition for book sales from the likes of Walmart and online giant Amazon.

Indigo operates 91 large format super stores and 130 small format locations under various banners such as Chapters and Indigo, Coles, Indigospirit, SmithBooks and The Book Company.