Mixed Results in TurbulentMixed Results in Turbulent Economyy

Revenue up 2.3%, far outpacing industry peersEBITDA margins down 4.3% driven primarily by rapid/steep drop in Canadian dollarp p p

Increased costs on ~10% of goods purchased in US dollarsFX loss on US payables versus FX gains last yearFX loss on US payables versus FX gains last yearReduced vendor incentives on programs linked to US/Can exchange rate

S lid b l h t ith $168 illi h b l dSolid balance sheet with $168 million cash balance and no bank debtCash tax rate lower than accounting tax rate due to remaining NOL and large CCA balance

2

Rolled Out State of the ArtRolled Out State-of-the-Art Customer Kiosk

Improved in-store search andImproved in-store search and find

New “iPhone-like” 22 inch touch screenstouch screens

Real-time information on hot books and topics in the media

Simplified purchase with slide card

Customers and staff loveCustomers and staff love them!

Driving higher in-store sales

3

sales…

Launched PistachioLaunched Pistachio

Environmentally friendly selection of paper and gift; organic apothecary products fororganic apothecary products for everyday use

Two test stores opened

Wholesale launch of paper products into Indigo stores

Focus in coming year:Focus in coming year:refining product selection and in-store experienceopening a small number ofopening a small number of additional test stores expanding wholesale program with a US partner

4

Opened Award Winning DesignOpened Award-Winning Design Stores

Four exciting new stores opened this year with six more planned prior to next holiday season

A rich and inviting bookstore at the core, but designed to prominently feature our high growth kids, gift and paper offerings

5

Expanded Kids/Toy ProgramExpanded Kids/Toy ProgramExpanded kids programExpanded kids program included in all new stores, and retrofitted into 5 more existing stores last quarterq

Reinforces Indigo as a “must go” destination for families

A t kid b i b tA strong kids business boosts performance in other categories…

6

Successfully Completed KeySuccessfully Completed Key Infrastructure Projectsj

Launched new Workforce Management SoftwareLaunched new Workforce Management SoftwareImproved control of store labour scheduling

Replaced Customer DatabaseConsolidated view of customer across all channels

Platform for new CRM and Loyalty programs launching over next 18 monthsover next 18 months

Upgraded SAP “Business Warehouse” Source of transactional data for all business analyticsSource of transactional data for all business analytics

Faster response and improved functionality

7

Achieved “Best in Class” EmployeeAchieved Best-in-Class Employee Engagement Scoresg g

IIndigo Home Office

8

How is Indigo Approaching TheHow is Indigo Approaching The Coming Year?g

We expect the economy to remain weak for the next 18+ monthsmonths

We continue to believe that books are great value and offer “comfort” in times of uncertainty

We have planned conservatively and cut discretionary spending

Our long term strategic focus has not changedOur long term strategic focus has not changed

We will continue to invest in key growth and infrastructure projects

We believe it is prudent to keep a very conservative balance sheet, but recognize that return of capital is an important issue for shareholders

10

Our Long Term Strategic FocusOur Long Term Strategic Focus Has Not Changedg

Drive growth in our coreDrive growth in our core business

Simplify core processes andSimplify core processes and drive productivity improvement

Launch and grow new conceptsLaunch and grow new concepts

Achieve best-in-class employee engagementengagement

11

We Will Continue to Invest in KeyWe Will Continue to Invest in Key Growth and Infrastructure Projects j

Targeted Store OpeningsTargeted Store Openings

Expansion of Kids/Toy Program

Expansion of Paper and Gift Programs

Pistachio Test

Launch of New Customer Relationship Management and Loyalty Programsand Loyalty Programs

Capacity and Efficiency Improvements for Our Distribution Center

Upgrades to our Core SAP “Engine”

Launch of “Shortcovers”

12

“Shortcovers” Set to LaunchShortcovers Set to Launch

Shortcovers is a platform for digital reading and discovery

ibl b bil d iaccessible by any mobile deviceUse your existing mobile phone to find your next great read

A h b k blAccess chapters, books, blogs, magazines & new formats from top authors & users in bite-sized chunks

Create & share your ownCreate & share your own Shortcovers.

Sample for free. Buy a chapter, a digital download or the physical book

Save precious time

13

A Few Words about “GivingA Few Words about Giving Back”…

$6.0 million contributed to date

““Writing on the Wall” documentary released fall 2007

Ontario provincial commitment of $120 million over 4 years to support school librariesschool libraries

14