- After 25 years at the helm, Indigo Books and Music founder Heather Reisman will be leaving the company effective Aug. 22
- Reisman built Indigo into Canada’s largest books and lifestyle retailer with a ubiquitous presence across almost 200 stores
- A new CEO and director base will look to continue the success of new product category introductions following a profitable holiday season
- Indigo Books and Music (TSX:IDG) is down by 9.22 per cent to $1.97 per share
After 25 years at the helm, Indigo Books and Music founder Heather Reisman will be leaving the company effective Aug. 22.
Reisman built Indigo into Canada’s largest books and lifestyle retailer with a ubiquitous presence across almost 200 stores, including its Chapters, Coles and IndigoSpirit banners, occupying an arguable monopoly over book sales and distribution.
Her departure as Director and Executive Chair – which coincides with four other director resignations, one of which cited mistreatment and poor leadership – comes after a tumultuous few years for the company marked by steep, pandemic-induced losses and a cyber attack in February, which affected online and in-store sales.
She relinquished her role as CEO last year, naming Peter Ruis, Indigo’s President, as her replacement.
She provided the following comment on the transition,
“Having worked with Peter closely over the last 20 months, I have full confidence that Peter is the right leader for Indigo and that he will be instrumental to both our future success and to sustaining the core values and culture that have underpinned this organization since its founding.”
With Indigo stock down more than 88 per cent over the past five years, it would seem that future success is all there is to look forward to, though that assumption may prove hasty.
A strong, profitable brand ripe for new direction
While Amazon’s cheaper book prices have certainly cut into Indigo’s margins over the years, the company has been focused on diversifying its offerings to ensure sustainable long-term growth.
Its omni-channel strategy has integrated new categories such as plants, gifting, tech, gourmet, wellness, manga and arts & crafts, among others, with an emphasis on beauty, quality and functionality, as opposed to just price.
This is in conjunction with technological pivots to unlock new business, including modernized ecommerce technology; a ship-from-store option, opening access to in-store inventory across Canada; as well as express pick-up, partnerships with Uber and InstaCart, and a dropship program with Convictional.
Though recent, the results of these changes are encouraging for prospective investors. Q3 FY 2023, covering the 2022 holiday season, featured revenue of C$422.7 million, with net income of $34.25 million. This is a 3x increase from the previous quarter’s loss of $15.9 million. The company has also produced over $100 million in free cash flow over the first three quarters of FY 2023.
While results for calendar 2023 remain to be seen given the cyber attack’s aftermath, Indigo’s performance is a meaningful improvement from its $185 million loss in 2020 and $57 million loss in 2021.
Bolstered by a CEO well-versed in the business, and a search for strategic directors underway, the company’s instant familiarity among Canadians – coupled with the book industry’s stable and growing presence in the global economy – is a recipe for its technological enhancements and focus on highly curated products to grow and deepen its relationship with its customer base.
This thesis should only grow more likely as the Bank of Canada reins in inflation, which the company has weathered remarkably well given recent results, and consumers can once again uncinch their belts with an eye on non-essential indulgences that, nevertheless, add purpose and meaning to life.
Investors may be looking at one of Canada’s most enticing value plays in recent memory, where a beloved brand with no competition institutes the next stage in its evolution. The time for full-fledged due diligence is now.
Indigo Books and Music (TSX:IDG) stock is down by 9.22 per cent to $1.97 per share as of 10:36 am EDT.
The material provided in this article is for information only and should not be treated as investment advice. For full disclaimer information, please click here.
