DAVIDsTEA Reports Third Quarter Results

Executive Summary

• Sales fell to $12.6 M (‑10.2% YoY), but SG&A expenses dropped 26.5% to $6.4 M, improving cost structure.
• Net loss narrowed sharply to $0.6 M from $1.6 M a year earlier; EBITDA turned positive at $0.7 M.
• Completed a $2.7 M revenue‑linked financing during the quarter and closed a $3.0 M private placement after quarter‑end; new store opened in Québec Mall with six additional locations planned for FY 2026.

Key Details

• Revenue: $12,613 k (Q3 FY25) vs. $14,039 k (Q3 FY24).
• Canada: $11,157 k (‑7.1% YoY) – 88.5% of total.
• U.S.: $1,456 k (‑28.3% YoY).
• Channel Mix:
• Retail (brick‑and‑mortar) sales $4,862 k ↑ 2.9% YoY; stores 20 vs. 19 prior year.
• Online sales $5,287 k ↓ 16.9% YoY.
• Wholesale sales $2,464 k ↓ 16.6% YoY.
• Gross Profit: $5,930 k (‑17.9% YoY); gross margin fell to 47.0% from 51.5%.
• SG&A Expenses: $6,394 k, down $2,306 k (‑26.5%); expense ratio improved to 50.7% of sales (from 62.0%).
• Savings driven by elimination of $3.1 M onerous contract charges, $1.5 M IT cost reduction, $0.5 M marketing cut, offset by $2.1 M reversal of prior‑year impairments and $0.4 M higher wages.
• EBITDA: $686 k (positive) vs. $(593) k YoY. Adjusted EBITDA $802 k (down from $1,010 k).
• Net Loss: $(641) k vs. $(1,575) k YoY; fully‑diluted loss per share $0.02 vs. $0.06 prior year.
• Liquidity: Cash $8.087 M (end of quarter); working capital $10.7 M.
• Financing Activities:
• Revenue‑linked financing: $2.7 M advance; repayment obligation 7% of revenues until total $2.9 M repaid (includes 8.0% fixed cost).
• Private Placement (post‑quarter): 3,333,334 units @ $0.90 = $3.0 M gross proceeds. Each unit = 1 common share + ½ warrant; warrants exercisable at $1.25 (first year) then $1.50, expire if TSX‑V price ≥ $2.00 for 20 consecutive days after a four‑month notice period. No commissions paid.
• Capital Expenditures: $237 k in Q3 FY25 (furniture & equipment $40 k, leasehold improvements $303 k, computer hardware $69 k, tenant inducement $175 k).
• Store Expansion: New store opened at Laurier Québec Mall (Dec 2025); target up to six new stores in FY 2026 (2 under contract H1, 2 LOI H2, remaining sites in selection phase).
• Conference Call: Scheduled for Dec 16, 2025 at 8:30 am ET; webcast available on investor‑relations site.

Notable Quotes

“Our focus remains on delivering profitable quarters while achieving our annual sales targets… Both brick‑and‑mortar and comparable store sales increased 2.9% in the quarter…” – Sarah Segal, CEO & Chief Brand Officer
“We have materially reduced our operating cost base… With a structurally lower cost base and an improved balance sheet, we are well positioned to execute our growth strategy with discipline and flexibility.” – Frank Zitella, President & CFO