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Financial and Operational Highlights:
- Sales decreased 27.3% to
$32.2 million - 120.7% or
$9.3 million increase in e-commerce and wholesale sales - Adjusted operating loss1 of
$4.4 million compared to loss of$1.7 million - Net cash position of
$39.3 million as atMay 2, 2020 - DAVIDsTEA’s online business at www.davidstea.com and sales in grocery stores and pharmacies across
Canada continues solid growth - 18 stores across
Canada expected to re-open before the end ofAugust 2020
“Our first quarter results reflect the closure of all our stores for about half of the quarter and the exceptional performance of our e-commerce and wholesale channels as our customers shifted their buying habits. Yesterday, we announced that our Canadian network will be comprised of 18 stores going forward for which we are finalizing terms and conditions with respective landlords. These stores will complement our focus on e-commerce and wholesale channels and position
“With first quarter sales growth of over 120% year-over-year, we are extremely pleased that our loyal tea-loving customers have shifted to buying our teas online, and in supermarkets and drugstores. The strong performance of these sales channels provided us with the confidence that we are on the right path for the future. We are moving forward with our business plan at an accelerated pace and our sales channels are now well balanced to fully leverage the
Mr. Segal added: “I sincerely regret the impact of closing stores and restructuring of our business will have on some of our exceptional and passionate employees. This has been an incredibly difficult decision to take, but a necessary one to ensure the long-term viability of
Operating Results for the First Quarter of Fiscal 2020 Compared to the First Quarter of Fiscal 2019
Sales. Sales for the three months ended
Gross Profit. Gross profit of
Selling, General and Administration Expenses. Selling, general and administration expenses (“SG&A”) increased by
Results from Operating Activities. Loss from operating activities was
Finance Costs. Finance costs amounted to
Finance Income. Finance income of
EBITDA. EBITDA, which excludes non-cash and other items in the current and prior periods, was negative
Net Loss. Net loss was
Fully diluted loss per common share. Fully diluted loss per common share was negative
Liquidity and Capital Resources
As at
Our primary source of liquidity is cash on hand. Our primary cash needs are to finance working capital and capital expenditures in connection with enhancing the functions and features of our online store. Our working capital requirements are for the purchase of inventory and payment of payroll, rent and other operating costs. Furthermore, in light of implementing the Restructuring Plan, the Company expects to use cash on hand to pay for professional fees and dividend resulting from the plan of arrangement that will be presented to creditors.
Our working capital requirements fluctuate during the year, rising in the second and third fiscal quarters as we take title to increasing quantities of inventory in anticipation of our peak selling season in the fourth fiscal quarter. We funded our capital expenditures and working capital requirements from cash on hand and net cash provided by our operating activities.
Condensed Consolidated Financial Data | |||||||||
(Canadian dollars, in thousands, except per share information) | |||||||||
For the three months ended | |||||||||
2020 | 2019 | ||||||||
Sales | $ | 32,242 | $ | 44,265 | |||||
Cost of sales | 17,569 | 17,929 | |||||||
Gross profit | 14,673 | 26,336 | |||||||
SG&A expenses | 59,034 | 28,020 | |||||||
Operating loss | (44,361 | ) | (1,684 | ) | |||||
Finance costs | 1,667 | 1,827 | |||||||
Finance income | (240 | ) | (191 | ) | |||||
Net loss | $ | (45,788 | ) | $ | (3,320 | ) | |||
EBITDA1 | $ | (40,367 | ) | $ | 3,142 | ||||
Adjusted SG&A1 | 19,074 | 28,020 | |||||||
Adjusted operating loss 1 | (4,401 | ) | (1,684 | ) | |||||
Adjusted EBITDA1 | (94 | ) | 3,269 | ||||||
Adjusted net loss 1 | $ | (5,828 | ) | $ | (3,320 | ) | |||
Basic and fully diluted loss per common share | $ | (1.76 | ) | $ | (0.13 | ) | |||
Adjusted basic loss per common share1 | $ | (0.22 | ) | $ | (0.13 | ) | |||
Gross profit as a percentage of sales | 45.5 | % | 59.5 | % | |||||
SG&A as a percentage of sales | 183.1 | % | 63.3 | % | |||||
Adjusted SG&A as a percentage of sales1 | 59.2 | % | 63.3 | % | |||||
Cash (used in) provided by operating activities | $ | (4,056 | ) | $ | 360 | ||||
Cash used in financing activities | (4,376 | ) | (5,823 | ) | |||||
Cash provided by (used in) investing activities | 1,437 | (1,120 | ) | ||||||
Decrease in cash during the period | (8,528 | ) | (6,583 | ) | |||||
Cash, end of period | $ | 39,343 | $ | 42,074 | |||||
As at | 2020 | 2020 | |||||||
Cash | $ | 39,343 | $ | 46,338 | |||||
Inventories | 23,450 | 22,363 | |||||||
Accounts receivable | 4,371 | 6,062 | |||||||
Trade and other payables | $ | 18,000 |
$ | 20,794 |
________________
1 Please refer to “Use of Non-IFRS financial measures” in this press release.
Use of Non-IFRS Financial Measures
This press release includes “non-IFRS financial measures” defined as including: 1) EBITDA and Adjusted EBITDA, 2) Adjusted operating loss, 3) Adjusted selling, general and administration expenses, 4) Adjusted net loss, 5) Adjusted fully diluted loss per share and 6) Adjusted selling, general and administration expenses as a percentage of sales. These non-IFRS financial measures are not defined by and in accordance with IFRS and may differ from similar measures reported by other companies. We believe that these non-IFRS financial measures provide knowledgeable investors with useful information with respect to our historical operations. We present these non-IFRS financial measures as supplemental performance measures because we believe they facilitate a comparative assessment of our operating performance relative to our performance based on our results under IFRS, while isolating the effects of some items that vary from period-to-period but not in substitution to IFRS financial measures.
Please refer to the non-IFRS financial measures section in the Management’s Discussion and Analysis section of our Form 10-Q for a reconciliation to IFRS financial measures.
Note
This release should be read in conjunction with the Company’s Management’s Discussion and Analysis, which will be filed by the Company with the Canadian securities regulatory authorities on www.sedar.com and with the
Caution Regarding Forward-Looking Statements
This press release includes statements that express our opinions, expectations, beliefs, plans or assumptions regarding future events or future results and there are, or may be deemed to be, “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”). The following cautionary statements are being made pursuant to the provisions of the Act and with the intention of obtaining the benefits of the “safe harbor” provisions of the Act. These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms “believes”, “expects”, “may”, “will”, “should”, “approximately”, “intends”, “plans”, “estimates” or “anticipates” or, in each case, their negatives or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our Restructuring Plan, the COVID-19 pandemic, our strategy of transitioning to e-commerce and wholesale sales, future sales through our e-commerce and wholesale channels, the closing of certain of our retail stores, future lease liabilities, our results of operations, financial condition, liquidity and prospects, the impact of the COVID-19 pandemic on the global macroeconomic environment, and our ability to avoid the delisting of the Company’s common stock by Nasdaq due to the restructuring or our inability to maintain compliance with Nasdaq listing requirements.
While we believe these opinions and expectations are based on reasonable assumptions, such forward-looking statements are inherently subject to risks, uncertainties and assumptions about us, including the risk factors set forth in our annual report on Form 10-K for the fiscal year ended
About
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PELICAN PR | |
514-731-0000 | 514-845-8763 |
investors@davidstea.com | media@rppelican.ca |
Source: DAVIDsTEA