Canadian retailer Indigo Books and Music Inc. has reported a loss of $49.6 million in its latest financial year. The company attributes this loss to a ransomware attack on its website and payment systems, as well as the impact of cooling consumer spending. The cyberattack resulted in the compromise of personal information belonging to both current and former employees. Indigo’s CEO, Peter Ruis, noted that the macroeconomic environment has affected consumer behavior and costs, leading to a decline in revenue, which totaled $1.058 billion. Despite this, the company experienced record-breaking online sales during Black Friday and strong sales during Boxing Day week. However, sales between these events have been quieter, causing a rollercoaster effect. Indigo is still assessing the full financial impact of the cyberattack.
The company’s fourth-quarter results were heavily impacted by the cyberattack, resulting in a revenue of $194.2 million compared to $220.7 million in the same period the previous year. Indigo stated that the attack accounted for the majority of the $19.1 million change in net loss position. The full long-term financial impact of the ransomware attack cannot be estimated at this time, but the company does have cyber insurance coverage and is working with its insurer to make claims for business interruption losses and incremental costs.
In addition to the financial strain caused by the cyberattack, Indigo also announced a shakeup in its board of directors. Four directors resigned earlier this month, while three new directors were appointed. Founder and executive chair Heather Reisman, who stepped down as CEO last year, will retire from the board in August. Looking ahead, Indigo plans to launch a new digital platform this summer and open a new flagship store in Toronto in September. The company expects its margins to benefit from lower international freight costs and quicker inventory arrival. Indigo is being cautious with inventory purchases this year to avoid mark-down pressure on margins.
Overall, Indigo faces challenges due to the impact of the ransomware attack and the broader economic environment. The company continues to adapt its strategies to meet changing consumer behaviors and is optimistic about its future with the upcoming digital platform launch and new store opening.
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