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DAVIDSTEA DAVIDSTEA Reports Third Quarter Fiscal 2021 Financial Results December 14 , 2021 • Third quarter sales of $ 22.2 million , up 18.5 % sequentially • Third quarter adjusted EBITDA of ( $ 0.3 ) million • Increased inventory level heading into holiday season • Solid start to fourth quarter with robust Black Friday sales MONTREAL , Dec. 14 , 2021 ( GLOBE NEWSWIRE ) -- DAVIDSTEA Inc. ( Nasdaq : DTEA ) ( “ DAVIDSTEA " or the " Company " ) , a leading tea merchant in North America , announced today its third quarter results for the three - month period ended October 30 , 2021 ( all amounts are expressed in Canadian dollars ) . " Our everyday focus is on scaling and expanding our digital footprint as well as our wholesale business across North America , always with the customer in mind , " said Sarah Segal , Chief Executive Officer and Chief Brand Officer , DAVIDSTEA . " With a keen eye on innovation and growing sales , we introduced new products including three unique superfood organic hot chocolate blends and the biggest Holiday Countdown Collection ever . We expanded our product offering in over 1,200 Loblaw grocery and pharmacy storefronts , deployed six holiday - themed pop - up shops at select locations in Canada to support our 18 flagship stores , and launched a podcast series called ' Steeping Together ' , another way for us to share our passion for a tea lifestyle and speak to all of our tea fans , among several other initiatives . This enhanced go - to - market strategy , designed to leverage our exceptional brand across our digital - first omnichannel platform , will enable DAVIDSTEA to retain its loyal customer base and attract new tea consumers . " " As we approach the holiday season , I would like to thank our entire team for its remarkable dedi ion , creativity and passion for brand . Recently , we were recognized as a Great Place to Work® after independent analysis conducted by Great Place to Work Institute . Given a period of unprecedented transformation and navigating through the ongoing COVID - 19 pandemic , this recognition is a testament to our inclusive corporate culture , and to the commitment of our incredible team who takes pride in its work to delight tea consumers daily . This recognition also made us eligible to receive the designation of 2021's Best Workplaces Managed by Women . With close to 70 % of our leadership team being comprised of women , this distinction reinforces our positioning as an equal opportunity employer that offers exciting career opportunities to individuals across North America , " Ms. Segal added . " The 15.3 % decrease in third quarter sales year - over - year is largely due to a pandemic - fueled surge in online sales for our tea blends and accessories during the better part of fiscal 2020 , " said Frank Zitella , President , Chief Financial and Operating Officer , DAVIDSTEA . " Progress achieved in transforming DAVIDSTEA can better be measured by the 18.5 % sales increase on a sequential basis . The slight loss in adjusted EBITDA in the third quarter reflects planned investments in digital marketing , technology , distribution and staffing with a clear emphasis to drive top - line growth . Going forward , our growth strategy rests upon continuing to invest in our online presence , improving the customer experience by building world - class fulfillment capabilities , expanding relationships with wholesale partners and leveraging the store - in - store concept . " On a sequential basis , we are pleased by our sales momentum and customer traction in the first seven weeks of the fourth quarter . This is supported by a strategic increase in inventory levels in anticipation of a strong holiday period and to mitigate ongoing global supply - chain issues , while maintaining a solid financial position , " Mr. Zitella concluded . Results for the Third Quarter of Fiscal 2021 Operating results for the three months ended October 30 , 2021 compared to the operating results for the three months ended October 31 , 2020 Sales . Sales for the three months ended October 30 , 2021 decreased 15.3 % , or $ 4.0 million , to $ 22.2 million from $ 26.2 million in the prior year quarter . On March 17 , 2020 , in response to the COVID - 19 pandemic , the Company closed all its retail stores in Canada and the United States , and subsequently in the second quarter of Fiscal 2020 as part of its Restructuring Plan pursuant to the Companies ' Creditors Arrangement Act ( " CCAA " ) , formal restructuring plan ( " Restructuring Plan " ) exited its brick - and - mortar stores except for 18 Canadian stores which were reopened on August 21 , 2020. Accordingly , retail store sales for the quarter compare favorably to the prior year quarter by $ 1.0 million since stores were not open for two of the three months in the prior year . Sales from e - commerce and wholesale channels decreased by $ 5.1 million or 22.9 % to $ 17.1 million from $ 22.1 million in the prior year quarter with the transition from last year's pandemic - fueled surge of online sales to serving consumers throughout our omni - channel capabilities . E - commerce and wholesale sales represented 77.1 % of sales , compared to 84.3 % of sales in the prior year quarter . Gross Profit . Gross profit of $ 8.6 million for the three months ended October 30 , 2021 decreased by $ 2.2 million or 20.4 % from the prior year quarter due to a decline in sales during the period , higher retail lease expenses and lower gross margin on tea , partially offset by lower delivery and distribution costs compared to the prior year quarter . Gross profit as a percentage of sales decreased to 38.7 % for the quarter compared to 41.3 % in the prior year quarter . Selling , General and Administration Expenses ( " SG & A " ) . SG & A increased by $ 3.1 million or 43.9 % to $ 10.2 million in the quarter compared to the prior year quarter . Excluding the impact of software implementation and configuration costs and the impact of the wage and rent subsidies received under the Canadian government COVID - 19 Economic Response Plan , Adjusted SG & A increased by $ 1.8 million or 20.9 % to $ 10.4 million in the quarter primarily due to increases in recurring software related costs , staffing and online marketing expenses as we continue the transformation to a digital first organization . Adjusted SG & A as a percentage of sales in the quarter increased to 46.7 % from 32.7 % in the prior year quarter . Restructuring Plan Activities , Net . Restructuring Plan activities , net includes an expense of $ 195 thousand related to professional services in connection with the completion of the CCAA proceedings compared to a gain of $ 10.7 million in the prior year quarter .