In the latest SHuSH newsletter, Ken Whyte discusses the financial woes of Canada’s quasi-monopoly book chain, Indigo after a series of misfortunes:
“Indigo Books and Music” by Open Grid Scheduler / Grid Engine is licensed under CC0 1.0
As we reported in SHuSH 197 and SHuSH 203, Indigo posted a ruinous 2023 (its fiscal year ends March 30), losing $50 million. That came on the heels of more than $270 million in losses the previous four years. The company’s share price, as high as $20 in 2018, has been floating around $1.30 this summer.
That dismal performance spelled the end of founding CEO Heather Reisman’s leadership at the chain. In June, her husband, Onex billionaire Gerry Schwartz, who has been Indigo’s controlling shareholder and chief financial backstop since the company’s launch in 1997, took the reins and elbowed Heather into the ditch along with almost every member of the board of directors who wasn’t beholden to Gerry personally.
The only non-Gerry director to survive was CEO Peter Ruis.
As I said at the time, Peter Ruis, “a career fashion retailer who landed in this jackpot from England two years ago”, is either “polishing his resume as we speak or negotiating a massive retention bonus to stick around and wield an axe on Gerry’s behalf. My money is on polishing.”
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Meanwhile, I’m hearing that everyone in the publishing industry is being slammed with returns. Publishers usually get a lot of books back from retailers in the first quarter of the year as stores send back unsold inventory from the holiday season. This year, the returns were slower to start, probably because of Indigo’s cyberattack last fall, but they have kept coming right through the second and third quarters. This is coupled with lighter than usual buying for the fall.
The firm’s releases continue to claim that Indigo will keep books at its core, even as it loads its shelves with brass cutlery, dildos, and pizza ovens. According to Google, the core of an apple represents 25 percent of its weight. Books are now less than 50% of Indigone, suggesting more returns and light orders to come.
One final note. I corresponded this morning with a giant of Canadian businessman who has no special insight into the Indigo situation although he’s kept up with the news and, like everyone in Toronto commercial circles, he’s familiar with the Schwartz-Reismans.
He wonders just how involved Gerry is with Indigo these days. Apparently his health is not good. And while he’s still the lead shareholder at Onex, he’s no longer CEO and may not have access to the hordes of ultra-bright hirelings and menials that have long surrounded him.
My friend writes: “My guess is that suppliers are going to start to halt shipping and that a financial crisis is imminent, despite [Gerry’s] line of credit. But I don’t know anything.”
