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Year inReview Another Excellent Year

Solid top line growth

Significantly improved operating margins

Strong cash flow

Kids business on fire

Launch of online “community” site

Four new Indigospirit stores opened

Stable & secure systems2

Notable Achievements#1 National Retailer in Canada(Kubas Consultants)

Best Retail Store Design (ICSC Maple Leaf Award)

$1.5 million commitment toschool literacy through Indigo Love of Reading Foundation

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Net Revenue up 5.5%

A “Harry Potter”year

Growth well above North American average despite decline in average book prices 700

725750775800825850875900925950975

FY04 FY05 FY06 FY07 FY08

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EBITDA up 12.6%

Best-in-class operating metrics

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FY04 FY05 FY06 FY07 FY08

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Net Income up 76.0%

Improved operating earnings

Lower interest and amortization costs

$8.8 mm non-cash tax recovery

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10.015.020.025.030.035.040.045.050.055.060.0

FY04 FY05 FY06 FY07 FY08

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Total debt reduced by $14.5 million

Repaid final $13 million term debt

Operating line of credit to cover seasonal working capital

Capital leases on select technology assets

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FY04 FY05 FY06 FY07 FY08

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Q1 Fiscal 2009 Results Continue Strong Trend …

Revenue up 3.1%Net loss cut in half$57.1 mm cash on handLaunched share repurchase program

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Financial SummarySolid balance sheet

Excellent momentum

No shortage of ideas…

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Our Strategic Focus

Drive growth in our core business

Simplify core processes and drive productivity improvement

Launch new concept

Achieve best-in-class employee engagement

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Re-imagine the Chapters/Indigo Experience

Award-winning store designState-of-the-art customer kioskInteractive digital communityAn increasingly rich bookstore experience…but expanding business in kids, gifts and paper

10 new superstores in 2009 and 2010

Drive Growth in Core Business

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Award-winning design

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Award-winning design

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Award-winning design

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State-of-the-Art Customer Kiosk

New “iPhone-like”22 inch touch screens

Improved in-store search and find

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

Simplified purchase with slide card

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our online place for booklovers to meet, recommend reading, create book clubs, join shared interest groups and be inspired on their next read

150,000 members and growing daily

Drives “no cost” natural search

Drives Growth of online

Interactive Digital Community…

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Increasingly Rich Bookstore Experience

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Increasingly Rich Bookstore Experience

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Expand Paper Business

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Expand Gift Business

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Full kids toy shops in all new superstoresRollout into existing stores over next two years

Expand Kids Business

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Paced Expansion of Indigospirit

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Good for you, good for the planet

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

Two new test stores opening before the holidays

Wholesale launch of paper products into Indigo stores before the holidays

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Simplify & Drive Productivity

Continuous improvement initiative

About thinking ‘end-to-end’

Three objectives:Enhance desired consumer experience

Improve quality of work life for employees

Drive out cost

Our target: Best-in-class operating margins of 8.5% - 9.0% of sales

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Achieve Best-in-Class Employee Engagement

Annual measurement of employee engagement using Hewitt survey

Four of eight areas in the business achieved best-in-class levels this past year; balance trending well with work still to be done

Priority reinforced in Executive Bonus Program

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$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 libraries