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- Sales of
$13.4 million - Net loss of
$2.6 million - Adjusted EBITDA1 of negative
$0.8 million - Launches cold brew ready-to-drink sparkling iced tea collection
“Despite tough economic conditions reducing overall demand, we are committed to turning our business around,” said
“We’re encouraged by our growing wholesale distribution network and we’ve signed agreements with distributors who have access to over 31,000 grocery stores in the US market. Additionally, we are optimistic about the recent launch of our cold brew sparkling iced tea collection, aimed at the multi-billion-dollar ready-to-drink market in
“The 6.1% sales decrease to
Operating Results for the First Quarter of Fiscal 2024
Three Months Ended
Sales. Sales decreased 6.1% to
Sales were negatively impacted by unfavorable economic conditions that continued to dampen overall consumer demand. In our online sales channel, notwithstanding an increase in overall transactions against the prior year quarter, the decrease in average ticket value resulted in an overall reduction in revenue. The inverse was true in our retail sales channel where fewer transactions were offset by higher ticket values over the prior year quarter.
The Company has taken ownership of the overall brand experience after in-sourcing order fulfilment since
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1 For a reconciliation of EBITDA, Adjusted EBITDA and Adjusted fully diluted (loss) earnings per share to the most directly comparable measure calculated in accordance with “IFRS”, see “Non-IFRS financial measures and ratios”, in this MD&A.
Tea and variety box assortment sales decreased by 4.7%, or
Online sales of
Sales from the wholesale channel decreased by
Brick-and-mortar sales increased by
Gross profit. Gross profit increased by 0.8% to
Selling, general and administration expenses. Selling, general and administration expenses (“SG&A”) of
EBITDA1 and Adjusted EBITDA1. EBITDA was negative
Net loss. Net loss totaled
Fully diluted net loss per share. Fully diluted net loss per common share amounted to
________________
1 For a reconciliation of EBITDA, Adjusted EBITDA and Adjusted fully diluted (loss) earnings per share to the most directly comparable measure calculated in accordance with “IFRS”, see “Non-IFRS financial measures and ratios”, in this MD&A.
LIQUIDITY AND CAPITAL RESOURCES
As at
The Company’s primary source of liquidity is cash on hand and cashflow generated from operations as it does not have access to third-party financing to fund its activities and to meet any future financial obligations. Working capital requirements are driven by the purchase of inventory, payment of payroll, ongoing technology expenditures and other operating costs. Working capital requirements fluctuate during the year, rising in the second and third fiscal quarters as
Capital expenditures of
________________
1 For a reconciliation of EBITDA, Adjusted EBITDA and Adjusted fully diluted (loss) earnings per share to the most directly comparable measure calculated in accordance with “IFRS”, see “Non-IFRS financial measures and ratios”, in this MD&A.
For the quarter ended
As at
The Company’s ability to continue as a going concern is dependent on its ability to stabilize its business from unfavourable revenue declines, reduce its costs so that at a minimum, they are commensurate with revenues, and manage its working capital. There is no assurance that such events will occur and, as a result, this indicates the existence of a material uncertainty that may cast a significant doubt on the Company’s ability to continue as a going concern.
Cash Flow
A summary of our cash flows used in operating, investing, and financing activities is presented in the following table:
For the three-months ended | |||||||||||||
2024 | 2023 | ||||||||||||
$ | $ | $ Change | % Change | ||||||||||
Cash flows provided by (used in): | |||||||||||||
Operating activities | (2,587 | ) | (1,465 | ) | (1,122 | ) | (76.6 | )% | |||||
Financing activities | (780 | ) | (770 | ) | (10 | ) | (1.3 | )% | |||||
Investing activities | (461 | ) | (622 | ) | 161 | 25.9 | % | ||||||
Decrease in cash | (3,828 | ) | (2,857 | ) | (971 | ) | (34.0 | )% | |||||
Three-months ended
Cash flows used in operating activities. Net cash used in operating activities amounted to
Cash flows used in financing activities. Net cash flows used in financing activities of
Cash flows used in investing activities. Net cash flows used in investing activities of
Condensed Consolidated Financial Data
(Canadian dollars, in thousands, except per share information)
For the three-months ended | |||||||||
2024 | 2023 | ||||||||
Sales | $ | 13,435 | $ | 14,313 | |||||
Cost of sales | 7,615 | 8,541 | |||||||
Gross profit | 5,820 | 5,772 | |||||||
Selling, general and administration expenses | 8,447 | 7,853 | |||||||
Results from operating activities | 2,627 | (2,081 | ) | ||||||
Finance costs | 146 | 182 | |||||||
Finance income | (124 | ) | (280 | ) | |||||
Net loss | $ | 2,649 | $ | (1,983 | ) | ||||
Sales - by country | |||||||||
$ | 11,729 | $ | 12,193 | ||||||
1,706 | 2,120 | ||||||||
Sales - by channel | |||||||||
Online | 6,740 | 7,647 | |||||||
Retail | 4,528 | 4,265 | |||||||
Wholesale | $ | 2,167 | $ | 2,401 | |||||
EBITDA1 | $ | 1,980 | $ | (1,230 | ) | ||||
Adjusted EBITDA1 | (820 | ) | (887 | ) | |||||
Adjusted net loss 1 | (1,577 | ) | (1,883 | ) | |||||
Adjusted fully diluted loss per common share1 | $ | (0.06 | ) | $ | (0.07 | ) | |||
Gross profit as a percentage of sales | 43.3 | % | 40.3 | % | |||||
SG&A expenses as a percentage of sales | 62.9 | % | 54.9 | % | |||||
Cash flows used in operating activities | $ | (2,587 | ) | $ | (1,465 | ) | |||
Cash flows used in financing activities | (780 | ) | (770 | ) | |||||
Cash used in investing activities | (461 | ) | (622 | ) | |||||
Decrease in cash during the period | (3,828 | ) | (2,857 | ) | |||||
Cash, end of period | $ | 8,772 | $ | 19,583 | |||||
As at | 2024 | 2024 | |||||||
Cash | $ | 8,772 | $ | 12,600 | |||||
Accounts and other receivables | 1,551 | 1,800 | |||||||
Prepaid expenses and deposits | 5,787 | 5,877 | |||||||
Inventories | 17,094 | 15,658 | |||||||
Trade and other payables | $ | 8,935 | $ | 8,662 | |||||
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1 Please refer to “Use of Non-IFRS Financial Measures” in this press release.
Use of Non-IFRS Financial Measures and Ratios
This press release includes “non-IFRS financial measures” defined as including: 1) EBITDA and Adjusted EBITDA, 2) Adjusted net (loss) income, and 3) Adjusted fully diluted (loss) income per common share. These non-IFRS financial measures are not defined by or 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 Company’s Management Discussion and Analysis for a reconciliation to IFRS financial measures.
Note
This release should be read in conjunction with the Company’s Management Discussion and Analysis, which is filed by the Company with the Canadian securities regulatory authorities on SEDAR+ at www.sedarplus.ca and will also be available in the Investor Relations section of the Company’s website at www.davidstea.com.
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 applicable Canadian securities law. 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 strategy of transitioning to e-commerce and wholesale sales, future sales through our e-commerce and wholesale channels, and our results of operations, financial condition, liquidity and prospects. Failure by the Company to secure a line of credit or other loan facility on a timely basis could have a material adverse effect on the Company’s cash position and liquidity. As well, the Company can give no assurance that it will complete the opening of two new stores in the province of
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 discussed in Management Discussion and Analysis of Financial Condition and Results of Operations for our fiscal year ended
Conference Call Information
A conference call to discuss the first quarter Fiscal 2024 financial results is scheduled for
About
DAVIDsTEA offers a specialty branded selection of high-quality proprietary loose-leaf teas, pre-packaged teas, tea sachets, tea-related accessories and gifts through its e-commerce platform at www.davidstea.com and the Amazon Marketplace, its wholesale customers which include over 4,000 grocery stores and pharmacies in
Contact information |
514-731-0000 DAVIDsTEA Investor Relations |
investors@davidstea.com |
Source: DAVIDsTEA