Document and Entity DEI Information - shares	9 Months Ended
Document and Entity DEI Information - shares	Nov. 03, 2018	Dec. 10, 2018
Document and Entity Information
Entity Registrant Name	DAVIDsTEA Inc.
Entity Central Index Key	0001627606
Document Type	10-Q
Document Period End Date	Nov. 03, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3
Amendment Flag	false
Current Fiscal Year End Date	--02-02
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		26,007,757
Entity Small Business	false
Entity Emerging Growth Company	true
Entity Ex Transition Period	true

INTERIM CONSOLIDATED BALANCE SHEETS - CAD ($) $ in Thousands	Nov. 03, 2018	Feb. 03, 2018
Current
Cash	$ 18,714	$ 63,484
Accounts and other receivables	4,007	3,131
Inventories	44,408	24,450
Income tax receivable	4,808	2,968
Prepaid expenses and deposits	9,476	7,712
Total current assets	81,413	101,745
Property and equipment	31,698	36,558
Intangible assets	7,392	4,439
Deferred income tax assets	8,962	5,194
Total assets	129,465	147,936
Current
Trade and other payables	16,096	14,392
Deferred revenue	4,966	5,186
Current portion of provisions	4,658	4,693
Derivative financial instruments		229
Total current liabilities	25,720	24,500
Deferred rent and lease inducements	8,829	8,608
Provisions	14,434	13,460
Total liabilities	48,983	46,568
Equity
Share capital	112,499	111,692
Contributed surplus	1,230	2,642
Deficit	(34,696)	(14,721)
Accumulated other comprehensive income	1,449	1,755
Total equity	80,482	101,368
Total liabilities and equity	$ 129,465	$ 147,936

INTERIM CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS - CAD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 03, 2018	Oct. 28, 2017	Nov. 03, 2018	Oct. 28, 2017
CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
Sales	$ 43,656	$ 42,997	$ 129,609	$ 137,353
Cost of sales	25,275	24,625	71,193	74,594
Gross profit	18,381	18,372	58,416	62,759
Selling, general and administrative expenses	29,119	27,035	84,865	79,004
Results from operating activities	(10,738)	(8,663)	(26,449)	(16,245)
Finance costs	80	327	237	615
Finance income	(122)	(149)	(574)	(420)
Loss before income taxes	(10,696)	(8,841)	(26,112)	(16,440)
Recovery of income tax	(1,635)	(2,356)	(5,851)	(4,030)
Net loss	(9,061)	(6,485)	(20,261)	(12,410)
Items to be reclassified subsequently to income (loss):
Cumulative translation adjustment	(62)	1,872	(473)	95
Items that may be reclassified subsequently to income (loss):
Unrealized net gain on forward exchange contracts		824	794	79
Realized net (gain) on forward exchange contracts reclassified to inventory	(425)	(714)	(565)	(46)
Provision for income tax (recovery) on forward exchange contracts	113	589	(62)	(303)
Other comprehensive income (loss), net of tax	(374)	2,571	(306)	(175)
Total comprehensive income (loss)	$ (9,435)	$ (3,914)	$ (20,567)	$ (12,585)
Net loss per share:
Basic (in CAD per share)	$ (0.35)	$ (0.25)	$ (0.78)	$ (0.48)
Fully diluted (in CAD per share)	$ (0.35)	$ (0.25)	$ (0.78)	$ (0.48)
Weighted average number of shares outstanding
Weighted average number of shares outstanding - basic	25,992,339	25,829,090	25,862,086	25,659,164
Weighted average number of shares outstanding - fully diluted	25,992,339	25,829,090	25,862,086	25,659,164

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS - CAD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 03, 2018	Oct. 28, 2017	Nov. 03, 2018	Oct. 28, 2017
OPERATING ACTIVITIES
Net loss	$ (9,061)	$ (6,485)	$ (20,261)	$ (12,410)
Items not affecting cash:
Depreciation of property and equipment	1,785	2,138	5,193	6,316
Amortization of intangible assets	377	494	905	1,248
Loss on disposal of property and equipment		18	14	48
Impairment of property and equipment	725	2,658	3,285	4,971
Deferred rent	74	174	(17)	377
Provision (recovery) for onerous contracts	3,414	(46)	5,306	(1,573)
Stock-based compensation expense	91	362	(7)	1,738
Amortization of financing fees	21	19	61	59
Accretion on provisions	60	307	177	558
Deferred income taxes (recovery)	(2,575)	(227)	(3,921)	203
Cash flows related to operating activities before net change in working capital	(5,089)	(588)	(9,265)	1,535
Net change in other non-cash working capital balances related to operations	(12,948)	(15,546)	(28,316)	(21,511)
Cash flows related to operating activities	(18,037)	(16,134)	(37,581)	(19,976)
FINANCING ACTIVITIES
Proceeds from issuance of common shares pursuant to exercise of stock options	8	90	82	1,696
Cash flows related to financing activities	8	90	82	1,696
INVESTING ACTIVITIES
Additions to property and equipment	(1,752)	(2,770)	(3,420)	(7,501)
Additions to intangible assets	(1,128)	(728)	(3,851)	(1,794)
Cash flows related to investing activities	(2,880)	(3,498)	(7,271)	(9,295)
Decrease in cash during the period	(20,909)	(19,542)	(44,770)	(27,575)
Cash, beginning of period	39,623	56,407	63,484	64,440
Cash, end of period	18,714	36,865	18,714	36,865
Cash paid for:
Income taxes (classified as operating activity)	7	165	9	877
Cash received for:
Interest	$ 120	$ 146	$ 563	433
Income taxes (classified as operating activity)				$ 26

INTERIM CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT) - CAD ($) $ in Thousands	Share Capital.	Contributed Surplus.	Deficit.	Accumulated Other Comprehensive Income.	Accumulated Derivative Financial Instrument Adjustment	Accumulated Foreign Currency Translation Adjustment	Total
Balance, beginning of period at Jan. 28, 2017	$ 263,828	$ 8,833	$ (142,398)	$ 3,187	$ 333	$ 2,854	$ 133,450
Change in equity
Net loss for the period			(12,410)				(12,410)
Other comprehensive income (loss)				(175)	128	(303)	(175)
Total comprehensive income (loss)			(12,410)	(175)	128	(303)	(12,585)
Issuance of common shares	2,546	(850)					1,696
Common shares issued on vesting of restricted stock units	912	(1,652)	184				(556)
Stock-based compensation expense		1,738					1,738
Income tax impact associated with stock options		(133)					(133)
Reduction of stated capital	(155,947)		155,947
Balance, end of period at Oct. 28, 2017	111,339	7,936	1,323	3,012	461	2,551	123,610
Balance, beginning of period at Feb. 03, 2018	111,692	2,642	(14,721)	1,755	(167)	1,922	101,368
Change in equity
Net loss for the period			(20,261)				(20,261)
Other comprehensive income (loss)				(306)	167	(473)	(306)
Total comprehensive income (loss)			(20,261)	(306)	$ 167	(473)	(20,567)
Issuance of common shares	164	(82)					82
Common shares issued on vesting of restricted stock units	643	(1,322)	286				(393)
Stock-based compensation expense		(7)					(7)
Income tax impact associated with stock options		(1)					(1)
Balance, end of period at Nov. 03, 2018	$ 112,499	$ 1,230	$ (34,696)	$ 1,449		$ 1,449	$ 80,482

CORPORATE INFORMATION	9 Months Ended
CORPORATE INFORMATION	Nov. 03, 2018
CORPORATE INFORMATION
CORPORATE INFORMATION	1. CORPORATE INFORMATION The unaudited condensed interim consolidated financial statements of DAVIDsTEA Inc. and its subsidiary (collectively, the “Company”) for the three and nine-month periods ended November 3, 2018 were authorized for issue in accordance with a resolution of the Board of Directors on December 13, 2018. The Company is incorporated and domiciled in Canada and its shares are publicly traded on the NASDAQ Global Market under the symbol “DTEA”. The registered office is located at 5430 Ferrier St., Town of Mount-Royal, Québec, Canada, H4P 1M2. The Company is engaged in the retail and online sale of tea, tea accessories and food and beverages in Canada and the United States. The results of operations for the interim period are not necessarily indicative of the results of operations for the full year. Sales fluctuate from quarter to quarter. Sales are traditionally higher in the fourth fiscal quarter due to the year-end holiday season, and tend to be lowest in the second and third fiscal quarters because of lower customer traffic during the summer months.

STATEMENT OF COMPLIANCE AND BASIS OF PREPARATION	9 Months Ended
STATEMENT OF COMPLIANCE AND BASIS OF PREPARATION	Nov. 03, 2018
STATEMENT OF COMPLIANCE AND BASIS OF PREPARATION
STATEMENT OF COMPLIANCE AND BASIS OF PREPARATION	2. STATEMENT OF COMPLIANCE AND BASIS OF PREPARATION These unaudited condensed interim consolidated financial statements have been prepared in accordance with IAS 34, “Interim Financial Reporting” as issued by the International Accounting Standards Board (“IASB”). Accordingly, these financial statements do not include all of the financial statement disclosures required for annual financial statements and should be read in conjunction with the Company’s audited consolidated financial statements for the year ended February 3, 2018, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the IASB. In management’s opinion, the unaudited condensed interim consolidated financial statements reflect all the adjustments that are necessary for a fair presentation of the results for the interim period presented. These unaudited condensed interim consolidated financial statements have been prepared using the accounting policies and methods of computation as outlined in note 3 of the consolidated financial statements for the year ended February 3, 2018 on Form 10-K filed with the SEC on April 19, 2018.

CHANGES IN ACCOUNTING POLICIES

9 Months Ended

Nov. 03, 2018

CHANGES IN ACCOUNTING POLICIES

CHANGES IN ACCOUNTING POLICIES

3. CHANGES IN ACCOUNTING POLICIES

As of February 4, 2018, the Company adopted IFRS 9, “Financial Instruments” (“IFRS 9”). IFRS 9 replaces IAS 39 Financial Instruments: Recognition and Measurement for annual periods beginning on or after January 1, 2018, bringing together all three aspects of the accounting for financial instruments: classification and measurement; impairment; and hedge accounting.

With the exception of hedge accounting, which the Company applied prospectively, the Company has applied IFRS 9 retrospectively, with the initial application date of February 4, 2018.

Overall, there was no material impact on the Company’s consolidated financial statements.

Classification and measurement. The Company did not identify any material impact on its consolidated financial statements in applying the classification and measurement requirements of IFRS 9. The following table presents the carrying amount of financial assets held by the Company at February 3, 2018 and their measurement category under IAS 39 and the new model under IFRS 9.


	February 3, 2018		February 3, 2018
	IAS 39		IFRS 9
	Measurement	Carrying	Measurement	Carrying
	category	Value	category	Value
		$		$
Cash	FVTPL	63,484	FVTPL	63,484
Credit card cash clearing receivables	Amortized cost	1,291	Amortized cost	1,291
Other receivables	Amortized cost	1,840	Amortized cost	1,840
Derivative financial instruments	FVTPL	229	FVTPL	229

There has been no impact caused by the new classification of financial assets under IFRS 9. The classification of all financial liabilities as financial liabilities at amortized cost remains unchanged as well as their measurement resulting from their classification.

Impairment. IFRS 9 requires the Company to record expected credit losses on all of its debt securities, loans and trade receivables, either on a 12-month or lifetime basis. The Company applied the simplified approach and records lifetime expected losses on all trade receivables. The Company performed a detailed analysis that considered all reasonable and supportable information, including forward-looking elements to determine the extent of the impact. The Company’s IFRS 9 expected credit loss model did not have a material impact on its consolidated financial statements.

Hedge accounting. The Company believes that all existing hedge relationships that are currently designated in effective hedging relationships still qualify for hedge accounting under IFRS 9. As IFRS 9 does not change the general principles of how an entity accounts for effective hedges, the adoption of IFRS 9 did not have a material impact on the Company’s hedge accounting.

As of February 4, 2018, the Company adopted IFRS 15, “Revenue from Contracts with Customers” (“IFRS 15”). IFRS 15 replaces IAS 11, “Construction Contracts”, and IAS 18, “Revenue”, as well as various interpretations regarding revenue. This standard introduces a single model for recognizing revenue that applies to all contracts with customers, except for contracts that are within the scope of standards on leases, insurance and financial instruments. This standard also requires enhanced disclosures. Adoption of IFRS 15 is mandatory and is effective for annual periods beginning on or after January 1, 2018. The implementation of IFRS 15 impacts the allocation of revenue that is deferred in relation to the Company’s customer loyalty award programs. Prior to adoption, revenue was allocated to the customer loyalty awards using the residual fair value method. Under IFRS 15, consideration is allocated between the loyalty program awards and the goods on which the awards were earned, based on their relative stand-alone selling prices. The change in allocation of revenue that is deferred in relation to the Company’s customer loyalty program does not have a material impact on retained earnings as at February 4, 2018. Overall, there was not a material impact on the Company’s consolidated financial statements.

As of February 4, 2018, the Company adopted International Financial Reporting Interpretations (“IFRIC”) 22, “Foreign Currency Transactions and Advance Consideration” (“IFRIC 22”). In December 2016, the IASB issued IFRIC 22, which addresses how to determine the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income (or part of it) and on the derecognition of a non-monetary asset or non-monetary liability arising from the payment or receipt of advance consideration in a foreign currency. IFRIC 22 is effective for annual periods beginning on or after January 1, 2018. There was no material impact on the Company’s consolidated financial statements.

Information on significant new accounting standards and amendments issued but not yet adopted is described below.

IFRS 16, “Leases” (“IFRS 16”) replaces IAS 17, “Leases”. This standard provides a single model for leases abolishing the current distinction between finance and operating leases, with most leases being recognized on the balance sheet. Certain exemptions will apply for short-term leases and leases of low value assets. The new standard will be effective for annual periods beginning on or after January 1, 2019 with early application permitted. The Company has performed a preliminary assessment of the potential impact of the adoption of IFRS 16 on its consolidated financial statements. The Company expects the adoption of IFRS 16 will have a significant impact as the Company will recognize new assets and liabilities for its operating leases of retail stores. In addition, the nature and timing of expenses related to those leases will change as IFRS 16 replaces the straight-line operating lease expense with a depreciation charge for right-of-use assets and interest expense on lease liabilities. The Company has not yet determined which transition method it will apply or whether it will use the optional exemptions or practical expedients under the standard. The Company expects to disclose additional detailed information, including its transition method, any practical expedients elected and estimated quantitative financial effects, before the adoption of IFRS 16.

IFRIC 23, “Uncertainty over Income Tax Treatments”, was issued by the IASB in June 2017. IFRIC 23 provides guidance on the accounting for current and deferred tax liabilities and assets in circumstances in which there is uncertainty over income tax treatments. IFRIC 23 is effective for annual periods beginning on or after January 1, 2019. Earlier application is permitted. IFRIC 23 requires an entity to:

Contemplate whether uncertain tax treatments should be considered separately, or together as a group, based on which approach provides better predictions of the resolution;

Reflect an uncertainty in the amount of income tax payable (recoverable) if it is probable that it will pay (or recover) an amount for the uncertainty; and

Measure a tax uncertainty based on the most likely amount or expected value depending on whichever method better predicts the amount payable (recoverable).

The Company does not expect a material impact from the adoption of IFRIC 23 on its consolidated financial statements.

SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS	9 Months Ended
	Nov. 03, 2018
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS	4. SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS The preparation of condensed interim consolidated financial statements requires management to make estimates and assumptions using judgments that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense during the reporting period. Estimates and other judgments are continually evaluated and are based on management’s experience and other factors, including expectations about future events that are believed to be reasonable under the circumstances. Actual results may differ from those estimates. In preparing these unaudited condensed interim consolidated financial statements, critical judgments made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those referred to in note 5 of the consolidated financial statements for the year ended February 3, 2018 on Form 10-K filed with the SEC on April 19, 2018.

INVENTORIES

9 Months Ended

Nov. 03, 2018

INVENTORIES

INVENTORIES

5. INVENTORIES


	November 3,	February 3,
	2018	2018
	$	$
Finished goods	36,510	17,600
Goods in transit	2,784	4,608
Packaging	5,114	2,242
	44,408	24,450

PROPERTY AND EQUIPMENT	9 Months Ended
PROPERTY AND EQUIPMENT	Nov. 03, 2018
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT	6. PROPERTY AND EQUIPMENT For the three and nine months ended November 3, 2018, an assessment of impairment indicators was performed which caused the Company to review the recoverable amount of the property and equipment for certain cash generating units (“CGUs”) with an indication of impairment. CGUs reviewed included stores performing below the Company’s expectations. As a result, for the three and nine months ended November 3, 2018, an impairment loss of $725 and $3,285, respectively, [October 28, 2017 — $2,658 and $4,971] related to store leasehold improvements, furniture and equipment, and computer hardware was recorded in the Canada and U.S. segments for $725 and nil, respectively, for the three months ended November 3, 2018 and $3,096 and $189, respectively, for the nine months ended November 3, 2018, respectively [October 28, 2017 — $595 and $2,063, respectively, for the three months and $595 and $5,242, respectively, for the nine months]. These losses were determined by comparing the carrying amount of the CGU’s net assets with their respective recoverable amounts based on value in use. Value in use of nil [October 28, 2017 —$635] was determined based on management’s best estimate of expected future cash flows from use over the remaining lease terms, considering historical experience as well as current economic conditions, and was then discounted using a pre-tax discount rate of 11.9% [October 28, 2017 — 13.4%]. A reversal of impairment occurs when previously impaired CGUs see improved financial results. For the three and nine months ended November 3, 2018, no impairment losses were reversed [October 28, 2017 — $866 reversed in the U.S. segment, with value in use of $848]. Impairment losses are reversed only to the extent that the carrying amounts of the CGU’s net assets do not exceed the carrying amount that would have been determined, net of depreciation, if no impairment loss had been recognized.

PROVISIONS

9 Months Ended

Nov. 03, 2018

PROVISIONS

PROVISIONS

7. PROVISIONS


		For the
		nine months ended
		November 3,
		2018
		$
Opening balance		18,153
Additions		5,894
Reversals		(588)
Utilization		(4,820)
Settlements		(615)
Accretion expense		177
Cumulative translation adjustment		891
Ending balance		19,092
Less: Current portion		(4,658)
Long-term portion of provisions		14,434

Provisions for onerous contracts have been recognized in respect of store leases where the unavoidable costs of meeting the obligations under the lease agreements exceed the economic benefits expected to be received from the contract. The unavoidable costs reflect the present value of the lower of the expected cost of terminating the contract and the expected net cost of operating under the contract.

During the three and nine months ended November 3, 2018, due to changes to assumptions, additions to the onerous provision were recorded in the amount of $3,743 and $5,894, respectively, [October 28, 2017 — nil and $458], while the provisions for other stores were partially or fully reversed by an amount of $329 and $588, respectively, [October 28, 2017 — $46 and $2,031].

REVOLVING FACILITY	9 Months Ended
REVOLVING FACILITY	Nov. 03, 2018
REVOLVING FACILITY
REVOLVING FACILITY	8. REVOLVING FACILITY On June 11, 2018, the Company amended its existing Credit Agreement (the “Amended Credit Agreement”). The Amended Credit Agreement provides for a two-year revolving facility (“Amended Revolving Facility”) in the principal amount of $15.0 million or the equivalent in U.S. dollars, repayable at any time, two years from June 11, 2018, with no accordion feature. Borrowings under the Amended Revolving Facility may not exceed the lesser of the total commitment for the revolving facility and the borrowing base, calculated as 75% of the face value of all eligible receivables plus 50% of the estimated value of all eligible inventory, less any priority payables. The Amended Credit Agreement subjects the Company to certain financial covenants entered into between the Company and the lender. Without the prior written consent of the lender, the Company’s fixed charge coverage ratio may not be less than 1.10:1.00 and the Company’s leverage ratio may not exceed 3.00:1:00. In addition, the Company’s net tangible worth may not be less than $65,000 and the Company’s minimum excess availability must not be less than $15.0 million. The Amended Revolving Facility bears interest based on the Company’s adjusted leverage ratio, at the bank’s prime rate, U.S. bank rate and LIBOR plus a range from 0.5% to 2.5% per annum. A standby fee range of 0.3% to 0.5% will be paid on the daily principal amount of the unused portion of the Amended Revolving Facility. The credit facility also contains non-financial covenants that, among other things and subject to certain exceptions, restrict the Company’s ability to become guarantor or endorser or otherwise become liable upon any note or other obligation other than in the normal course of business. The Company also cannot make any dividend payments. As at November 3, 2018 and February 3, 2018, the Company did not have any borrowings under the Amended Revolving Facility. At November 3, 2018, the Company is in breach of its fixed charge coverage ratio and is taking measures to rectify the situation. The Company is in compliance with its other financial and non-financial covenants.

SHARE CAPITAL

9 Months Ended

Nov. 03, 2018

SHARE CAPITAL

SHARE CAPITAL

9. SHARE CAPITAL

Authorized

An unlimited number of common shares.

Issued and outstanding


	November 3,	February 3,
	2018	2018
	$	$
26,007,009 common shares [February 3, 2018 - 25,885,372 shares]	112,499	111,692
	112,499	111,692

During the three and nine-month periods ended November 3, 2018, 10,000 and 88,135 stock options, respectively, were exercised for 88,135 common shares for cash proceeds of $8 and $82, respectively, and 36,418 common shares for a non-cash settlement of nil and $121, respectively [October 28, 2017 — 24,000 and 436,773 stock options, respectively, for cash proceeds of $90 and $1,696, respectively]. During the three and nine-month periods ended November 3, 2018, the carrying value of common shares includes $3 and $82, respectively [October 28, 2017 — $22 and $850, respectively], which corresponds to a reduction in contributed surplus associated with options exercised during the period.

In addition, during the three and nine-month periods ended November 3, 2018, 1,128 and 70,668 common shares, respectively [October 28, 2017 – 19,819 and 75,820 common shares, respectively] were issued in relation to the vesting of restricted stock units (“RSU”), resulting in an increase in share capital of $7 and $643, net of tax, respectively [October 28, 2017 – $208 and $912, respectively] and a reduction in contributed surplus of $18 and $1,322, respectively [October 28, 2017 — $433 and $1,652, respectively].

During the nine-month period ended October 28, 2017, the shareholders of the Company approved a resolution to reduce the stated capital maintained in respect of the common shares by an amount of $155,947, which resulted in a corresponding reduction of the deficit.

Stock-based compensation

As at November 3, 2018, 842,905 common shares remain available for issuance under the 2015 Omnibus Incentive Plan.

No stock options were granted during the nine-month period ended November 3, 2018. For the nine-month period ended October 28, 2017, the weighted average fair value of options granted of $2.39 was estimated using the Black Scholes option pricing model, using the following assumptions:



	October 28,
	2017
Risk-free interest rate		1.79	%
Expected volatility		27.4	%
Expected option life		4.0	years
Expected dividend yield		0	%
Exercise price	$	9.76

Expected volatility was estimated using historical volatility of similar companies whose share prices were publicly available.

A summary of the status of the Company’s stock option plan and changes during the nine-month period is presented below.


	For the nine months ended
	November 3,		October 28,
	2018		2017
		Weighted		Weighted
		average		average
	Options	exercise	Options	exercise
	outstanding	price	outstanding	price
	#	$	#	$
Outstanding, beginning of period	447,779	7.18	933,195	5.63
Issued	—	—	161,980	9.76
Exercised	(88,135)	2.76	(436,773)	3.88
Forfeitures	(220,791)	8.92	(135,135)	8.31
Outstanding, end of period	138,853	7.23	523,267	7.67
Exercisable, end of period	75,837	4.84	315,909	5.74

For the nine-month period ended November 3, 2018, the weighted average share price at the date of exercise for stock options exercised was $4.47 [October 28, 2017 — $8.68].

A summary of the status of the Company’s RSU plan and changes during the nine-month period is presented below.


	For the nine months ended
	November 3,		October 28,
	2018		2017
		Weighted		Weighted
		average		average
	RSUs	fair value	RSUs	fair value
	outstanding	per unit (1)	outstanding	per unit (1)
	#	$	#	$
Outstanding, beginning of period	289,416	9.70	252,233	12.42
Granted	476,450	4.48	298,897	8.59
Forfeitures	(327,479)	6.45	(34,864)	10.19
Vested	(70,668)	9.08	(75,820)	12.21
Vested, withheld for tax	(69,017)	8.91	(65,342)	11.40
Outstanding, end of period	298,702	5.26	375,104	9.80

(1)

Weighted average fair value per unit as at date of grant.

During the three and nine-month periods ended November 3, 2018, the Company recognized stock-based compensation expense and a net reversal of stock-based compensation of $91 and $7, respectively [October 28, 2017 — stock-based compensation expense of $362 and $1,738, respectively].

INCOME TAXES

9 Months Ended

Nov. 03, 2018

INCOME TAXES

INCOME TAXES

10. INCOME TAXES

Income tax expense is recognized based on management’s best estimate of the weighted average annual income tax rate expected for the full fiscal year.

A reconciliation of the statutory income tax rate to the effective tax rate is as follows:


	For the three months ended				For the nine months ended
	November 3,		October 28,		November 3,		October 28,
	2018		2017		2018		2017
	%	$	%	$	%	$	%	$
Income tax recovery — statutory rate	26.9	(2,873)	26.8	(2,368)	26.9	(7,015)	26.8	(4,404)
Increase (decrease) in provision for income tax (recovery) resulting from:
Non-deductible items	(0.4)	38	(0.4)	38	0.1	(31)	(2.3)	385
Provision for uncertain tax position	(8.8)	940	—	—	(3.6)	940	—	—
Other	(2.4)	260	0.3	(26)	(1.0)	255	0.1	(11)
Income tax provision (recovery) — effective tax rate	15.3	(1,635)	26.7	(2,356)	22.4	(5,851)	24.6	(4,030)

A breakdown of the income tax provision (recovery) on the interim consolidated statement of loss is as follows:


	For the three months ended		For the nine months ended
	November 3,	October 28,	November 3,	October 28,
	2018	2017	2018	2017
	$	$	$	$
Income tax provision (recovery)
Current	940	(2,129)	(1,930)	(4,233)
Deferred	(2,575)	(227)	(3,921)	203
	(1,635)	(2,356)	(5,851)	(4,030)

SELLING, GENERAL AND ADMINISTRATION EXPENSES

9 Months Ended

Nov. 03, 2018

SELLING, GENERAL AND ADMINISTRATION EXPENSES

SELLING, GENERAL AND ADMINISTRATION EXPENSES

11. SELLING, GENERAL AND ADMINISTRATION EXPENSES


	For the three months ended		For the nine months ended
	November 3,	October 28,	November 3,	October 28,
	2018	2017	2018	2017
	$	$	$	$
Wages, salaries and employee benefits	16,767	15,012	49,031	47,113
Depreciation of property and equipment	1,785	2,138	5,193	6,316
Amortization of intangible assets	377	494	905	1,248
Loss on disposal of property and equipment	—	18	14	48
Impairment of property and equipment	725	2,658	3,285	4,971
Provision (recovery) for onerous contracts	3,414	(46)	5,306	(1,573)
Utilization for onerous contracts	(2,126)	(1,092)	(4,820)	(2,340)
Stock-based compensation	91	362	(7)	1,738
Executive separation costs related to salary	123	1,070	840	1,882
Strategic review and proxy contest costs	27	—	3,538	—
Other selling, general and administration	7,936	6,421	21,580	19,601
	29,119	27,035	84,865	79,004

EARNINGS PER SHARE

9 Months Ended

Nov. 03, 2018

EARNINGS PER SHARE

EARNINGS PER SHARE

12. EARNINGS PER SHARE

Basic earnings per share (“EPS”) amounts are calculated by dividing the net income (loss) for the period attributable to ordinary equity holders by the weighted average number of ordinary shares outstanding during the period. Diluted EPS amounts are calculated by dividing the net income (loss) attributable to ordinary equity holders (after adjusting for dividends) by the weighted average number of ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares, unless these would be anti‑dilutive.

The following reflects the loss and share data used in the basic and diluted EPS computations:


	For the three months ended		For the nine months ended
	November 3,	October 28,	November 3,	October 28,
	2018	2017	2018	2017
	$	$	$	$
Net loss for basic EPS	(9,061)	(6,485)	(20,261)	(12,410)

Weighted average number of shares outstanding — basic and fully diluted	25,992,339	25,829,090	25,862,086	25,659,164

As a result of the net loss during the three and nine-month periods ended November 3, 2018, the stock options and RSUs disclosed in Note 9 are anti-dilutive.

RELATED PARTY DISCLOSURES	9 Months Ended
RELATED PARTY DISCLOSURES	Nov. 03, 2018
RELATED PARTY DISCLOSURES
RELATED PARTY DISCLOSURES	13. RELATED PARTY DISCLOSURES Other than the reimbursement of third-party costs described below incurred in connection with the proxy contest which culminated at the Company’s annual meeting held on June 14, 2018, (the “2018” Annual Meeting”), there have been no significant changes in related party transactions from those disclosed in the Company’s audited annual consolidated financial statements for the year ended February 3, 2018. During the three and nine months ended November 3, 2018, the Company purchased merchandise and services from a company controlled by one of its executive employees amounting to $125 and $222, respectively [October 28, 2017 — nil]. During the three and nine months ended November 3, 2018, the Company reimbursed Rainy Day Investments Ltd. (“Rainy Day Investments”), a controlling shareholder, nil and $957, respectively, for third-party costs incurred by it in connection with the proxy contest, as approved by the independent members of the Board of Directors of the Company. This amount is included in selling, general and administration expenses.

SEGMENT INFORMATION

9 Months Ended

Nov. 03, 2018

SEGMENT INFORMATION

SEGMENT INFORMATION

14. SEGMENT INFORMATION

An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses. The Company has reviewed its operations and determined that each of its retail stores represents an operating segment. However, because its retail stores have similar economic characteristics, sell similar products, have similar types of customers, and use similar distribution channels, the Company has determined that these operating segments can be aggregated at a geographic level. As a result, the Company has concluded that it has two reportable segments, Canada and the U.S., that derive their respective revenues from the retail and online sale of tea, tea accessories and food and beverages. The Company’s Interim Chief Executive Officer (the chief operating decision maker or “CODM”) makes decisions about resource allocation and assesses performance at the country level, and for which discrete financial information is available.

The Company derives revenue from the following products:


	For the three months ended		For the nine months ended
	November 3,	October 28,	November 3,	October 28,
	2018	2017	2018	2017
	$	$	$	$
Tea	31,348	30,098	92,167	93,958
Tea accessories	8,478	8,636	25,979	30,315
Food and beverages	3,830	4,263	11,463	13,080
	43,656	42,997	129,609	137,353

Property and equipment and intangible assets by country are as follows:


	November 3,	February 3,
	2018	2018
	$	$
Canada	35,342	37,234
US	3,748	3,763
Total	39,090	40,997

During the fourth quarter of Fiscal 2017, the Company changed the measure of profit used by the CODM in measuring performance. Management believes that the new measure, being results from operating activities before corporate expenses by country, excluding intercompany profit, is the most relevant in evaluating results. The Company has retroactively revised the results by segment for the three and nine-month periods ended October 28, 2017. Results from operating activities before corporate expenses per country are as follows:


	For the three months ended			For the nine months ended
	November 3, 2018			November 3, 2018
	Canada	US	Consolidated	Canada	US	Consolidated
	$	$	$	$	$	$
Sales	34,709	8,947	43,656	103,091	26,518	129,609
Cost of sales	19,520	5,755	25,275	55,060	16,133	71,193
Gross profit	15,189	3,192	18,381	48,031	10,385	58,416
Selling, general and administration expenses (allocated)	13,872	4,513	18,385	40,794	12,907	53,701
Impairment of property and equipment	725	—	725	3,096	189	3,285
Impact of onerous contracts	133	1,155	1,288	1,129	(643)	486
Results from operating activities before corporate expenses	459	(2,476)	(2,017)	3,012	(2,068)	944
Selling, general and administration expenses (non-allocated)			8,721			27,393
Results from operating activities			(10,738)			(26,449)
Finance costs			80			237
Finance income			(122)			(574)
Loss before income taxes			(10,696)			(26,112)


	For the three months ended			For the nine months ended
	October 28, 2017			October 28, 2017
	Canada	US	Consolidated	Canada	US	Consolidated
	$	$	$	$	$	$
Sales	35,495	7,502	42,997	112,803	24,550	137,353
Cost of sales	19,475	5,150	24,625	59,046