David’s Tea co-founder David Segal is pictured at a DavidsTea outlet in Toronto on Tuesday, Feb. 9, 2016. THE CANADIAN PRESS/Chris Young

David’s Tea co-founder David Segal is pictured at a DavidsTea outlet in Toronto on Tuesday, Feb. 9, 2016. THE CANADIAN PRESS/Chris Young

DavidsTea Inc. reports $9.1M loss in third quarter, sales up 1.5 per cent

THE CANADIAN PRESS

DavidsTea Inc. reported a more than $9-million loss in its most recent quarter that was marked by wild share price swings, but the retailer’s co-founder, who led a recent shareholder revolt, says he’s confident in the tea purveyor’s ability to turnaround its financial performance.

The Montreal-based retailer reported Thursday that its consolidated net loss surged 40 per cent to $9.1 million or 35 cents per diluted share for its third quarter ending Nov. 3. That compared with a net loss of $6.5 million or 25 cents per share for the same quarter the previous year.

Its adjusted net loss was $7.4 million or 28 cents per share compared with a $4.5-million loss or 17 cents per share in the third quarter of its 2017 financial year.

“We are seeing favourable trends in several areas of the business,” said Herschel Segal, who is serving as interim CEO, during a conference call with analysts after markets closed. The call lasted less than 15 minutes and analysts were not permitted to ask questions, a customary practice for most quarterly calls.

Segal took over as executive chairman of the company’s board and interim CEO earlier this year after 54 per cent of shareholders at the annual general meeting voted in favour of Segal’s slate of seven directors over the management nominees. The loss prompted then-CEO Joel Silver to resign.

At the time, Segal pledged that the chain will become profitable within a year.

For the second set of quarterly results under his leadership, sales increased 1.5 per cent to $43.7 million from $43 million in the same quarter of 2017.

Segal highlighted the company’s e-commerce and alternative sales channels as “showing great promise.”

DavidsTea’s online sales account for 16 per cent of its volume and the company needs to increase this portion of its business significantly, he said.

Sales of its tea sachets in 450 Loblaw stores, as well as on Air Canada flights, and in certain hotels and offices is going very well, he said.

Still, same-store sales fell 4.7 per cent during the quarter.

That drop reflects the company’s decision to reduce its dependency on discounting, said chief financial officer Frank Zitella, who started in the role this week. That resulted in less product available for the retailer’s semi-annual sale, he said.

The company’s shares on the Nasdaq composite experienced volatile highs and lows during the quarter, so much so that the company released two statements indicating it was “not aware of any corporate development or other reason for the recent market activity.”

First, on Sept. 21, shares soared nearly 60 per cent before plummeting about 25 per cent at close. The following month, on Oct. 2, shares closed up about 63 per cent from US$2.55 to US$4.16.

The company did not comment on this during the call, though some suggested the activity came from speculation DavidsTea might be looking to somehow enter the cannabis space.

The shares closed up 10 cents or 5.3 per cent to US$1.99 in Thursday trading.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

The body of 25-year-old Kyler Corriveau was discovered near Red Deer on Sunday. He was missing since Dec. 15. Police are investigating his death as a homicide. (Contrinuted photo).
RCMP are investigating the death of missing Red Deer man as a homicide

The body of Kyler Corriveau was discovered on Sunday

Alberta’s chief medical officer of health Dr. Deena Hinshaw reported 456 new cases of COVID-19 over Tuesday afternoon. (photography by Chris Schwarz/Government of Alberta)
Five new COVID-19 deaths in Central zone, two in Red Deer

Province reports 456 new cases of COVID-19

Community Futures Central Alberta, in partnership with the Central Alberta Regional Innovation Network (CARIN), is behind the SMARTstart initiative for budding entrepreneurs.
New program aimed at helping entrepreneurs succeed

Program offers mentorship, business advice and networking opportunities

A Red Deer man, who has been declared a dangerous offender, lost his appeal of an aggravated assault conviction from 2017. Advocate file photo
Red Deer man who chomped on remand centre inmate’s ear loses aggravated assault appeal

Inmate lost part of his ear in attack at Red Deer Remand Centre in August 2017

Red Deer’s Wiklund vs. Wiklund is celebrating a burst of songwriting creativity during the 2020 lockdown by releasing a new tune to YouTube and multiple digital music platforms in each month of 2021. (Contributed image).
Pandemic lockdown fuels a flurry of songwriting for Red Deer music duo

Wiklund vs Wiklund will release a new single monthly in 2021

Justin Kripps of Summerland and his team have competed in Olympic action and World Cup competitions in bobsleigh. (Jason Ransom-Canadian Olympic Comittee).
QUIZ: Are you ready for some winter sports?

It’s cold outside, but there are plenty of recreation opportunities in the winter months

A Subway fast food restaurant's sign is shown in New York on Oct. 24, 2016. A defamation lawsuit by the world’s largest fast-food operator against Canada's public broadcaster over a report on the chain's chicken sandwiches can proceed, Ontario's top court has ruled. THE CANADIAN PRESS/AP, Mark Lennihan
Subway can press $210-million defamation suit against CBC for show on chicken content

Subway can press $210-million defamation suit against CBC for show on chicken content

 A man watches the financial numbers on the digital ticker tape at the TMX Group in Toronto's financial district on Friday, May 9, 2014. THE CANADIAN PRESS/Darren Calabrese
Energy pushes S&P/TSX composite up as TC Energy shares rebound after Keystone worries

Energy pushes S&P/TSX composite up as TC Energy shares rebound after Keystone worries

AltaLink seeks to refund extra $350 million over three years to Alberta customers

AltaLink seeks to refund extra $350 million over three years to Alberta customers

Alberta Energy Minister Sonya Savage speaks during an event to mark the start of right-of-way construction for the Trans Mountain Expansion Project, in Acheson, Alta., Tuesday, Dec. 3, 2019. A government lawyer says decisions about environmental policy should be made by elected officials, not courts. THE CANADIAN PRESS/Jason Franson
Alberta lawyer argues coal policy decisions belong with politicians, not courts

Alberta lawyer argues coal policy decisions belong with politicians, not courts

Prime Minister Justin Trudeau provides an update on the COVID-19 pandemic from Rideau Cottage in Ottawa on Tuesday, Jan. 11, 2021. THE CANADIAN PRESS/Sean Kilpatrick
Trudeau vows to keep up the fight to sway U.S. on merits of Keystone XL pipeline

Trudeau vows to keep up the fight to sway U.S. on merits of Keystone XL pipeline

A medical team of the new Nurse Isabel Zendal Hospital apply a fiberoptic bronchoscopy to a patient inside a COVID-19 ICU in Madrid, Spain, Monday, Jan. 18, 2021. As the coronavirus curve of contagion turned increasingly vertical after Christmas and New Year's, the Zendal has been busy. On Monday, 392 virus patients were being treated, more than in any other hospital in the Madrid region. (AP Photo/Bernat Armangue)
Panel: China, WHO should have acted quicker to stop pandemic

GENEVA — A panel of experts commissioned by the World Health Organization… Continue reading

File photo
Wetaskiwin Crime Reduction Unit recovers valuable stolen property

Property valued at over $50,000 recovered by Wetaskiwin Crime Reduction Unit.

Karina Gould, Minister of International Development, holds a news conference on Parliament Hill in Ottawa on Thursday, Dec. 10, 2020. THE CANADIAN PRESS/Sean Kilpatrick
COVID-19 vaccines: Canadians torn between helping the world and helping themselves

MONTREAL — The COVID-19 vaccine rollout is highlighting the disconnect between the… Continue reading

Most Read