Indigo Books & Music Inc. (TSX:IDG) says consumers have responded favourably to its Kobo electronic book business, offsetting lower sales at its bricks-and-mortar locations across Canada.

Indigo's overall revenue rose to $214.8 million in the three months ended Oct. 2, a gain of $7.8 million from the comparable period last year.

But the growth came at a cost, with Indigo recording a $1.7-million loss, or seven cents per share, in the second quarter of its 2011 fiscal year.

"The increased loss was expected as we continue to invest in the growth and development of our digital initiatives and the re-development of our stores to accommodate growth in our gift and toy businesses," Indigo CEO Heather Reisman said in a statement.

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