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- Operating loss of
$9.3 million compared to loss of$10.7 million - EBITDA1 of negative
$4.5 million compared to a negative$8.6 million - 14.1% increase in wholesale and e-commerce sales or
$1.1 million - Positive cash flow from operations of
$4.8 million compared to negative$18.0 million - Net cash position of
$28.0 million
“The recent introduction of our new and exciting tea collection has been well received by consumers and our tea sachets are now available in an expanded network of grocery stores across
“We continue to actively manage our working capital and remain in a solid financial position, with a cash position of
During the third quarter of 2019 DAVIDsTEA’s products and brand earned three recognitions by independent publications. Newsweek, a premier U.S. weekly news magazine and website, recognized
Operating Results for the Third Quarter of Fiscal 2019
Sales for the three months ended
Operating loss decreased by
Selling, general and administration expenses (“SG&A”) increased by
EBITDA, which excludes non-cash and other items in the current and prior periods, was negative
Fully diluted loss per common share was
As at
Net cash provided by operating activities amounted to
Cash flow used in financing activities was
Cash flow used in investing activities was
Adoption of IFRS 16 - Leases
The Company adopted IFRS 16 - Leases, replacing IAS 17 - Leases and Related interpretations, using the modified retrospective approach, effective for the annual reporting period beginning on
Filing of Financial Statements
The Company is filing today with the Canadian securities regulatory authorities (www.sedar.com) and with the
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
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 Management’s Discussion and Analysis section of our Form 10-Q for a reconciliation to IFRS financial measures.
Condensed Consolidated Financial Data
(Canadian dollars, in thousands, except per share information)
For the three months ended | For the nine months ended | ||||||||||||||||||||||
November 2, 2019 | November 2, 2019 | ||||||||||||||||||||||
November 2, | Excluding impact | November 3, | November 2, | Excluding impact | November 3, | ||||||||||||||||||
2019 | of IFRS 16 (1) | 2018 | 2019 | of IFRS 16 (1) | 2018 | ||||||||||||||||||
Sales | $ | 39,493 | $ | 39,493 | $ | 43,656 | $ | 122,925 | $ | 122,925 | $ | 129,609 | |||||||||||
Cost of sales | 18,139 | 23,859 | 25,275 | 53,430 | 70,772 | 71,193 | |||||||||||||||||
Gross profit | 21,354 | 15,634 | 18,381 | 69,495 | 52,153 | 58,416 | |||||||||||||||||
SG&A expenses | 30,670 | 27,733 | 29,119 | 90,254 | 81,101 | 84,865 | |||||||||||||||||
Operating loss | (9,316 | ) | (12,099 | ) | (10,738 | ) | (20,759 | ) | (28,948 | ) | (26,449 | ) | |||||||||||
Finance costs | 1,699 | — | 80 | 5,305 | — | 237 | |||||||||||||||||
Finance income | (185 | ) | (185 | ) | (122 | ) | (570 | ) | (570 | ) | (574 | ) | |||||||||||
Recovery of income tax | — | — | (1,635 | ) | — | — | (5,851 | ) | |||||||||||||||
Net loss | $ | (10,830 | ) | $ | (11,914 | ) | $ | (9,061 | ) | $ | (25,494 | ) | $ | (28,378 | ) | $ | (20,261 | ) | |||||
EBITDA1 | $ | (4,548 | ) | $ | (10,269 | ) | $ | (8,576 | ) | $ | (6,237 | ) | $ | (23,579 | ) | $ | (20,351 | ) | |||||
Adjusted SG&A1 | 28,619 | 25,682 | 26,956 | 83,178 | 74,025 | 76,716 | |||||||||||||||||
Adjusted operating loss1 | (7,265 | ) | (10,048 | ) | (8,575 | ) | (13,683 | ) | (21,872 | ) | (18,300 | ) | |||||||||||
Adjusted EBITDA1 | (2,241 | ) | (7,962 | ) | (6,248 | ) | 1,387 | (15,955 | ) | (12,212 | ) | ||||||||||||
Adjusted net loss1 | $ | (8,779 | ) | $ | (9,863 | ) | $ | (8,533 | ) | $ | (18,418 | ) | $ | (21,302 | ) | $ | (17,964 | ) | |||||
Basic and fully diluted loss per common share | $ | (0.42 | ) | $ | (0.46 | ) | $ | (0.35 | ) | $ | (0.98 | ) | $ | (0.98 | ) | $ | (0.78 | ) | |||||
Adjusted basic and fully diluted loss per common share1 | $ | (0.34 | ) | $ | (0.46 | ) | $ | (0.33 | ) | $ | (0.71 | ) | $ | (0.71 | ) | $ | (0.69 | ) | |||||
Gross profit as a percentage of sales | 54.1 | % | 39.6 | % | 42.1 | % | 56.5 | % | 42.4 | % | 45.1 | % | |||||||||||
SG&A as a percentage of sales | 77.7 | % | 70.2 | % | 66.7 | % | 73.4 | % | 66.0 | % | 65.5 | % | |||||||||||
Adjusted SG&A as a percentage of sales1 | 72.5 | % | 65.0 | % | 61.7 | % | 67.7 | % | 60.2 | % | 59.2 | % | |||||||||||
Number of stores at end of period | 233 | 233 | 238 | 233 | 233 | 238 | |||||||||||||||||
Comparable sales decline for the period | (14.1 | %) | (14.1 | %) | (4.7 | %) | (10.0 | %) | (10.0 | %) | (8.8 | %) | |||||||||||
Cash provided by (used in) operating activities | $ | 4,786 | $ | (934 | ) | $ | (18,037 | ) | $ | 8,229 | $ | (9,113 | ) | $ | (37,581 | ) | |||||||
Cash provided by (used in) financing activities | (5,711 | ) | 9 | 8 | (17,333 | ) | 9 | 82 | |||||||||||||||
Cash used in investing activities | (756 | ) | (756 | ) | (2,880 | ) | (4,926 | ) | (4,926 | ) | (7,271 | ) | |||||||||||
Decrease in cash during the period | (1,681 | ) | (1,681 | ) | (20,909 | ) | (14,030 | ) | (14,030 | ) | (44,770 | ) | |||||||||||
Cash, end of period | $ | 28,044 | $ | 28,044 | $ | 18,714 | $ | 28,044 | $ | 28,044 | $ | 18,714 | |||||||||||
November 2, | February 2, | November 3, | |||||||||||||||||||||
As at | 2019 | 2019 | 2018 | ||||||||||||||||||||
Cash | $ | 28,044 | $ | 42,074 | $ | 18,714 | |||||||||||||||||
Inventories | 32,638 | 34,353 | 44,408 | ||||||||||||||||||||
Accounts receivable | 3,430 | 3,680 | 4,007 | ||||||||||||||||||||
Trade payables | $ | 9,386 | $ | 5,195 | $ | 6,438 |
__________________
1 Please refer to “Use of Non-IFRS financial measures” in this press release.
Cautionary Forward-Looking Statements
Certain material presented in this press release includes forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by the use of words such as “anticipate,” “expect,” “plan,” “could,” “may,” “will,” “believe,” “estimate,” “forecast,” “goal,” “project,” and other words of similar meaning. These forward-looking statements address various matters including management’s beliefs about the Company’s prospects, management’s turn-around strategy, plans for investment in marketing initiatives, changes to product offerings and assortment, and strategic plans. The Company cannot assure investors that future developments affecting the Company will be those that it has anticipated. Actual results may differ materially from these expectations due to risks and uncertainties including: the Company’s ability to implement its strategy, the Company’s ability to maintain and enhance its brand image, particularly in new markets; the Company’s ability to compete in the specialty tea and beverage category; the Company’s ability to expand and improve its operations; changes in the Company’s executive management team; levels of foot traffic in locations in which the Company’s stores are located; changes in consumer trends and preferences; fluctuations in foreign currency exchange rates; general economic conditions and consumer confidence; minimum wage laws; the importance of the Company’s first, second and third fiscal quarters to results of operations for the entire fiscal year; and other risks set forth in the Company’s Annual Report on Form 10-K. If one or more of these risks or uncertainties materialize, or if any of the Company’s assumptions prove incorrect, the Company’s actual results may vary in material respects from those projected in these forward-looking statements. Any forward-looking statement made by the Company in this release speaks only as of the date on which the Company makes it. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable securities laws.
Conference Call Information
A conference call to discuss the third quarter Fiscal 2019 financial results is scheduled for today,
About
Investor Contact | Media Contact |
MaisonBrison Communications | PELICAN PR |
Pierre Boucher | Lyla Radmanovich |
514.731.0000 | 514-845-8763 |
investors@davidstea.com | media@rppelican.ca |
Source: DAVIDsTEA