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!ndigo 2011 AGM

The Story of Indigo...Established product design and development capabilities to build Indigo proprietary gift and lifestyle merchandise Launch Indigo Enrich Your Life August 2011

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Page 1: The Story of Indigo...Established product design and development capabilities to build Indigo proprietary gift and lifestyle merchandise Launch Indigo Enrich Your Life August 2011

!ndigo2011 AGM

Page 2: The Story of Indigo...Established product design and development capabilities to build Indigo proprietary gift and lifestyle merchandise Launch Indigo Enrich Your Life August 2011

Agenda

Call to order

Audited financial statements

Election of directors

Appointment of auditors

Formal meeting adjournment

Presentation by Heather Reisman

Page 3: The Story of Indigo...Established product design and development capabilities to build Indigo proprietary gift and lifestyle merchandise Launch Indigo Enrich Your Life August 2011

Net Revenue up 5%.

Kobo revenue increased from

$0.8 million to $90.0 million.

Very solid growth in our general

merchandise business.

FY11 Revenue

700

750

800

850

900

950

1,000

FY07 FY08 FY09 FY10 FY11

millio

ns

Consolidated revenues surpassed the billion dollar mark

Page 4: The Story of Indigo...Established product design and development capabilities to build Indigo proprietary gift and lifestyle merchandise Launch Indigo Enrich Your Life August 2011

FY11 EBITDA

EBITDA decline from $73.0 million

to $26.2 million driven by:

One less operating week in FY11;

Significant operating investment

made to grow Kobo;

Operating investments in product

design and merchant teams to

drive general merchandise

business;

Declining revenue and margin in

core book business.

0

10

20

30

40

50

60

70

80

FY 07 FY 08 FY 09 FY 10 FY11

millio

ns

Page 5: The Story of Indigo...Established product design and development capabilities to build Indigo proprietary gift and lifestyle merchandise Launch Indigo Enrich Your Life August 2011

Net earnings decline from

$34.9 million to $11.3 million.

FY11 Net Earnings

0

10

20

30

40

50

60

FY07 FY08 FY09 FY10 FY11

millio

ns

Page 6: The Story of Indigo...Established product design and development capabilities to build Indigo proprietary gift and lifestyle merchandise Launch Indigo Enrich Your Life August 2011

Solid balance sheet with no long-term debt.

Critical steps taken to:

Leverage global growth opportunity in eReading; and

Transform Indigo with and for our customers.

FY11 Summary

Page 7: The Story of Indigo...Established product design and development capabilities to build Indigo proprietary gift and lifestyle merchandise Launch Indigo Enrich Your Life August 2011

Kobo

Page 8: The Story of Indigo...Established product design and development capabilities to build Indigo proprietary gift and lifestyle merchandise Launch Indigo Enrich Your Life August 2011

Kobo is one of 3 powerhouses in the market Time Magazine - January 2011

Page 9: The Story of Indigo...Established product design and development capabilities to build Indigo proprietary gift and lifestyle merchandise Launch Indigo Enrich Your Life August 2011

A Global Leader in eReading

World class book store – 2.4 million titles

#1 eReading app on iPad and iPhone worldwide

Top selling affordable eReader

4 million readers in 100+ countries

Page 10: The Story of Indigo...Established product design and development capabilities to build Indigo proprietary gift and lifestyle merchandise Launch Indigo Enrich Your Life August 2011

A Global Leader in eReading

#1 share in Canada, Australia & New Zealand, #3 in the US

Tablet Partners: Samsung, RIM, Acer, Asus, HTC…

“Reading Life”: first ever socially-integrated eReading platform

$80 million in investment from Indigo, Cheung Kong Holdings, Fidelity…

Page 11: The Story of Indigo...Established product design and development capabilities to build Indigo proprietary gift and lifestyle merchandise Launch Indigo Enrich Your Life August 2011

Kobo eReader Touch changes the game

Expanding relationships with leading booksellers around the world

Expanding distribution partnerships with leading brands (Walmart, Best Buy, Sears, Kmart, Target…)

Our Goal: No. 1 competitor to Kindle worldwide within 3 Years

Page 12: The Story of Indigo...Established product design and development capabilities to build Indigo proprietary gift and lifestyle merchandise Launch Indigo Enrich Your Life August 2011

Launching this summer in French, Spanish, German, Italian with Asia to follow

Kobo to be preloaded on over 20 million devices globally in 2011

Global book publishing market exceeds US$90 billion

Our Goal: No. 1 competitor to Kindle worldwide within 3 Years

Page 13: The Story of Indigo...Established product design and development capabilities to build Indigo proprietary gift and lifestyle merchandise Launch Indigo Enrich Your Life August 2011

Aggressive plan in place for FY12

Significant growth in customer base

Significant growth in top line revenues

Margin improvement with move to agency

Increased share of global eBook market

The KOBO slidesKobo

Page 14: The Story of Indigo...Established product design and development capabilities to build Indigo proprietary gift and lifestyle merchandise Launch Indigo Enrich Your Life August 2011

A Transformational Agenda

!ndigo 3.0

Page 15: The Story of Indigo...Established product design and development capabilities to build Indigo proprietary gift and lifestyle merchandise Launch Indigo Enrich Your Life August 2011

Key Statistics

163 million store and online visits in FY11

33 million transactions in FY11

2 million loyalty members

66% of transactions are loyalty transactions

62% NPS

Page 16: The Story of Indigo...Established product design and development capabilities to build Indigo proprietary gift and lifestyle merchandise Launch Indigo Enrich Your Life August 2011

Market position:

Indigo 3.0 - a r*etail experience

The authority on books – digital and physical

The destination for kids Edutainment

The destination for inspired home accessories

The destination for gifts to treasure

Page 17: The Story of Indigo...Established product design and development capabilities to build Indigo proprietary gift and lifestyle merchandise Launch Indigo Enrich Your Life August 2011

Reshape assortment to leverage consumer trust, drive top line growth, and margin expansion

Reshape online and in-store experience

Engage consumers in the Indigo transformation agenda

Re-engineer supply chain to support expanded general merchandise strategy & drive productivity

The Indigo Transformation Agenda

Page 18: The Story of Indigo...Established product design and development capabilities to build Indigo proprietary gift and lifestyle merchandise Launch Indigo Enrich Your Life August 2011

Established product design and development capabilities to build Indigo proprietary gift and lifestyle merchandise

Launch Indigo Enrich Your LifeAugust 2011

Build general merchandise to approx. 40% of mix over next 18 months with meaningful amount of proprietary product

Expand Kobo Central in store

Drive top line growth & margin expansion

Page 19: The Story of Indigo...Established product design and development capabilities to build Indigo proprietary gift and lifestyle merchandise Launch Indigo Enrich Your Life August 2011

Finalize expansion of IndigoKids, both in-store and online, into a true leader for kids edutainment products; birthday and holiday gifts

Currently have 53 full-line IndigoKids

Additional 20 full-line rollouts scheduled for fiscal 2012 and 2013

Note: Strongest performing stores have a full IndigoKids experience

Drive top line growth & margin expansion

Page 20: The Story of Indigo...Established product design and development capabilities to build Indigo proprietary gift and lifestyle merchandise Launch Indigo Enrich Your Life August 2011

Reshape online and in-store experience

Page 21: The Story of Indigo...Established product design and development capabilities to build Indigo proprietary gift and lifestyle merchandise Launch Indigo Enrich Your Life August 2011

Expand “known” consumers from 1 million to 3 million through plum program - launched April 2011

Involve consumers in direct dialogue/innovation on new product introductions

Engage consumers in Indigo transformation

Page 22: The Story of Indigo...Established product design and development capabilities to build Indigo proprietary gift and lifestyle merchandise Launch Indigo Enrich Your Life August 2011

Fiscal 2011

Opened new online warehouse capable of handling toys and general merchandise product

Fiscal 2012

Implementing changes to our retail warehouse to support our evolving product mix, to improve efficiency and reduce operating costs

Established a major strategic thrust to look at end-to-end productivity

Drive productivity improvement

Page 23: The Story of Indigo...Established product design and development capabilities to build Indigo proprietary gift and lifestyle merchandise Launch Indigo Enrich Your Life August 2011

More than $10.5 million committed through Indigo Love of Reading Foundation

415 schools revitalized through the Literacy Fund and Adopt a School

The Goal Remains...Cross-Canada provincial funding!

Indigo Love of Reading Foundation

“You have just changed the lives of children that we serve everyday…”

Principal Jill Maar, Armadale Public School - 2011

Page 24: The Story of Indigo...Established product design and development capabilities to build Indigo proprietary gift and lifestyle merchandise Launch Indigo Enrich Your Life August 2011