Mr. Peter Ruis reports

INDIGO REPORTS FY24 FIRST QUARTER RESULTS

Indigo Books & Music Inc. has released its financial results for the 13-week period ended July 1, 2023, compared with the 13-week period ended July 2, 2022.

Revenue for the quarter totalled $179.2-million, compared with $204.6-million in the prior year, a decrease of $25.4-million or 12 per cent. Sales were negatively affected by the carryover impacts of the ransomware attack that occurred in the fourth quarter of fiscal 2023. Inventory replenishment capabilities were challenged as a result of the attack, which impacted the assortment available in both the retail and on-line sales channels for the quarter. Furthermore, the ransomware attack impacted Indigo's search engine optimization, which led to a weaker on-line presence and a decrease in on-line traffic. As these challenges were addressed throughout the first quarter, the company generated some recovery in sales momentum, with the decline in year-over-year sales improving every month. Sales were also impacted by the downward pressures of a challenging macroeconomic environment, which led to softened demand both in stores and on-line. Customers demonstrated increased price sensitivity, noted through positive responses to promotions and a lift of sales during promotional periods.

The company's print business declined compared with the prior period, which had several prominent book releases. The company noted an increase in sales in the bargain print category, again demonstrating customers' price sensitivity in the current macroeconomic environment. The general merchandise business continued to be affected by softer customer demand, spanning across most product categories. Both the print and general merchandise businesses were also impacted by the challenges to inventory replenishment discussed.

Commenting on results, chief executive officer Peter Ruis said: "This quarter continued to be challenged by the impacts of the ransomware attack and diminished consumer confidence due to the current macroeconomic environment. Despite these challenges, we remain committed to delivering exceptional value to our customers and driving sustainable growth. We are excited to share that we recently launched our reimagined website and are eager to provide customers with a much improved on-line shopping experience."

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) for the quarter was a loss of $21.4-million, compared with a loss of $19.2-million in the prior year. Adjusted EBITDA was primarily impacted by the reduced sales volumes. The company generated cost savings in the quarter, driven by reduced labour, international freight, and warehousing and distribution costs. These savings were partially offset by additional costs incurred related to the company's digital modernization achievements. Net loss for the quarter totalled $28.5-million ($1.02 net loss per basic common share), compared with a net loss of $25.4-million (91 cents per basic common share) in the prior year.

On July 31, 2023, pursuant to the commitment letter signed on June 27, 2023, the company entered into a revolving line of credit facility with a related party, Trilogy Retail Holdings Inc., as lender. The credit facility is for an aggregate principal amount of up to $45.0-million and, with the consent of Trilogy, the amount may be increased by up to $10.0-million. The credit facility will be used to finance the seasonal working capital and operational needs of the company, was issued on reasonable commercial terms, and is not convertible, directly or indirectly, into equity or voting securities.

Analyst/investor call

Indigo will host a conference call for analysts and investors to review these results at 10 a.m. Eastern Time on Aug. 11, 2023.

To join the conference call without operator assistance, you may register and enter your phone number on-line to receive an instant automated callback.

The call can also be accessed through an operator by dialling 416-764-8659 from within the Toronto area or 1-888-664-6392 outside of Toronto. The eight-digit participant code is 76179157.

A playback of the call will also be available by telephone until 11:59 p.m. ET on Aug. 18, 2023. The call playback can be accessed after 12 p.m. ET on Aug. 11, 2023, by dialling 416-764-8677 from within the Toronto area or 1-888-390-0541 outside of Toronto. The six-digit replay passcode number is 179157 followed by the pound key. The conference call transcript will be archived in the investor relations section of the Indigo website.

About Indigo Books & Music Inc.

Indigo is a publicly traded Canadian company listed on the Toronto Stock Exchange (symbol IDG). Indigo is Canada's leading book and lifestyle retailer, offering a curated assortment of books, gifts, and home, wellness, fashion, paper, baby and kids products that support customers by simplifying their journey to living with intention. The company operates retail stores in all 10 provinces and one territory in Canada, and also has retail operations in the United States through a wholly owned subsidiary, operating one retail store in Short Hills, N.J. Retail operations are seamlessly integrated with the company's digital channels, including the Indigo website and the mobile applications, which are extensions of the physical stores and offer customers an expanded assortment of book titles, along with a meaningfully curated assortment of general merchandise. Indigo believes in real books, in living life fully and generously, in being kind to each other, and that stories -- big and little -- connect people.

The company supports a separate registered charity, called the Indigo Love of Reading Foundation, which is committed to addressing educational inequality and more specifically the literacy crisis in Canada. The foundation provides resources, including new books and learning materials, training, and year-round curation support, to help ensure teachers, education staff, school administrators and other key stakeholders have the tools they need to promote literacy in their communities. With the support of the company, its customers, employees and suppliers, the foundation has committed over $35.0-million to more than one million students across Canada since 2004.

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