Two Retailers: One Buy, One Hold

Article Excerpt

INDIGO BOOKS & MUSIC INC. $16.82 (Toronto symbol IDG; SI Rating: Speculative) (416-646-8965; www.chapters.indigo.ca; Shares outstanding: 24.6 million; Market cap: $414.6 million) is the largest book retailer in Canada. It operates stores in all 10 provinces and also sells through its Chapters and Indigo web sites. Indigo acquired money-losing Chapters Inc. in 2001. Indigo operates 88 superstores under the banners Chapters, Indigo and the World’s Biggest Bookstore, and 158 small format stores, under the banners Coles, Indigo, SmithBooks and The Book Company. Indigo also has a 50% interest in Calendar Club of Canada, which operates seasonal kiosks in shopping malls across Canada. Indigo’s superstores offer a huge selection and attractive surroundings. Indigo’s revenues in the fiscal fourth quarter ended March 31, 2007 rose 6.2%, to $201.9 million from $190.1 million a year earlier. Sales growth came in all areas, including superstores, small-format stores and its online retail operations. The company reported a lower loss in the quarter of $4.2 million, compared to a..