Best Retail Store Design - Chapters Indigo

images.chapters.indigo.ca

Best Retail Store Design - Chapters Indigo

Year in

Review

Another Excellent Year

Solid top line growth

Significantly improved operating

margins

Strong cash flow

Kids business on fire

Launch of online “community” site

Four new Indigospirit stores opened

Stable & secure systems

2


Notable Achievements

#1 National Retailer in Canada

(Kubas Consultants)

Best Retail Store Design (ICSC

Maple Leaf Award)

$1.5 million commitment to

school literacy through Indigo

Love of Reading Foundation

3


Net Revenue up 5.5%

A “Harry Potter”

year

Growth well above

North American

average despite

decline in average

book prices

$ millions

975

950

925

900

875

850

825

800

775

750

725

700

FY04 FY05 FY06 FY07 FY08

4


EBITDA up 12.6%

Best-in-class

operating metrics

$ millions

75

70

65

60

55

50

45

40

35

30

25

FY04 FY05 FY06 FY07 FY08

5


Net Income up 76.0%

Improved operating

earnings

Lower interest and

amortization costs

$8.8 mm non-cash

tax recovery

$ millions

60.0

55.0

50.0

45.0

40.0

35.0

30.0

25.0

20.0

15.0

10.0

5.0

-

FY04 FY05 FY06 FY07 FY08

6


Total debt reduced by $14.5 million

Repaid final $13

million term debt

Operating line of

credit to cover

seasonal working

capital

Capital leases on

select technology

assets

$ millions

120

100

80

60

40

20

0

FY04 FY05 FY06 FY07 FY08

7


Q1 Fiscal 2009 Results

Continue Strong Trend …

Revenue up 3.1%

Net loss cut in half

$57.1 mm cash on hand

Launched share repurchase

program

8


Financial Summary

Solid balance sheet

Excellent momentum

No shortage of ideas…

9


Our Strategic Focus

Drive growth in our core business

Simplify core processes and drive

productivity improvement

Launch new concept

Achieve best-in-class employee

engagement

11


Drive Growth in Core Business

Re-imagine the Chapters/Indigo

Experience

Award-winning store design

State-of-the-art customer kiosk

Interactive digital community

An increasingly rich bookstore

experience…but expanding business in

kids, gifts and paper

10 new superstores in 2009 and

2010

12


Award-winning design

13


Award-winning design

14


Award-winning design

15


State-of-the-Art Customer Kiosk

New “iPhone-like”

22 inch touch

screens

Improved in-store

search and find

Real-time

information on hot

books and topics

in the media

Simplified

purchase with

slide card

16


Interactive Digital Community…

our online place for booklovers to meet,

recommend reading, create book clubs,

join shared interest groups and be

inspired on their next read

150,000 members and growing daily

Drives “no cost” natural search

Drives Growth of online

17


Increasingly Rich Bookstore Experience

18


Increasingly Rich Bookstore Experience

19


Expand Paper Business

20


Expand Gift Business

21


Expand Kids Business

Full kids toy shops in all new

superstores

Rollout into existing stores

over next two years

22


Paced Expansion of Indigospirit

23


Good for you, good for the planet

Environmentally friendly selection of paper

and gift; organic apothecary products for

everyday use

Two new test stores opening before the

holidays

Wholesale launch of paper products into

Indigo stores before the holidays

25


Simplify & Drive Productivity

Continuous improvement initiative

About thinking ‘end-to-end’

Three objectives:

Enhance desired consumer experience

Improve quality of work life for employees

Drive out cost

Our target: Best-in-class operating

margins of 8.5% - 9.0% of sales

35


Achieve Best-in-Class

Employee Engagement

Annual measurement of employee

engagement using Hewitt survey

Four of eight areas in the business

achieved best-in-class levels this

past year; balance trending well

with work still to be done

Priority reinforced in Executive

Bonus Program

36


$6.0 million

contributed to date

“Writing on the Wall”

documentary released

fall 2007

Ontario provincial

commitment of $120

million over 4 years to

support school

libraries

37

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