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Q4 2018 Financial and Operational Highlights:
- Sales decreased 4.1% to
$83.1 million and comparable store sales declined 1.6% - 20.2% increase in wholesale and e-commerce sales
- Operating loss1 of
$1.3 million compared to loss of$8.4 million in Q4-17 - Adjusted EBITDA1 of
$10.9 million - Net cash position of
$42.1 million
Other:
- Wholesale expansion within Canada’s largest retail network, Loblaw Companies Limited, effective Fall 2019
Frank Zitella , promoted to Chief Operating Officer and maintains CFO responsibilities
“While current financial results are not yet on par with our expectations, we are pleased that the DAVIDsTEA brand continues to resonate strongly with customers through a broad range of channels. Since the end of last summer, the availability of our teas in the largest grocery chain in
“Our e-commerce platform is expected to fuel future growth and in Q4, this channel accounted for 16.9% of total sales. We continue to make significant investments to elevate the overall user experience and we see our online store playing a crucial role in the omnichannel shopping experience that begins online and ends in store. We are adding features such as ratings and reviews of our teas as well as enhanced search and navigation features that ultimately will increase conversion. We now have the leadership team in place to execute our strategy and create value for our shareholders,” concluded
“In recent months, we have embarked on several initiatives to reduce operating expenses and procurement costs, and we anticipate reaping the benefits in upcoming quarters. We ended the year with a solid cash position which will allow us to invest in our e-commerce platform and in our store network in order to stimulate revenue growth, as we spare no efforts to turn the company around and bring it back to profitability. We have a strong and motivated leadership team and the means to execute our strategy, and to create value for our shareholders for the long term,” stated
Operating Results for the Fourth Quarter of 2018
Sales decreased 4.1% to
Gross profit decreased by
Selling, general and administration expenses (“SG&A”) decreased by
Loss from operating activities was
Adjusted EBITDA1, which excludes non-cash or other items in the current and prior periods, was
Net loss was
Fully diluted loss per common share was
At the end of the quarter, the Company had cash amounting to
Operating Results for Fiscal 2018
Sales decreased by 5.0% to
Gross profit decreased by 8.6% to
SG&A decreased to
Loss from operating activities was
Adjusted EBITDA1, which excludes non-cash or other items in the current and prior year periods, was negative
Net loss was
Fully diluted loss per common share was
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
Condensed Consolidated Financial Data
(Canadian dollars, in thousands, except per share information)
For the three months ended |
For the twelve months ended |
||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Sales | $ | 83,144 | $ | 86,662 | $ | 212,753 | $ | 224,015 | |||||||
Gross profit | 39,563 | 44,484 | 97,979 | 107,243 | |||||||||||
SG&A expenses | 40,857 | 52,926 | 125,722 | 131,930 | |||||||||||
Operating loss1 | (1,294 | ) | (8,442 | ) | (27,743 | ) | (24,687 | ) | |||||||
Net loss | $ | (13,278 | ) | $ | (16,091 | ) | $ | (33,539 | ) | $ | (28,501 | ) | |||
Adjusted SG&A1 | $ | 31,125 | $ | 30,910 | $ | 107,841 | $ | 106,782 | |||||||
Adjusted operating income (loss)1 | 8,438 | 13,574 | (9,862 | ) | 461 | ||||||||||
Adjusted EBITDA1 | 10,940 | 16,397 | (1,272 | ) | 12,819 | ||||||||||
Adjusted net income (loss)1 | $ | 6,401 | $ | 9,741 | $ | (6,773 | ) | $ | (110 | ) | |||||
Fully diluted loss per common share | $ | (0.51 | ) | $ | (0.62 | ) | $ | (1.29 | ) | $ | (1.11 | ) | |||
Adjusted fully diluted income (loss) per common share1 | $ | 0.25 | $ | 0.37 | $ | (0.26 | ) | $ | (0.00 | ) | |||||
Gross profit as a percentage of sales | 47.6 | % | 51.3 | % | 46.1 | % | 47.9 | % | |||||||
SG&A as a percentage of sales | 49.1 | % | 61.1 | % | 59.1 | % | 58.9 | % | |||||||
Adjusted SG&A as a percentage of sales | 37.4 | % | 35.7 | % | 50.7 | % | 47.7 | % | |||||||
Number of stores at end of period | 237 | 240 | 237 | 240 | |||||||||||
Comparable sales decline for the period | (1.6 | %) | (6.0 | %) | (6.1 | %) | (6.0 | %) | |||||||
Cash from (used) in operating activities | $ | 24,353 | $ | 29,834 | $ | (13,228 | ) | $ | 9,858 | ||||||
Cash used in investing activities | (993 | ) | (3,301 | ) | (8,264 | ) | (12,596 | ) | |||||||
Cash, end of period | $ | 42,074 | $ | 63,484 | $ | 42,074 | $ | 63,484 | |||||||
As at | 2019 | 2018 | |||||||||||||
Inventories | $ | 34,353 | $ | 24,450 | |||||||||||
Accounts receivable | $ | 3,681 | $ | 3,131 |
Conference Call Information
A conference call to discuss the fourth quarter and full year Fiscal 2018 financial results is scheduled for today,
Use of Non-IFRS Financial Information
This press release includes “non-IFRS measures” defined as including: 1) Adjusted EBITDA, 2) Adjusted operating income (loss), 3) Adjusted selling, general and administration expenses, 4) Adjusted net income (loss), 5) Operating loss, and 6) Adjusted fully diluted income (loss) per share. These non-IFRS 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 measures provide knowledgeable investors with useful information with respect to our historical operations. We present these non-IFRS 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.
Please refer to the non-IFRS financial measures section in Management’s Discussion and Analysis section of our Form10-K.
Cautionary Forward-Looking Statements
This press release includes statements that express our opinions, expectations, beliefs, plans, objectives, assumptions or projections 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 can be identified by the use of forward-looking terminology, including the terms “believes,” “expects,” “may,” “will,” “should,” “could,” “seeks,” “projects,” “approximately,” “intends,” “plans,” “estimates,” or “anticipates,” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this press release and include statements regarding our intentions, beliefs or current expectations concerning, among other things, the Company’s prospects, management’s turn-around strategy, plans for investment in marketing initiatives, changes to product offerings and assortment, and strategic plans.
While we believe these expectations and projections 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 the Company’s Annual Report on Form 10-K.
Actual results may differ materially from those in the forward-looking statements as a result of various factors, including but not limited to, the following: our ability to manage significant changes to our Board of Directors and leadership team; our efforts to expand beyond retail stores; our ability to maintain our brand image; significant competition within our industry; the effect of a decrease in customer traffic to the shopping malls, centers and street locations where our stores are located; the results of our transfer pricing audit; our ability to attract and retain employees that embody our culture, including Tea Guides and store and district managers and regional directors; changes in consumer preferences and economic conditions affecting disposable income; our ability to source, develop and market new varieties of teas, tea accessories, food and beverages; our reliance upon the continued retention of key personnel; the impact from real or perceived quality or safety issues with our teas, tea accessories, food and beverages; our ability to obtain quality products from third-party manufacturers and suppliers on a timely basis or in sufficient quantities; the impact of weather conditions, natural disasters and manmade disasters on the supply and price of tea; actual or attempted breaches of data security; the costs of protecting and enforcing our intellectual property rights and defending against intellectual property claims brought by others; adverse publicity as a result of public disagreements with our shareholders; fluctuations in exchange rates; and the seasonality of our business and other risks set forth in the Company’s Form 10-K .
All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. These statements are based upon information available to us as of the date of this release, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially-available relevant information. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this release might not occur, and investors are cautioned not to unduly rely upon these statements.
Forward-looking statements speak only as of the date of this release. Except as required under federal securities laws and the rules and regulations of the
About
Investor Contact | Media Contact |
PELICAN PR | |
514.731.0000 | 514-845-8763 |
investors@davidstea.com | media@rppelican.ca |
1 Please refer to “Use of Non-IFRS financial measures” in this press release.