Indigo Reports Impressive Third Quarter: Same Store Sales grow by 15.1% Online Sales grow by 17.9% Earnings improve by $19.8M

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1 Indigo Reports Impressive Third Quarter: Same Store Sales grow by 15.1% Online Sales grow by 17.9% Earnings improve by $19.8M TORONTO, ON February 2, Indigo Books & Music Inc. (TSX: IDG), Canada s largest book, gift and specialty toy retailer reported 12.9% growth in revenue for its third quarter ended December 26, 2015, marking Indigo s ninth consecutive quarter of growth. Revenue for the quarter was $383.2 million, up $43.8 million from last year, despite operating one less superstore and four fewer small format stores. On a comparable store basis, Indigo and Chapters superstores posted 15.5% growth, while Coles and Indigospirit small format stores increased by 13.4%. Sales from Indigo s online channel, indigo.ca, grew by 17.9%. Revenue growth was driven by continued double digit growth in the general merchandise business and high single digit growth in the core book business. Commenting on the results, CEO Heather Reisman said, We re delighted to be reporting such a meaningful improvement in our financial results for Q3. As with every retailer, our third quarter is critical to the business and Indigo performed strongly across all categories and in all channels. We re incredibly proud of the Indigo team for delivering an outstanding assortment of books, gifts and toys, coupled with amazing service to our customers for the holidays. Indigo recognized net earnings of $52.8 million which is $2.03 net earnings per common share for the quarter, compared to net earnings of $33.0 million, or $1.28 net earnings per common share for the same period last year. The improvement of $19.8 million was primarily driven by increased revenues at a higher margin rate and a lower tax expense. During the quarter, Indigo launched two expanded IndigoKids locations, at Chapters Chinook Centre in Calgary and Chapters West Edmonton Mall in Edmonton, bringing the best kids books and toys, as well as the highly popular American Girl Specialty Boutique to both locations in time for holiday gift giving. Also in the quarter, the Indigo Love of Reading Foundation celebrated the global movement of Giving Tuesday by distributing over $1 million in Indigo e-gift cards to over 400 high needs elementary schools. Our Indigo, Chapters and Coles store teams across the country were delighted to deliver this incredible surprise to some of their local schools, who will use the money to bolster their libraries with books, learning tools and educational resources. These gifts would not have been possible without the generous donations and support from Indigo customers.

2 Analyst/Investor Call Indigo will host a conference call for analysts and investors to review these results at 9:00 a.m. (ET) tomorrow, February 3, The call can be accessed by dialling from within the Toronto area, or outside of Toronto. The eight digit participant code is #. A playback of the call will also be available by telephone until 10:00 a.m. (ET) on Wednesday February 10, The call playback can be accessed after 11:00 a.m. (ET) on February 3, 2016, by dialing from within the Toronto area, or outside of Toronto. The six-digit replay passcode number is #. The conference call transcript will be archived in the Investor Relations section of the Indigo website, Forward-Looking Statements Statements contained in this news release that are not historical facts are forward-looking statements which involve risk and uncertainties that could cause results to differ materially from those expressed in the forward-looking statements. Among the key factors that could cause such differences are: general economic, market or business conditions in Canada; competitive actions by other companies; changes in laws or regulations; and other factors, many of which are beyond the control of the Company. Non-IFRS Financial Measures The Company prepares its unaudited interim condensed consolidated financial statements in accordance with International Financial Reporting Standards and International Accounting Standards 34, Interim Financial Reporting. In order to provide additional insight into the business, the Company has also provided non-ifrs data, including comparative store sales growth, in the press release above. This measure does not have a standardized meaning prescribed by IFRS and is therefore specific to Indigo and may not be comparable to similar measures presented by other companies. Comparative store sales growth is a key indicator used by the Company to measure performance against internal targets and prior period results. This measure is commonly used by financial analysts and investors to compare Indigo to other retailers. Comparable store sales are defined as sales generated by stores that have been open for more than 12 months on a 52-week basis. About Indigo Books & Music Inc. Indigo is a publicly traded Canadian company listed on the Toronto Stock Exchange (IDG). As the largest book, gift and specialty toy retailer in Canada, Indigo operates in all provinces under different banners including Indigo Books & Music; Indigo Books, Gifts, Kids; Indigospirit; Chapters; and Coles. The online channel, indigo.ca, offers a one-stop online shop with a robust selection of books, toys, home décor, stationery, and gifts. Indigo founded the Indigo Love of Reading Foundation in 2004 to address the underfunding of public elementary school libraries. Every year the Indigo Love of Reading Foundation grants $1.5 million to 20 high-needs elementary schools so they can transform their libraries with the purchase of new books and education resources. To date, the Indigo Love of Reading Foundation has committed over $22.9 million to over 2,000 schools through our signature programs.

3 To learn more about Indigo, please visit the Our Company section at indigo.ca. For further information please contact: Janet Eger Vice President, Public Affairs

4 Consolidated Balance Sheets (Unaudited) As at As at As at December 26, December 27, March 28, (thousands of Canadian dollars) ASSETS Current Cash and cash equivalents 312, , ,162 Accounts receivable 22,354 20,784 4,896 Inventories 220, , ,395 Income taxes recoverable Prepaid expenses 4,576 5,864 5,477 Total current assets 559, , ,955 Property, plant, and equipment 58,340 56,771 54,886 Intangible assets 15,593 17,902 16,587 Equity investment 2,426 1, Deferred tax assets 46,332 40,766 44,241 Total assets 682, , ,395 LIABILITIES AND EQUITY Current Accounts payable and accrued liabilities 241, , ,645 Unredeemed gift card liability 68,735 64,232 48,211 Provisions Deferred revenue 13,414 13,380 13,298 Income taxes payable Current portion of long-term debt Total current liabilities 323, , ,239 Long-term accrued liabilities 2,596 2,335 3,841 Long-term provisions Long-term debt Total liabilities 326, , ,246 Equity Share capital 207, , ,871 Contributed surplus 10,455 9,715 9,770 Retained earnings 137, ,454 95,508 Total equity 355, , ,149 Total liabilities and equity 682, , ,395

5 Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited) 13-week 13-week 39-week 39-week period ended period ended period ended period ended December 26, December 27, December 26, December 27, (thousands of Canadian dollars, except per share data) Revenue 383, , , ,221 Cost of sales (214,057) (191,709) (429,669) (398,265) Gross profit 169, , , ,956 Operating, selling, and administrative expenses (121,162) (113,012) (306,963) (298,997) Operating profit 47,952 34,668 37,155 11,959 Interest on long-term debt and financing charges (4) (19) (9) (48) Interest income on cash and cash equivalents ,057 1,253 Share of earnings from equity investment 2,426 1,684 1,700 1,086 Earnings before income taxes 50,704 36,798 39,903 14,250 Income tax recovery (expense) 2,091 (3,838) 2,091 (3,838) Net earnings and comprehensive earnings for the period 52,795 32,960 41,994 10,412 Net earnings per common share Basic $ 2.03 $ 1.28 $ 1.62 $ 0.41 Diluted $ 2.02 $ 1.27 $ 1.61 $ 0.40

6 Consolidated Statements of Cash Flows (Unaudited) 13-week 13-week 39-week 39-week period ended period ended period ended period ended December 26, December 27, December 26, December 27, (thousands of Canadian dollars) CASH FLOWS FROM OPERATING ACTIVITIES Net earnings for the period 52,795 32,960 41,994 10,412 Add (deduct) items not affecting cash Depreciation of property, plant, and equipment 3,666 3,703 10,830 11,036 Amortization of intangible assets 2,210 3,032 6,870 8,881 Net reversal of capital assets (1,619) (458) (1,619) (458) Loss on disposal of capital assets Share-based compensation Directors' compensation Deferred tax assets (2,091) 3,838 (2,091) 3,838 Other (665) (175) (3,316) (716) Net change in non-cash working capital balances 91, ,386 70, ,546 Interest on long-term debt and financing charges Interest income on cash and cash equivalents (330) (465) (1,057) (1,253) Income taxes received Share of earnings from equity investment (2,426) (1,684) (1,700) (1,086) Cash flows from operating activities 143, , , ,373 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant, and equipment (7,665) (4,196) (13,562) (8,907) Addition of intangible assets (2,106) (1,384) (5,880) (5,196) Proceeds from disposal of capital assets Interest received Cash flows used in investing activities (9,487) (5,373) (18,667) (13,108) CASH FLOWS FROM FINANCING ACTIVITIES Repayment of long-term debt (40) (170) (135) (536) Interest paid (17) (19) (51) (50) Proceeds from share issuances 1, , Cash flows from financing activities 1, , Effect of foreign currency exchange rate changes on cash and cash equivalents , Net increase in cash and cash equivalents during the period 136, , , ,649 Cash and cash equivalents, beginning of period 176, , , ,578 Cash and cash equivalents, end of period 312, , , ,227