Indigo Books profit drops 74 pct on e-reader costs

Mon May 31, 2010 5:35pm EDT

* Q4 profit falls 74 pct

* Results hurt by e-reader expense

TORONTO May 31 (Reuters) - Indigo Books & Music (IDG.TO), Canada's largest book retailer, said on Monday its quarterly profit dropped 74 percent, hurt by expenses related to the launch of the Kobo e-reader.

Profit for the company's fourth quarter, ended March 10, was C$500,000 ($480,000), down from C$1.9 million a year earlier. The company did not disclose per-share results.

Revenue rose by about 6 percent over the year-before quarter, the company said, despite same-store sales that fell 2.7 percent at Indigo and Chapters superstores, and 5.8 percent at small-format Indigo Spirit stores.

"The last quarter was a challenging one for us," Indigo Chief Executive Heather Reisman said in a statement, noting that store traffic suffered due to the Winter Olympics in February. The company said the higher expense from the Kobo launch should continue into the coming fiscal year.

On a full-year basis, the company earned C$34.9 million, or C$1.39 a share, compared with a year-before C$30.7 million, or C$1.21 a share.

Shares of Indigo fell 9 Canadian cents on Monday to close at C$15.01 on the Toronto Stock Exchange. The results were released after markets closed.

($1=$1.04 Canadian) (Reporting by Cameron French; editing by Peter Galloway)