DAVIDsTEA Inc., a leading tea merchant in North America, announced Wednesday its fourth quarter and full-year results for the period ended February 1, 2025, with year-over-year sales growth.
“Fiscal 2024 proved to be a positive turnaround year for DAVIDsTEA, marked by incremental sales growth, gross profit improvement and positive cash flow from operations,” said Sarah Segal, Chief Executive Officer and Chief Brand Officer, DAVIDsTEA. “These encouraging results reflect the disciplined execution of our omnichannel growth strategy by bringing our brand closer to consumers through the opening of two new retail stores and its spillover effect on wholesale and e-commerce sales. These results also confirm that our premium specialty teas remain a comforting purchase despite an unpredictable economic landscape.
“Demand for healthy tea and matcha products continues to expand globally. With a constant focus on being responsive to our customers, our results validate that moving fulfillment services in-house more than a year ago and transitioning to a more agile, cost-effective IT platform in recent months will positively affect the Company’s operations for years to come. We are pleased with the progress across our omnichannel business towards profitability, stabilizing the business and preparing for the next phase of growth.
“In the fourth quarter, brick-and-mortar revenues were stable year-over-year despite one less week of sales than the fourth quarter of 2023. For their part, wholesale and e-commerce revenues slightly declined mainly due to the shorter selling season and a strike at Canada Post, respectively. The highlight of the quarter was unquestionably our return to profitability with net income of $2.5 million. We are proud of reaching this latest milestone and are determined to drive profitable growth in 2025 and beyond.
“Looking ahead to the next three-year cycle, we intend to generate a sales compound annual growth rate between 10 and 12% on the strength of growing our number of Canadian retail stores, accelerating wholesale expansion in the U.S., and enhancing our online presence. We also plan to raise our gross profit margin to 48-50% on a sustained basis by taking advantage of our in-house fulfillment capabilities, focusing on innovation and differentiated product pipeline, and better absorbing our fixed costs on higher sales volume. Finally, we expect to leverage annual cost savings of $4 million from the end of the third quarter of 2024 through the shift to our newly deployed IT platform and tight control on discretionary spending. As a result, we believe that we can achieve an adjusted EBITDA margin in the low double digits by the end of fiscal 2027 from mid-single digits in 2024.”
DAVIDsTEA offers a specialty branded selection of high-quality proprietary loose-leaf teas, pre-packaged teas, tea sachets, tea-related accessories and gifts through its e-commerce platform at www.davidstea.com and the Amazon Marketplace, its wholesale customers which include over 4,000 grocery stores and pharmacies, over 1,500 convenience stores in Canada and over 900 grocery stores in the United States, as well as 20 company-owned stores across Canada. It offers primarily proprietary tea blends that are exclusive to the company, as well as traditional single-origin teas and herbs. The company is headquartered in Montréal.
“We are entering fiscal 2025 in a far better position than last year, notwithstanding an uncertain trade environment,” said Frank Zitella, President, Chief Financial and Operating Officer, DAVIDsTEA.
“Key building blocks are in place to bolster sales growth; our brick-and-mortar, wholesale and e-commerce businesses are supported by strong unit economics; and we have added financial flexibility with a cash position of $16.2 million at the end of the fiscal year.
“The threat of U.S. tariffs remains a concern particularly the related impact on the Canadian economy; however, due to many years of diversifying our supply chains, we have demonstrated resilience in mitigating the direct impact to our business. It should also be noted that DAVIDsTEA has limited exposure to sales south of the border, which accounted for 14.3% of total revenue in 2024.”
Fiscal 2024
➢ Sales reached $61.8 million, up 2% year-over-year
➢ Net loss narrows to $3.2 million, a $10.6 million improvement
➢ Adjusted EBITDA turned positive at $3.9 million, up $9.3 million
➢ Free cash flow of $7.3 million with year cash of $16.2
Q4 2024
➢ Sales of $23.2 million
➢ Net income of $2.5 million, up $6.4 million, despite lower revenue
➢ Adjusted EBITDA of $4.0 million, a $3.5 million improvement
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What kind of an idiot ignores the idea of opening a David’s tea in Scarborough Town Centre?
I say plop that person just outside the Eaton Centre and make him or her walk to the Scarborough town Centre, since they seem to think both stores were too close to each other.