DavidsTea reports lower Q4 sales, announces plans to sell in more grocery stores

DavidsTea Inc. saw a drop in sales in its most recent quarter, but announced plans to expand its wholesale business.

“Clearly our financial results are not yet where we want them to be,” said interim CEO and executive chairman Herschel Segal during a conference call Thursday after the company released its fourth-quarter financial results.

“However, we are making headway and experiencing positive trends in a number of areas.”

Sales fell 4.1 per cent to $83.1 million in the quarter ending Feb. 2 and comparable store sales, a key retail metric, dropped 1.6 per cent.

The company’s consolidated net loss was $14.4 million or 51 cents per diluted share, compared with $16.1 million or 62 cents per share in the same quarter the previous year.

Its adjusted net income was $6.4 million or 25 cents per share, compared with $9.7 million or 37 cents per share in the previous fourth quarter.

The Montreal-based retailer saw its wholesale and e-commerce sales grow 20.2 per cent or $2.5 million for the quarter.

Greater online adoption in Canada and the U.S. helped drive the boost, as well as the company beginning to sell some of its teas at a number of Loblaw Companies Ltd. store locations.

Sales through that channel have “been hailed as a success by all measures,” said Segal.

DavidsTea announced it would be expanding that arrangement and will sell its teas at more than 1,500 of the retailer’s locations starting this fall.

The company also plans to grow its brand awareness among men, said Frank Zitella. DavidsTea announced Thursday that Zitella has been promoted to chief operating officer, but would also maintain the responsibilities of the chief financial officer.

Currently, women represent more than 80 per cent of the company’s total sales, he said. DavidsTea will start to promote its tea and other products at events popular with the male demographic in the coming months, Zitella said.

It will also try to put together initiatives to more directly capitalize on wellness trends, he said, as wellness teas are “growing more quickly than the overall tea market.”

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