TORONTO — Indigo Books and Music Inc. said the one-month Canada Post strike last fall “severely hurt” third-quarter earnings, contributing to a roughly 50 per cent drop in net earnings.
The Toronto-based retailer revealed Tuesday that in the period ending Dec. 29 it earned $21.5 million, down from the $42.6 million it reported for the same period the year before.
Indigo’s diluted earnings per share amounted to 79 cents per share, down from $1.56 per share from the year before.
The company’s revenue also tumbled by 1.7 per cent to $426 million from $433.3 million the year before.
Indigo founder and chief executive officer Heather Reisman told industry analysts that the company had seen double-digit growth until the postal strike began Oct. 23, bringing double-digit declines with it.
“Indigo is hugely dependent on Canada Post. The strike severely hurt our ability to serve our customers in a manner that today’s retail environment demands,” Reisman said.
“As a result, to some extent, customers chose not to shop online or when they did shop online and we sent them to our stores to pick up the product, our cost to transfer the product was often quite high as we had to use a number of alternative carriers.”
Predicting the quarter would be strong, Indigo had also purchased plenty of inventory, which Reisman admitted was a struggle to clear out and often had to be sold for less than the company would have hoped.
She called the conditions a “triple whammy” that were made even worse by increases to minimum wages in some provinces, ongoing renovations at seven locations and the closure of two stores.
Some stores, she said, had remained closed for longer than expected and it is taking some customers longer to “re-acclimate” to new locations.
Reisman said the company would hold off on further “big” renovations, so the company can “absorb some of what has happened.”
“Do we think it is going to immediately pick up? No, but we can see the trend already trying to come back,” she said. “It will take a little bit of time, but we remain optimistic about our position in the market.”
She was also positive about the company’s first U.S. location, which it opened at a New Jersey mall in October.
Reisman was short on details about the store, but said the location set a reasonable target for its first holiday open and “slightly improved upon it.”
“So far we feel happy with our response from the customer.”
Companies in this story: (TSX:IDG)
Tara Deschamps, The Canadian Press