- Sales reached $11.1 million, up 0.5% year-over-year
- Gross profit margin attained 47.2%, down marginally by 0.1%
- Net loss remained stable at $1.6 million
- Adjusted EBITDA was negative $0.2 million compared to negative $0.3 million in Q2 2024
- New stores earmarked for South Shore of Montreal, Quebec City and Mississauga
MONTREAL, Sept. 16, 2025 (GLOBE NEWSWIRE) — DAVIDsTEA Inc. (TSX-Venture: DTEA) (“DAVIDsTEA” or the “Company”), a leading North American tea merchant, announced today its financial results for the second quarter of fiscal 2025 ended August 2, 2025.
“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,” said Sarah Segal, Chief Executive Officer and Chief Brand Officer, DAVIDsTEA. “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. As we expand our store footprint, we are intensifying our community and brand marketing efforts—across both digital and physical media—to ensure we remain top of mind with consumers heading into our peak selling season. We expect these initiatives to generate a strong return on investment and contribute to profitable growth.”
“We fully intend to make retail stores the focal point of our omnichannel growth strategy,” said Frank Zitella, President, Chief Financial and Operating Officer, DAVIDsTEA. “After all, the best billboard for DAVIDsTEA is a new store, especially considering the deep expertise of our tea guides in driving exploration across a wide assortment of products. We believe this positive in-store consumer experience, in turn, will convert non-tea drinkers or casual tea drinkers into devoted tea lovers.”
“We are currently renovating our flagship store in Montreal’s South Shore and remain on track to reopen in mid-November,” added Mr. Zitella. “At the same time, we will be celebrating the opening of a brand-new store at Laurier Quebec Mall in Quebec City—two important milestones in our renewed retail expansion. A third new location will follow at Square One Mall in Mississauga—one of Canada’s premier shopping destinations—in July 2026. We look forward to expanding our store footprint and strengthening our presence in communities across Canada.”
DAVIDsTEA also announced that Ernst & Young LLP, Chartered Professional Accountants, resigned as auditors of the Company at the Company’s request and that the Board of Directors appointed Richter LLP, Chartered Professional Accountants, as the Company’s new auditors. DavidsTea thanks Ernst & Young for its service as auditors since fiscal 2011.
Operating Results for the Second Quarter of Fiscal 2025
Three Months Ended August 2, 2025 compared to Three Months Ended August 3, 2024
Sales. Sales for the second quarter of 2025 reached $11.1 million, up $50 thousand or 0.5% from the prior year quarter. Sales in Canada, which accounted for 89.6% of total revenue, increased by $0.4 million, or 3.7%, compared to the prior year quarter. U.S. sales of $1.2 million decreased by $0.3 million, or 20.6%, from the prior year quarter.
DAVIDsTEA is focused on delivering a value proposition that resonates with consumers, supported by a memorable experience both in person and online, in order to generate sales as the Company navigates macro-economic headwinds.
Brick-and-mortar sales of $4.6 million in the second quarter of 2025 increased by $0.4 million, or 9.1%, from $4.2 million in the prior year quarter. Brick-and-mortar sales represented 41.0% of total sales compared to 37.8% in the prior year quarter.
Online sales of $5.1 million decreased by $0.4 million, or 6.7%, from $5.5 million in the prior year quarter.
Online sales represented 45.9% of total sales in the second quarter of 2025 compared to 49.5% in the prior year quarter. Wholesale channel sales of $1.5 million improved by $0.1 million, or 2.5%, from the prior year quarter. Wholesale sales represented 13.0% of total sales compared to 12.8% in the prior year quarter.
Gross profit. Gross profit of $5.3 million was stable year-over-year in the second quarter of 2025. A slight drop in product margin was offset by a decrease in unitized freight, shipping and fulfillment costs. Gross profit as a percentage of sales decreased to 47.2% for the second quarter compared to 47.3% in the prior year quarter.
Selling, general and administration expenses. Selling, general and administrative expenses (“SG&A”) amounted to $6.7 million in the second quarter of 2025 and was consistent with the prior year quarter. IT-related expenses, which are included in SG&A, have been reduced by $1.1 million, resulting from the successful conversion of DAVIDsTEA’s full technology stack to a lower-cost operating system. This strategic transition has materially and permanently reduced the Company’s operating cost base, providing sustainable efficiency gains going forward. In the second quarter of 2025, DAVIDsTEA reversed previously recorded IT-related and other expenses amounting to $0.2 million. Additionally, the prior year quarter included $0.3 million in impairment charges on property and equipment and intangible assets. This item did not recur in the current quarter. These savings were offset by an increase in marketing expenses of $0.5 million and wages, salaries and employee benefits of $0.5 million.
As a percentage of sales, SG&A expenses declined to 59.8% in the second quarter of 2025 from 60.5% in the prior year quarter, reflecting improved cost efficiency and operating leverage.
EBITDA, Adjusted EBITDA and Adjusted EBITDA (after rent equivalent expense)1. EBITDA was negative $0.2 million in the second quarter of 2025 compared to negative $0.8 million in the prior year quarter. Adjusted EBITDA was negative $0.2 million in the second quarter compared to negative $0.3 million for the same period in the prior year. Adjusted EBITDA (after rent equivalent expense) was negative $1.4 million in the second quarter compared to negative $1.1 million in the prior year quarter.
Net loss and Adjusted net loss. Net loss totaled $1.6 million in the second quarter of 2025, stable compared to the prior year quarter. Adjusted net loss amounted to $1.8 million in the second quarter compared to an adjusted net loss of $1.0 million in the prior year quarter.
Fully diluted net loss per share and Adjusted fully-diluted net income (loss) per share. Fully diluted net loss per common share amounted to $0.06 in the second quarter of 2025 compared to a fully diluted net loss per common share of $0.06 in the prior year quarter. Adjusted fully diluted net income per common share1, which is Adjusted net income on a fully diluted weighted average shares outstanding basis, totaled $0.06 compared to an Adjusted fully diluted net loss of $0.04 in the prior year quarter.
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1 Please refer to “Non-IFRS Financial Measures” in this press release.
Liquidity and Capital Resources
As at August 2, 2025, the Company had $7.6 million of cash held by major Canadian financial institutions.
Working capital amounted to $11.4 million as at August 2, 2025 compared to $12.8 million as at February 1, 2025. The decline in working capital can mainly be attributed to a decrease in cash. This factor was partially offset by an increase in inventories and a decrease in trade and other payables.
DAVIDsTEA’s primary source of liquidity is cash on hand and cashflow generated from operations. Working capital requirements are driven by the purchase of inventory, payment of payroll, ongoing technology expenditures and other operating costs.
Working capital requirements fluctuate during the year, rising in the second and third fiscal quarters as DAVIDsTEA takes title to increasing quantities of inventory in anticipation of its peak selling season in the fourth fiscal quarter. Capital expenditures of $97 thousand in the second quarter of fiscal 2025 included the purchase of furniture and equipment of $10 thousand, leasehold improvements of $70 thousand, and computer hardware of $17 thousand. Capital expenditures in the second quarter of fiscal 2024 amounted to $312 thousand, comprised of furniture and equipment of $29 thousand, leasehold improvements of $270 thousand, and computer hardware of $13 thousand.
As at August 2, 2025, the Company had financial commitments in connection with the purchase of goods and services, which are enforceable and legally binding, amounting to $12.9 million, net of $0.8 million of advances (February 1, 2025 – $7.4 million, net of $0.5 million of advances). These commitments are expected to be discharged within twelve months. Commitments include variable payments required under certain IT service contracts that are based on sales with minimum committed amounts extending to fiscal 2027 totaling $0.3 million.
Condensed Consolidated Financial Data
(Canadian dollars, in thousands, except per share information)
| For the three-months ended | For the six-months ended | |||||||||||||||
| August 2, | August 3, | August 2, | August 3, | |||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Sales | $ | 11,142 | $ | 11,091 | $ | 24,875 | $ | 24,526 | ||||||||
| Cost of sales | 5,884 | 5,840 | 12,714 | 13,455 | ||||||||||||
| Gross profit | 5,258 | 5,251 | 12,161 | 11,071 | ||||||||||||
| Selling, general and administration expenses | 6,666 | 6,714 | 13,598 | 15,161 | ||||||||||||
| Results from operating activities | (1,408 | ) | (1,463 | ) | (1,437 | ) | (4,090 | ) | ||||||||
| Finance costs | 209 | 119 | 426 | 265 | ||||||||||||
| Finance income | (55 | ) | (95 | ) | (135 | ) | (219 | ) | ||||||||
| Net loss | $ | (1,562 | ) | $ | (1,487 | ) | $ | (1,728 | ) | $ | (4,136 | ) | ||||