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- Sales of
$9.8 million - Reduced SG&A expenses by 25.1% year-over-year to
$7.9 million - Net loss of
$4.3 million in line with management’s expectations on path to profitability - Opened third Tea Bar at Toronto
Eaton Centre location, with other Tea Bars planned for later this year - Order fulfillment activities taken in-house for enhanced consumer experience
“While our sales continued to be dampened by challenging economic conditions, particularly in our online channel, we moved forward with our focus on value creation initiatives during the quarter and delivering excellent customer experiences,” said
“At the same time, we continue to fuel innovation through an enhanced premium product offering featuring an expansion of our cold relief, immunity and wellness tea assortment. This fall, we’re delighted to introduce four new wellness-driven teas designed to support immunity and overall well-being. Our 'Immunity SOS Tea' combines citrusy orange, ginger, and echinacea to boost immunity as a compliment to our popular line of cold-relief teas. Our 'Golden Sun Tea Powder' and 'Ashwagandha Pumpkin Superfood Tea Powder' are blended for immunity-boosting and relaxation. Lastly, our 'Super Shroom Matcha' features adaptogenic mushrooms on an organic matcha base for balance and focus. The company remains committed to delivering natural and organic ingredients to tea lovers, catering to all consumer preferences, making tea fun and accessible to all,” added
“While we are not pleased with our overall financial performance, we are very satisfied with the results thus far from our cost-containment plan, as we reduced our year-over-year SG&A expenses by 25.1% in the quarter,” said
Operating Results for the Second Quarter of Fiscal 2023
Three Months Ended
Sales. Sales for the second quarter of Fiscal 2023 decreased by
Sales continue to be impacted by unfavorable economic conditions that dampen consumer demand. We also believe that our e-commerce revenues have been significantly impacted by order fulfillment failures in the fourth quarter of 2022 that left many consumers frustrated. On
Tea and variety box assortment sales decreased by 34.0% or
Online sales of
Sales from the wholesale channel decreased by
Brick-and-mortar sales declined by
Gross profit. Gross profit dropped by 37.7% to
Selling, general and administration expenses. Selling, general and administration expenses (“SG&A”) of
EBITDA 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
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1 Please refer to “Use of Non-IFRS Financial Measures” in this press release.
Liquidity and Capital Resources
As at
Working capital was
The Company’s primary source of liquidity is cash on hand and cashflow generated from operations. 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
As at
Condensed Consolidated Financial Data
(Canadian dollars, in thousands, except per share information)
For the three-months ended | For the six-months ended | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Sales | $ | 9,834 | $ | 15,207 | $ | 24,147 | $ | 35,494 | ||||||||
Cost of sales | 6 203 | 9,380 | 14 889 | 21,459 | ||||||||||||
Gross profit | 3 631 | 5,827 | 9 258 | 14,035 | ||||||||||||
Selling, general and administration expenses | 7 922 | 10,572 | 15 630 | 20,622 | ||||||||||||
Results from operating activities | (4,291 | ) | (4,745 | ) | (6,372 | ) | (6,587 | ) | ||||||||
Finance costs | 177 | 167 | 359 | 338 | ||||||||||||
Finance income | (216 | ) | (77 | ) | (496 | ) | (116 | ) | ||||||||
Net loss | $ | (4,252 | ) | $ | (4,835 | ) | $ | (6,235 | ) | $ | (6,809 | ) | ||||
EBITDA1 | $ | (3,400 | ) | $ | (3,851 | ) | $ | (4,629 | ) | $ | (4,827 | ) | ||||
Adjusted EBITDA1 | (2,593 | ) | (2,128 | ) | (3,479 | ) | (2,039 | ) | ||||||||
Adjusted net loss 1 | (3,622 | ) | (3,510 | ) | (5,505 | ) | (4,729 | ) | ||||||||
Adjusted fully diluted loss per common share1 | $ | (0.14 | ) | $ | (0.13 | ) | $ | (0.21 | ) | $ | (0.18 | ) | ||||
Gross profit as a percentage of sales | 36.9 | % | 38.3 | % | 38.3 | % | 39.5 | % | ||||||||
SG&A expenses as a percentage of sales | 80.60 | % | 69.5 | % | 64.7 | % | 58.1 | % | ||||||||
Cash flows used in operating activities | $ | (4,297 | ) | $ | (2,735 | ) | $ | (5,762 | ) | $ | (4,413 | ) | ||||
Cash flows used in financing activities | (772 | ) | (769 | ) | (1,542 | ) | (1,518 | ) | ||||||||
Cash used in investing activities | (321 | ) | (128 | ) | (943 | ) | (128 | ) | ||||||||
Decrease in cash during the period | (5,390 | ) | (3,632 | ) | (8,247 | ) | (6,059 | ) | ||||||||
Cash, end of period | $ | 14,193 | $ | 19,048 | $ | 14,193 | $ | 19,048 | ||||||||
As at | 2023 | 2023 | 2023 | 2022 | ||||||||||||
Cash | $ | 14,193 | $ | 19,583 | $ | 22,440 | $ | 16,131 | ||||||||
Accounts and other receivables | 1,675 | 2,769 | 3,258 | 3,937 | ||||||||||||
Prepaid expenses and deposits | 5,030 | 4,992 | 5,839 | 6,137 | ||||||||||||
Inventories | 18,130 | 18,184 | 19,522 | 29,985 | ||||||||||||
Trade and other payables | $ | 6,851 | $ | 9,057 | $ | 12,310 | $ | 14,445 | ||||||||
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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 and ratios” 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 and ratios section in the Company’s Management’s Discussion and Analysis 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 is filed by the Company with the Canadian securities regulatory authorities on 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 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 strategy of transitioning to e-commerce and wholesale sales, future sales through our e-commerce and wholesale channels, our results of operations, financial condition, liquidity and prospects, and the impact of the COVID-19 pandemic on the global macroeconomic environment.
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’s Discussion and Analysis of Financial Condition and Results of Operations for our fiscal year ended
Conference Call Information
A conference call to discuss the second quarter Fiscal 2023 financial results is scheduled for
About
Contact information
514-731-0000
DAVIDsTEA Investor Relations
investors@davidstea.com

Source: DAVIDsTEA