Indigo Books & Music : Reports FY21 Full Year Results – Exceptional online growth of +127% drives ’s digital transformation

Indigo Reports FY21 Full Year Results - Exceptional online growth of

+127% drives Indigo's digital transformation

TORONTO, ON - June 1, 2021 -- Indigo Books & Music Inc. (TSX: IDG), Canada's largest book and lifestyle retailer reported financial results for the 53-week period ended April 3, 2021 compared to the 52-week period ended March 28, 2020.

Indigo's exceptional online growth showed resilience against severe disruption from the COVID- 19 global health crisis and is driving the Company's transformational strategy. Over 1 million new and existing customers embraced the Online channel in fiscal 2021, providing Indigo with a compelling market opportunity to strengthen its position beyond a COVID-19 recovery. Strength in the Company's core book business stabilized against macro-economic headwinds, while the successful launch of proprietary lifestyle brand OUI showcased customers' affinity for Indigo's evolving product lines and the success of assortment expansion as a growth lever for the business.

The impact on revenue from extensive COVID-19 related store closures was contained to a decline of 5.5% or $53.0 million on full-year results, with Indigo reporting revenue of $904.7 million compared to $957.7 million last year. Key markets like the Greater Toronto Area were impacted for around six months' time, including over the critical holiday period. Revenue was buoyed by remarkable online performance, the delivery of enhanced omnichannel capabilities and continued demand for core categories of reading, wellness, and at-home learning and entertainment, which partially offset the adverse COVID-19 impacts.

Commenting on the results, CEO Heather Reisman said: "This sustained acceleration in e- commerce presents an extraordinary opportunity for Indigo. The new initiatives we are embarking on, from further assortment expansion to becoming a truly omni-channel retailer, strategically align the business to deliver profitable growth. With the welcome of our new President, Peter Ruis, these efforts strongly position us to build upon the hoped-forCOVID-19 recovery in fiscal 2022."

Adjusted EBITDA for the year was a loss of $28.3 million compared to a loss of $7.3 million last year. This was driven by the top-line decline resulting from COVID-19 rolling store closures, pressure on margin stemming from the subsequent need to clear goods and elevated shipping costs during store closure periods, and other pandemic-related costs, partially offset by external COVID-19 labour and occupancy support.

Indigo reported a net loss of $57.9 million ($2.09 net loss per basic common share) compared to a net loss of $185.0 million ($6.72 net earnings per basic common share) last year. This improvement was a result of cycling over non-cash impairment losses and the non-cash deferred

income tax expense associated with the write-down of the Company's deferred tax assets in the prior year.

Revenue for the fourth quarter was $199.0 million compared to revenue of $178.1 million for the same quarter last year, an increase of 11.7%. The Online channel more than doubled, offsetting the adverse impact of lengthy COVID-19 store closures in the fourth quarter of fiscal 2021. Net loss for the fourth quarter was $39.5 million compared to a net loss of $171.3 million last year, an improvement of $131.8 million as the Company cycles over impairment and deferred tax charges recorded in the prior year.

With no outstanding debt and a cash balance of $84.9 million, the Company continues to be well positioned to manage through these uncertain times.

Analyst/Investor Call

Indigo will host a conference call for analysts and investors to review these results at 9:00 a.m. (Eastern Time) tomorrow, June 2, 2021. The call can be accessed by dialing 647-427-7450 from within the Toronto area, or 1-888-231-8191 outside of Toronto. The seven-digit participant code is 1264749.

A playback of the call will also be available by telephone until 11:59 p.m. (ET) on June 9, 2021. The call playback can be accessed after 12:00 p.m. (ET) on June 2, 2021, by dialing 416-849-0833 from within the Toronto area, or 1-855-859-2056 outside of Toronto. The seven-digit replay passcode number is 1264749. The conference call transcript will be archived in the Investor Relations section of the Indigo website, www.indigo.ca.

Forward-Looking Statements

Statements contained in this news release that are not historical facts are "forward-looking information" within the meaning of applicable Canadian securities legislation. To the extent any forward-looking information constitutes "financial outlooks" within the meaning of applicable Canadian securities laws, such information is being provided as preliminary financial and operational results. Financial outlooks, as with forward-looking information generally, are, without limitation, based on the assumptions and subject to various risks and uncertainties that could cause actual results to differ materially from those expressed in or implied in this news release. Among the key factors that could cause such differences are: general economic, market or business conditions; the future impacts and government response to the COVID-19 pandemic, including any impact to online and/or retail operations of the Company; competitive actions by other companies; changes in laws or regulations; and other factors, many of which are beyond the control of the Company, as set out in the Company's annual information form dated June 23, 2020 and available on the Company's issuer profile on SEDAR at www.sedar.com.

Undue reliance should not be placed on such forward-looking information and no assurance can be given that such events will occur in the disclosed time frames or at all. Any forward-looking information included in this news release is made as of the date of this news release and the Company does not undertake an obligation to publicly update such forward-looking information to reflect new information, subsequent events or otherwise unless required by applicable securities laws.

Non-IFRS Financial Measures

The Company prepares its consolidated financial statements in accordance with International Financial Reporting Standards ("IFRS"). In order to provide additional insight into the business, the Company has also provided non-IFRS data, specifically adjusted EBITDA, in this press release. These measures do not have standardized meanings prescribed by IFRS and are therefore specific to Indigo and may not be comparable to similar measures presented by other companies.

For additional context see "Results of Operations" and "Non-IFRS Financial Measures" in the Management's Discussion and Analysis (which can be found at www.indigo.ca/investor-relations or www.sedar.com).

About Indigo Books & Music Inc.

Indigo is a publicly traded Canadian company listed on the Toronto Stock Exchange (IDG). Indigo is the world's first Cultural Department Store - a physical and digital meeting place inspired by and filled with books, music, art, ideas, and beautifully designed lifestyle products. Indigo believes in real books, in living life fully and generously, in being kind to each other and that stories - big and little - connect us.

Indigo founded the Indigo Love of Reading Foundation in 2004 to address the underfunding of public elementary school libraries. Every year the Foundation provides grants to high-needs elementary schools so they can transform their libraries with the purchase of new books and educational resources. To date, the Foundation has committed over $32 million to more than 3,000 elementary schools, benefitting more than 1,000,000 students. Most recently in April 2020, in the wake of the COVID-19 pandemic and unprecedented nation-wide school closures, the Foundation committed $1.0 million to provide books to families in need.

To learn more about Indigo, please visit the "Our Company" section at indigo.ca. For further information please contact:

Madeleine Lowenborg-FrickDirector, Corporate Communications [e-mail]

Consolidated Balance Sheets

	As at	As at
	April 3,	March 28,
(thousands of Canadian dollars)	2021	2020
ASSETS
Current	84,935
Cash and cash equivalents	120,473
Accounts receivable	22,976	7,640
Inventories	215,114	241,812
Prepaid expenses	12,278	6,062
Income taxes receivable	-	138
Derivative assets	-	3,794
Other assets	2,120	2,320
Total current assets	337,423	382,239
Loan receivable	-	446
Property, plant, and equipment, net	77,131	91,215
Right-of-use assets, net	361,864	382,146
Intangible assets, net	20,916	24,571
Equity investment, net	2,156	2,353
Total assets	799,490	882,970
LIABILITIES AND EQUITY
Current	145,193
Accounts payable and accrued liabilities	164,294
Unredeemed gift card liability	58,053	51,673
Provisions	2,365	2,034
Deferred revenue	16,486	10,682
Short-term lease liabilities	67,603	68,402
Derivative liabilities	1,622	-
Total current liabilities	291,322	297,085
Long-term accrued liabilities	2,090	1,196
Long-term provisions	827	469
Long-term lease liabilities	482,671	500,215
Total liabilities	776,910	798,965
Equity	226,986
Share capital	226,986
Contributed surplus	13,782	12,822
Retained deficit	(216,668)	(158,801)
Accumulated other comprehensive income (loss)	(1,520)	2,998
Total equity	22,580	84,005
Total liabilities and equity	799,490	882,970

Consolidated Statements of Loss and Comprehensive Loss

		53-week		52-week
		period ended		period ended
		April 3,		March 28,
(thousands of Canadian dollars, except per share data)		2021		2020
Revenue		904,738		957,722
Cost of sales		(567,902)		(553,627)
Gross profit		336,836		404,095
Operating, selling, and other expenses		(368,705)		(422,624)
Impairment losses		-		(56,582)
Operating loss		(31,869)		(75,111)
Net interest expense		(24,784)		(23,524)
Share of loss from equity investments		(197)		(1,651)
Loss before income taxes		(56,850)		(100,286)
Income tax expense		(1,017)		(84,712)
Net loss		(57,867)		(184,998)
Other comprehensive income (loss)
Items that are or may be reclassified subsequently to net loss,
net of taxes:		(4,507)
Change in fair value of cash flow hedges			2,492
Reclassification of realized loss (gain)		108		(497)
Foreign currency translation adjustment		(119)		445
Other comprehensive income (loss)		(4,518)		2,440
Total comprehensive loss		(62,385)		(182,558)
Net loss per common share	$	(2.09)
Basic	$	(6.72)
Diluted	$	(2.09)	$	(6.72)