June 29, 2012

Heather Reisman is bullish on the books still remaining in her stores


Indigo Books & Music head Heather Reisman, speaking to shareholders in Toronto Wednesday

“The book business is still a thriving business in every respect,” Heather Reisman, head of Canada’s biggest bookselling chain, Indigo Books & Music, announced at the company’s annual stockholders meeting in Toronto on Wednesday. Which of course makes you wonder why less than a year ago, as we detailed in this MobyLives report, Reisman announced she was moving away from selling books as fast as she could — that is, that she was reducing the amount of floor space dedicated to books to only 50%, which is not much in a, you know, bookstore. Taking up the rest of the floor space? Lifestyle items, also known as “things with better margins than books.” She wasn’t just hauling ass away from books, either — a few months after that announcement, Reisman announced she’d sold her 51% stake in the Kobo ereader for a reputed $315 million, as another MobyLives story reported.

So why is she so bullish on books that there are so few of them left in her stores?  Well, the company’s newest quarterly statement, under discussion at that Toronto meeting, showed “robust net earnings,” as a Financial Post report by Hollie Shaw noted — but only because that $315 million she got for selling Kobo. Beyond that, the company “recorded a loss from continuing operations during the period.” A Globe & Mail story by Marina Strauss detailed the situation further: “excluding one-time items such as the Kobo gain, [Indigo’s] loss widened to $15.3-million from $13.7-million a year earlier. Revenue slipped to $196-million from $200-million.”

And here’s the kicker: As the FP story notes, “Three-quarters of Indigo’s revenue … is still derived from book sales.” And so Reisman, in mid-flight from books, has some ‘splainin’ to do to her stockholders.

And thus, she’s talking to stockholders about the “increasing number of people reading digitally and physically, which augurs well for Indigo.” Which it would, if you had, oh I don’t know, an e-reading device to sell and maybe, say, you hadn’t reduced the amount of space you had to sell books by half.

But Reisman wasn’t giving stockholders much time to think about that. She also noted that all the “non-book” businesses being developed in the chain were “very nicely.”

Meanwhile, she cautioned, “The transformation we are embarked upon is a demanding multiyear effort.  It will certainly take a few years before our operating financial results … return to pre-e-book levels and are poised for major new growth.”

So why do I suspect she envisions those “pre-e-book levels” in a post-book Indigo?


Dennis Johnson is the founder of MobyLives, and the co-founder and co-publisher of Melville House.