DAVIDsTEA Stays the Course in the Second Quarter

Executive Summary

• DAVIDsTEA Inc. reported financial results for the second quarter of fiscal 2025 (ended August 2, 2025), showing stable sales growth of 0.5% year-over-year to $11.1 million, driven by a 9.1% increase in brick-and-mortar sales.
• The company reported a net loss of $1.6 million, consistent with the prior year, while Adjusted EBITDA improved slightly to negative $0.2 million from negative $0.3 million in Q2 2024.
• The company announced a change in auditors, with Ernst & Young LLP resigning and Richter LLP appointed as the new auditor, alongside updates on retail expansion including store renovations and new locations.

Key Details

• Financial Performance (Q2 Fiscal 2025):
  • Sales: $11.1 million, up 0.5% ($50k) from $11.091 million in Q2 2024.
  • Gross Profit: $5.3 million, stable year-over-year; Gross profit margin was 47.2% (down 0.1% from 47.3%).
  • Net Loss: $1.6 million, stable compared to $1.487 million in Q2 2024.
  • Adjusted EBITDA: Negative $0.2 million, improved from negative $0.3 million in Q2 2024.
  • EBITDA: Negative $0.2 million, improved from negative $0.8 million in Q2 2024.
  • SG&A Expenses: $6.7 million (59.8% of sales), down from 60.5% in prior year; includes $1.1 million reduction in IT expenses due to technology stack conversion.
• Sales Breakdown:
  • Brick-and-Mortar: $4.6 million, up 9.1% year-over-year; represented 41.0% of total sales.
  • Online: $5.1 million, down 6.7% year-over-year; represented 45.9% of total sales.
  • Wholesale: $1.5 million, up 2.5% year-over-year; represented 13.0% of total sales.
  • Geographic: Canada sales increased 3.7% to $9.982 million; U.S. sales decreased 20.6% to $1.16 million.
• Operational Metrics:
  • Comparable Store Sales Growth: 0.6% for the quarter (vs 19.8% in Q2 2024).
  • Comparable Retail Sales per Square Foot: $277 (vs $276 in Q2 2024).
  • Number of Stores: 20 stores (up from 18 in Q2 2024).
  • Cash Position: $7.6 million as of August 2, 2025.
  • Working Capital: $11.4 million as of August 2, 2025 (down from $12.8 million at Feb 1, 2025).
  • Capital Expenditures: $97 thousand in Q2 2025 (vs $312 thousand in Q2 2024).
• Corporate Actions & Strategy:
  • Auditor Change: Ernst & Young LLP resigned as auditor; Richter LLP appointed as new auditor.
  • Store Expansion/Renovation:
    • Flagship store in Montreal’s South Shore is being renovated, targeting mid-November reopening.
    • New store opening at Laurier Quebec Mall in Quebec City.
    • Third new location planned for Square One Mall in Mississauga, targeting July 2026.
  • Cost Savings: Successful conversion of full technology stack to a lower-cost operating system, resulting in $1.1 million reduction in IT-related expenses.

Notable Quotes

• “DAVIDsTEA stayed the course with its omnichannel growth strategy in the second quarter of 2025, supported by retail store and wholesale channel sales increases of 9.1% and 2.5% year-over-year, respectively... While our online sales growth is not where it should be, we are encouraged by the halo effect of our retail locations, which continue to drive brand awareness and customer engagement.” — Sarah Segal, CEO and Chief Brand Officer
• “We fully intend to make retail stores the focal point of our omnichannel growth strategy... We believe this positive in-store consumer experience, in turn, will convert non-tea drinkers or casual tea drinkers into devoted tea lovers.” — Frank Zitella, President, CFO and COO
• “We are currently renovating our flagship store in Montreal’s South Shore and remain on track to reopen in mid-November... A third new location will follow at Square One Mall in Mississauga... in July 2026.” — Frank Zitella, President, CFO and COO