DavidsTea Inc. DTEA-X reported a $1.6-million loss in its second quarter as sales declined in its online store, which makes up roughly half of the Montreal-based retailer’s business.
“Macroeconomic headwinds,” including U.S. tariffs on Canadian imports, higher unemployment and inflationary pressure, dragged down the e-commerce business, executives said during a conference call to announce the results on Tuesday morning. The specialty tea retailer is banking on expanding its brick-and-mortar store network in order to drive growth.
“While our online sales have not grown to target, we are encouraged by the halo effect of our retail locations, which continue to drive brand awareness and customer engagement,” chief executive officer Sarah Segal said during the call.
Son of DavidsTea founder calls for leadership overhaul, accusing company of poor governance
DavidsTea has been struggling for a number of years since emerging from restructuring during the COVID-19 pandemic, when it closed more than 200 stores in the United States and Canada. As of the end of its second quarter, the company had 20 locations in Canada. DavidsTea plans to open three more stores in the coming year. Ms. Segal said the team is also in negotiations with mall landlords for potential additional locations.
The retailer reported sales of $11.1-million in the second quarter ended Aug. 2, roughly flat compared with the same period the prior year. The net loss of $1.6-million in the quarter compared with a loss of $1.5-million last year.
The period is generally a smaller quarter for DavidsTea, which does most of its business during the holiday season: More than 60 per cent of the company’s annual sales volume occurs in the third and fourth quarters. The company is increasing investments in marketing in preparation for that busy period, Ms. Segal said on Tuesday.