January 27, 2009 / 9:39 PM / in 9 years

UPDATE 1-Indigo Books profit drops on C$, taxes

* Earnings C$1.07 a share vs C$1.94 * Revenue C$330 million vs C$322.6 million

TORONTO, Jan 27 (Reuters) - Indigo Books & Music Inc (IDG.TO) reported a sharp drop in quarterly profit on Tuesday because of a tax expense and a weaker Canadian dollar, but the bookstore chain said its revenue grew despite a weak economy.

The company, Canada’s biggest book retailer, said it earned C$26.8 million ($21.8 million), or C$1.07 a share, in the quarter, which included the key Christmas shopping period. That was down from a profit of C$49.2 million, or C$1.94 a share, a year earlier.

Indigo said this year’s quarter included a tax expense of C$13.4 million, while last year’s included a tax recovery of C$7.6 million.

“Our profit was dampened by the steep and unexpected decline in the Canadian dollar during the quarter which impacted the cost of imported goods and a number of our operating costs,” Chief Executive Heather Reisman said in a statement.

Still, she added, “we’re very satisfied with our top line growth given the challenging economic climate.”

The company’s revenue grew to C$330 million from C$322.6 million a year earlier.

Indigo also launched two of its new Pistachio stores during the quarter, it said. The green-friendly stores sell paper and specialty gift items.

It said that on a comparable store basis, its Indigo and Chapters superstores posted 2.2 percent revenue growth. Its Coles small-format stores were up 3.2 percent. However, Indigo’s online sales dropped 2.6 percent.

The company released its results after markets closed. During the day, its shares fell 19 Canadian cents to close at C$12 on the Toronto Stock Exchange.

$1=$1.23 Canadian Reporting by Wojtek Dabrowski; editing by Rob Wilson

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