DAVIDsTEA has opened a new flagship store at Square One in Mississauga as the Montreal-based tea retailer continues rebuilding its physical presence in major Canadian shopping centres.
The Square One opening brings DAVIDsTEA to 23 company-owned stores across Canada and marks its seventh location in Ontario. Two additional stores are planned for this fall at Southgate Centre in Edmonton and Metropolis at Metrotown in Burnaby, B.C., which would bring the retailer to its target of 25 locations by the end of its fiscal year.
DAVIDsTEA is also providing an early indication of how its recent store openings are performing. The company says the locations are tracking toward their investment payback targets while generating additional sales through its e-commerce and wholesale channels.
Stores Delivering Broader Sales Lift
DAVIDsTEA has increasingly positioned its physical stores as part of a broader omnichannel strategy, with new locations expected to build brand awareness and acquire customers in addition to generating sales within the stores themselves. Sarah Segal, Chief Executive Officer and Chief Brand Officer, said the company is now seeing evidence of that effect in markets where it has opened stores.
“As we’ve seen with our recent openings, each new store also creates a measurable spillover effect, lifting sales in our e-commerce and wholesale channels in the surrounding market,” Segal said.
Earlier this year, DAVIDsTEA identified this cross-channel effect as one of the reasons it was investing in physical retail again. When Retail Insider reported on the company’s return to Oshawa Centre in June, management described stores as “brand billboards” and demand drivers that could support the company’s online and wholesale businesses.
DAVIDsTEA has not disclosed how large the reported spillover has been around individual locations, but Segal’s comments mark a progression from the strategy outlined earlier in the year. At that time, the company was projecting that new stores would generate business across other channels; it is now saying that it is measuring such an effect following recent openings.
The potential reach extends well beyond DAVIDsTEA’s own store network. The company says its products are sold through more than 4,000 grocery stores and pharmacies and more than 1,500 convenience stores in Canada, in addition to its e-commerce business.
New Locations Tracking Toward Payback Targets
DAVIDsTEA also says its new stores are performing in line with the investment returns it projected as it began accelerating its physical expansion.
“Our new stores are on track to pay back their investment within 18 months, supported by a strong four-wall contribution margin and overall economics that let us keep funding growth while strengthening our balance sheet,” said Frank Zitella, President and Chief Financial and Operating Officer of DAVIDsTEA.
Retail Insider previously reported that DAVIDsTEA was targeting approximately $1.2 million to $1.4 million in annual sales from a typical new store, with an investment of approximately $400,000 to $475,000 per location. Management was targeting a four-wall contribution margin of approximately 25% and a payback period of 15 to 18 months.
The company’s latest comments move that discussion from projected economics toward early execution. While DAVIDsTEA has not released store-by-store results, management now says its recent openings are tracking toward the payback period established as part of the expansion strategy.
DAVIDsTEA Returns to Major Canadian Malls
The new flagship marks DAVIDsTEA’s return to Square One following the dramatic reduction of its physical footprint during its 2020 restructuring. The Mississauga property spans more than 2.2 million square feet and ranks among Canada’s largest shopping centres, with Oxford Properties reporting sales of approximately $1,396 per square foot in 2025, up 8.6% from a year earlier.
The new DAVIDsTEA location carries the company’s assortment of proprietary loose-leaf teas, pre-packaged teas, accessories and seasonal collections, along with its Tea Bar. It becomes the retailer’s seventh Ontario location, joining CF Toronto Eaton Centre and CF Sherway Gardens in Toronto, CF Lime Ridge in Hamilton, CF Rideau Centre in Ottawa, CF Masonville Place in London and Oshawa Centre.
Rather than entering four entirely new markets, DAVIDsTEA’s current expansion is in part a selective return to major shopping centres it exited during the contraction of its network. The company returned to Oshawa Centre in June, followed by Square One in August, and plans to return to Southgate Centre in Edmonton and Metropolis at Metrotown in Burnaby this fall.
The two western openings would bring DAVIDsTEA to 25 company-owned stores across Canada and complete its four-store expansion program for the current fiscal year.
The strategy differs considerably from DAVIDsTEA’s earlier period of rapid expansion. The retailer once operated more than 200 stores across Canada and the United States before restructuring in 2020 and closing most of its physical network, emerging from the process with 18 stores in Canada.
Its current expansion is considerably more selective, focusing on locations in major shopping centres that management believes can generate strong store-level returns while supporting the company’s larger digital and wholesale businesses.
Expansion Continues Amid Mixed Sales
The store rollout is taking place against a mixed sales backdrop. DAVIDsTEA reported first-quarter fiscal 2026 sales of $13.0 million, down 5.2% from $13.7 million a year earlier, while adjusted EBITDA was $1.6 million.
Brick-and-mortar sales declined 1.5% to $5.2 million during the quarter, compared with a 6.0% decline in e-commerce sales to $6.0 million and a 12.1% decline in wholesale revenue to $1.8 million. Comparable-store sales were down 3.1%.
Canada remains by far the company’s largest market, accounting for $11.7 million, or nearly 90% of quarterly revenue. That makes the company’s claim that new stores are lifting e-commerce and wholesale sales in surrounding markets particularly relevant as DAVIDsTEA evaluates additional locations.
With Square One now open, DAVIDsTEA is halfway through its four-store expansion program for the current fiscal year. Management has previously indicated that the physical network could expand further over time if new locations continue meeting the company’s investment and profitability criteria.
For now, the next phase of the rollout moves west. Southgate Centre in Edmonton and Metropolis at Metrotown in Burnaby are expected to open this fall, bringing DAVIDsTEA to its target of 25 stores across Canada.
