DAVIDsTEA Inc. (Nasdaq:DTEA) (DAVIDsTEA or “the Company”), reported
consolidated net loss of $ 9.1 million ($0.35 per diluted share)
for the third quarter 2018 compared to a net loss of $6.5 million
($0.25 per diluted share) for the third quarter 2017. Net loss for
the nine months ended November 3, 2018 was $20.3 million ($0.78 per
diluted share) compared to a net loss of $12.4 million ($0.48 per
diluted share) for the nine months ended October 28, 2017.
The Company’s adjusted net loss1 was $7.4
million ($0.28 per diluted share) for the third quarter 2018
compared to a loss of $4.5 million ($0.17 per diluted share) for
the third quarter 2017 and a loss of $14.1 million ($0.55 per
diluted share) for the nine months ended November 3, 2018
compared to a loss of $9.9 million ($0.38 per diluted share) for
the nine months ended October 28, 2017.
“Despite a decline in same store sales, we are
seeing favourable trends in several areas of the business,” stated
Herschel Segal, Executive Chairman and Interim Chief Executive
Officer. “We continue to have great confidence in our team, in our
brand, our growth opportunities and our capacity to improve our
financial results.”
Mr Segal added, “Our new executive leadership is
squarely focused on restoring profitability. We expect to achieve
immediate efficiency gains in our purchasing and operations,
optimize our e-commerce platform and alternative sales channels,
and strengthen our leadership in the tea industry.”
Operating Results for the Third
Quarter of 2018
Sales increased 1.5% to $43.7 million from $43.0
million in the third quarter of fiscal 2017. E-commerce and
wholesale channels increased $2.0 million and 35.1% driven
primarily from greater online adoption in both Canada and the US,
as well as our entry into grocery chain distribution earlier this
year. Non-comparable sales of $1.6 million from stores opened
for less than thirteen months, helped to partially offset decreases
of $2.9 million, or 7.9% in comparable sales.
Gross profit remained consistent at $18.4
million and decreased slightly as a percentage of sales to 42.1%
from 42.7%, resulting from a shift in product sales mix and the
deleveraging of fixed costs due to negative comparable sales.
Selling, general and administration expenses
(“SG&A”) increased by $2.1 million to $29.1 million compared to
the prior year quarter. As a percentage of sales, SG&A
increased to 66.7% from 62.9%. Adjusted SG&A1, which excludes
any impact from executive separation costs, impairment of property
and equipment, onerous contracts and costs related to strategic
review and proxy contest, increased to $27.0 million from $24.4
million, an increase of $2.6 million primarily due to a $1.7
million increase in salaries, partly attributable to minimum wage
increases and greater use of consultants, and $0.8 million increase
in foreign exchange translation losses. As a percentage of sales,
Adjusted SG&A1 increased to 61.8% from 56.7%, due to the
deleveraging of fixed costs as a result of negative comparable
sales this quarter.
Loss from operating activities was $10.7 million
as compared to $8.7 million in the third quarter of fiscal 2017.
Adjusted loss from operating activities1, which excludes
any impact from executive separation costs, impairment of property
and equipment, onerous contracts and costs related to strategic
review and proxy contest was $8.6 million compared to $6.0 million
in the prior year quarter.
Adjusted EBITDA1, which excludes non-cash or
other items in the current and prior periods, was negative $6.2
million compared to negative $2.9 million in the third quarter of
fiscal 2017.
At the end of the quarter, the Company had cash
amounting to $18.7 million.
Net loss was $9.1 million compared to a net loss
of $6.5 million in the third quarter of fiscal 2017. Adjusted net
loss1, which excludes any impact from executive separation costs,
impairment of property and equipment, onerous contracts and costs
related to strategic review and proxy contest, was $7.4 million
compared to $4.5 million.
Fully diluted loss per common share was $0.35
compared to $0.25 in the third quarter of fiscal 2017. Adjusted
fully diluted loss per common share1, which is adjusted net
loss on a fully diluted weighted average shares outstanding basis,
was $0.28 per share compared to $0.17 per share.
Operating Results
Year-to-date:
Sales decreased by 5.7% to $129.6 million from
$137.4 million in the comparable period in fiscal 2017.
E-commerce and wholesale channel sales increased $3.0 million and
19.4% from the nine months in fiscal 2017 driven primarily by
greater online adoption in both Canada and the US, as well as our
entry into grocery chain distribution. Non-comparable sales
of $2.5 million, from stores opened for less than thirteen months,
helped to partially offset decreases of $13.3 million and 11.7% in
comparable sales.
Gross profit decreased by 7.0% to $58.4 million
from $62.8 million in the comparable period in fiscal 2017, while
gross profit as a percentage of sales decreased slightly to 45.1%
from 45.7% in the comparable period in fiscal 2017.
SG&A increased to $84.9 million from $79.0
million in the comparable period in fiscal 2017. As a percentage of
sales, SG&A increased to 65.5% from 57.5%. Adjusted SG&A1,
which excludes any impact from executive separation costs,
impairment of property and equipment, onerous contracts and costs
related to strategic review and proxy contest, increased to $76.7
million from $75.9 million, due to $1.9 million in salary increase,
partly attributable to minimum wage increases and greater us of
consultants, $0.5 million increase in foreign exchange translation
and a $1.7 million decrease in stock-based compensation expenses.
As a percentage of sales, Adjusted SG&A1 increased to 59.2%
from 55.2%, due to the deleveraging of fixed costs as a result of
negative comparable sales this quarter.
Loss from operating activities was $26.4 million
as compared to a loss of $16.2 million in the comparable period in
fiscal 2017. Adjusted net loss from operating activities1,
which excludes any impact from executive separation costs,
impairment of property and equipment, onerous contracts and costs
related to strategic review and proxy contest, increased to a loss
of $18.3 million from a loss $13.1 million.
Adjusted EBITDA1, which excludes non-cash or
other items in the current and prior year periods, was
negative $12.2 million compared to negative $3.6 million in the
comparable period in fiscal 2017.
Net loss was $20.3 million compared to a net
loss of $12.4 million in the comparable period in fiscal 2017.
Adjusted net loss1, which excludes any impact from executive
separation costs, impairment of property and equipment, onerous
contracts and costs related to strategic review and proxy contest,
was $14.1 million compared to an adjusted net loss of $9.9 million
in fiscal 2017.
Fully diluted loss per common share was $0.78
compared to a fully diluted loss of $0.48 per share in the
comparable period in fiscal 2017. Adjusted fully diluted loss per
common share1, which is adjusted net loss on a fully diluted
weighted average shares outstanding basis, was $0.55 per share
compared to $0.38 per share.
Note:This
release should be read in conjunction with the Company’s
Management’s Discussion and Analysis and its unaudited condensed
interim consolidated financial statements as at and for the three
and nine months ended November 3, 2018, available on the Company’s
corporate website, which will be filed by the Company with the
Canadian securities regulatory authorities and with the U.S.
Securities and Exchange Commission.
Condensed Consolidated Financial
Data (UNAUDITED)(Canadian dollars, in thousands,
except per share information)
|
For the three months
ended |
|
For the nine months
ended |
|
November 3, |
|
October 28, |
|
November 3, |
|
October 28, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
$ |
43,656 |
|
|
$ |
42,997 |
|
|
$ |
129,609 |
|
|
$ |
137,353 |
|
Gross profit |
|
18,381 |
|
|
|
18,372 |
|
|
|
58,416 |
|
|
|
62,759 |
|
SG&A expenses |
|
29,119 |
|
|
|
27,035 |
|
|
|
84,865 |
|
|
|
79,004 |
|
Operating loss |
|
(10,738 |
) |
|
|
(8,663 |
) |
|
|
(26,449 |
) |
|
|
(16,245 |
) |
Net loss |
$ |
(9,061 |
) |
|
$ |
(6,485 |
) |
|
$ |
(20,261 |
) |
|
$ |
(12,410 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted SG&A1 |
$ |
26,956 |
|
|
$ |
24,403 |
|
|
$ |
76,716 |
|
|
$ |
75,872 |
|
Adjusted operating
loss1 |
|
(8,575 |
) |
|
|
(6,031 |
) |
|
|
(18,300 |
) |
|
|
(13,113 |
) |
Adjusted EBITDA1 |
|
(6,248 |
) |
|
|
(2,887 |
) |
|
|
(12,212 |
) |
|
|
(3,578 |
) |
Adjusted net loss1 |
$ |
(7,383 |
) |
|
$ |
(4,502 |
) |
|
$ |
(14,114 |
) |
|
$ |
(9,851 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fully diluted loss per
common share |
$ |
(0.35 |
) |
|
$ |
(0.25 |
) |
|
$ |
(0.78 |
) |
|
$ |
(0.48 |
) |
Adjusted fully diluted
loss per common share1 |
$ |
(0.28 |
) |
|
$ |
(0.17 |
) |
|
$ |
(0.55 |
) |
|
$ |
(0.38 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit as a
percentage of sales |
|
42.1 |
% |
|
|
42.7 |
% |
|
|
45.1 |
% |
|
|
45.7 |
% |
SG&A as a
percentage of sales |
|
66.7 |
% |
|
|
62.9 |
% |
|
|
65.5 |
% |
|
|
57.5 |
% |
Number of stores at end
of period |
|
238 |
|
|
|
236 |
|
|
|
238 |
|
|
|
236 |
|
Comparable sales
decline for the period |
|
(4.7 |
%) |
|
|
(6.8 |
%) |
|
|
(8.8 |
%) |
|
|
(4.5 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash used in operating
activities |
$ |
(18,037 |
) |
|
$ |
(16,134 |
) |
|
$ |
(37,581 |
) |
|
$ |
(19,976 |
) |
Cash used in investing
activities |
|
(2,880 |
) |
|
|
(3,498 |
) |
|
|
(7,271 |
) |
|
|
(9,295 |
) |
Cash, end of
period |
$ |
18,714 |
|
|
$ |
36,865 |
|
|
$ |
18,714 |
|
|
$ |
36,865 |
|
_________________________1 Please refer to
“Definition and reconciliation of non-IFRS financial measures” in
this press release.
Conference Call
Information:A conference call to discuss the
third quarter fiscal 2018 financial results is scheduled for today,
December 13, 2018, at 5:00 pm Eastern Time. The conference call
will be webcast and may be accessed via the Company’s Investor
Relations section of its website at www.davidstea.com. An online
archive of the webcast will be available within two hours of the
conclusion of the call and will remain available for one year.
Use of Non-IFRS Financial
Information:This press release includes “non-IFRS
measures” defined as including: 1) Adjusted EBITDA, 2) Adjusted
results from operating activities, 3) Adjusted selling, general and
administration expenses, 4) Adjusted net loss, and 5) Adjusted
fully diluted income (loss) per share. These non-IFRS measures are
not defined by and in accordance with IFRS and may differ from
similar measures reported by other companies. We believe that these
non-IFRS measures provide investors with useful information with
respect to our historical operations. We present these non-IFRS
measures as supplemental performance measures because we believe
they facilitate a comparative assessment of our operating
performance relative to our performance based on our results under
IFRS, while isolating the effects of some items that vary from
period-to-period. Specifically, these non-IFRS measures allow for
an assessment of our operating performance, including new store
costs, without the effect of non-cash charges of the period or
other one-time charges, such as depreciation, amortization, finance
costs, deferred rent, non-cash compensation expense, costs related
to onerous contracts or contracts where we expect the costs of the
obligations to exceed the economic benefit, gain (loss) on
derivative financial instruments, loss on disposal of property and
equipment, impairment of property and equipment, and certain
non-recurring expenses. These measures also function as benchmarks
to evaluate our operating performance. These measures are not
measurements of our financial performance under IFRS and should not
be considered in isolation or as alternatives to net income, net
cash provided by operating, investing or financing activities or
any other financial statement data presented as indicators of
financial performance or liquidity, each as presented in accordance
with IFRS. We understand that although these measures are
frequently used by securities analysts, lenders and others in their
evaluation of companies, they have limitations as analytical tools,
and you should not consider them in isolation, or as a substitute
for analysis of our results as reported under IFRS. Some of these
limitations are that;
- these non-IFRS measures do not reflect changes in, or cash
requirements for, our working capital needs, and
- although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized will often have to be
replaced in the future, and Adjusted EBITDA does not reflect any
cash requirements for such replacements.
Because of these limitations, these non-IFRS
measures should not be considered as discretionary cash available
to us to reinvest in the growth of our business or as a measure of
cash that will be available to us to meet our obligations.
Cautionary Forward-Looking
StatementsCertain material presented in this
press release includes forward-looking statements intended to
qualify for the safe harbor from liability established by the
Private Securities Litigation Reform Act of 1995. These
forward-looking statements generally can be identified by the use
of words such as “anticipate,” “expect,” “plan,” “could,” “may,”
“will,” “believe,” “estimate,” “forecast,” “goal,” “project,” and
other words of similar meaning. These forward-looking statements
address various matters including management’s beliefs about the
Company’s prospects, management’s turn-around strategy, plans for
investment in marketing initiatives, changes to product offerings
and assortment, and strategic plans. The Company cannot assure
investors that future developments affecting the Company will be
those that it has anticipated. Actual results may differ materially
from these expectations due to risks and uncertainties including:
the Company’s ability to implement its strategy, the Company’s
ability to maintain and enhance its brand image, particularly in
new markets; the Company’s ability to compete in the specialty tea
and beverage category; the Company’s ability to expand and improve
its operations; changes in the Company’s executive management team;
levels of foot traffic in locations in which the Company’s stores
are located; changes in consumer trends and preferences;
fluctuations in foreign currency exchange rates; general economic
conditions and consumer confidence; minimum wage laws; the
importance of the Company’s first fiscal quarter to results of
operations for the entire fiscal year; and other risks set forth in
the Company’s Quarterly Report on Form 10-Q and Annual Report on
Form 10-K . If one or more of these risks or uncertainties
materialize, or if any of the Company’s assumptions prove
incorrect, the Company’s actual results may vary in material
respects from those projected in these forward-looking statements.
Any forward-looking statement made by the Company in this release
speaks only as of the date on which the Company makes it. The
Company undertakes no obligation to publicly update any
forward-looking statement, whether as a result of new information,
future developments or otherwise, except as may be required by any
applicable securities laws.
Definition and Reconciliation of
Non-IFRS Financial MeasuresThis press release
includes references to certain non-IFRS financial measures as
described below. These non-IFRS measures to not have any
standardized meanings prescribed by International Financial
Reporting Standards (IFRS) and are therefore unlikely to be
comparable to similar measures prescribed by other companies.
Accordingly, they should not be considered in isoloation. The
terms and definitions fo the non-IFRS measures used in this press
release and a reconciliation of each non-IFRS measure to the most
directly comparable IFRS measure are provided below.
Reconciliation of Reported Results to Non-IFRS
results - Adjusted EBITDA |
|
Unaudited and in thousands of Canadian
dollars |
|
|
For the three months
ended |
|
For the nine months
ended |
|
November 3, |
|
October 28, |
|
November 3, |
|
October 28, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss |
$ |
(9,061 |
) |
|
$ |
(6,485 |
) |
|
$ |
(20,261 |
) |
|
$ |
(12,410 |
) |
Finance costs |
|
80 |
|
|
|
327 |
|
|
|
237 |
|
|
|
615 |
|
Finance income |
|
(122 |
) |
|
|
(149 |
) |
|
|
(574 |
) |
|
|
(420 |
) |
Depreciation and
amortization |
|
2,162 |
|
|
|
2,632 |
|
|
|
6,098 |
|
|
|
7,564 |
|
Loss on disposal of
property and equipment |
|
— |
|
|
|
18 |
|
|
|
14 |
|
|
|
48 |
|
Recovery of income
tax |
|
(1,635 |
) |
|
|
(2,356 |
) |
|
|
(5,851 |
) |
|
|
(4,030 |
) |
EBITDA |
$ |
(8,576 |
) |
|
$ |
(6,013 |
) |
|
$ |
(20,337 |
) |
|
$ |
(8,633 |
) |
Additional adjustments
: |
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense (reversal) (a) |
|
91 |
|
|
|
362 |
|
|
|
(7 |
) |
|
|
1,738 |
|
Executive
separation costs related to salary (b) |
|
123 |
|
|
|
1,070 |
|
|
|
840 |
|
|
|
1,882 |
|
Impairment of property and equipment (c) |
|
725 |
|
|
|
2,658 |
|
|
|
3,285 |
|
|
|
4,971 |
|
Impact of
onerous contracts (d) |
|
1,288 |
|
|
|
(1,138 |
) |
|
|
486 |
|
|
|
(3,913 |
) |
Deferred
rent (e) |
|
74 |
|
|
|
174 |
|
|
|
(17 |
) |
|
|
377 |
|
Strategic
review and proxy contest costs (f) |
|
27 |
|
|
|
— |
|
|
|
3,538 |
|
|
|
— |
|
Adjusted EBITDA |
$ |
(6,248 |
) |
|
$ |
(2,887 |
) |
|
$ |
(12,212 |
) |
|
$ |
(3,578 |
) |
_________________________
(a) |
|
Represents
non-cash stock-based compensation expense (reversal). |
(b) |
|
Executive
separation costs related to salary represent salary owed to former
executives as part of their separation of employment from the
Company. |
(c) |
|
Represents
costs related to impairment of property and equipment for
stores. |
(d) |
|
Represents
provisions, non-cash reversals and utilization related to certain
stores where the unavoidable costs of meeting the obligations under
the lease agreements are expected to exceed the economic benefits
expected to be received from the contract. |
(e) |
|
Represents
the extent to which our annual rent expense has been above or below
its cash rent payments. |
(f) |
|
Represents
costs related to a corporate strategic review process as well as
costs related to the proxy contest which culminated at the
Company’s annual meeting held on June 14, 2018. Costs for the three
and nine months ended November 3, 2018 include nil and $389,
respectively, related to the strategic review process, nil and $868
for incremental directors and officers run-off insurance costs
incurred prior to the annual meeting on June 14, 2018, and $27 and
$2,281, respectively, for costs incurred in connection with the
proxy contest, including nil and $957, respectively, paid to Rainy
Day Investments Ltd., a controlling shareholder, for third-party
costs incurred by it, as approved by the independent members of the
Board of Directors of the Company. |
Reconciliation of Reported Results to Non-IFRS
Results - Adjusted Results from Operating Activities |
|
Unaudited and in thousands of Canadian
dollars |
|
|
For the three months
ended |
|
For the nine months
ended |
|
November 3, |
|
October 28, |
|
November 3, |
|
October 28, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
Results
from operating activities |
$ |
(10,738 |
) |
|
$ |
(8,663 |
) |
|
$ |
(26,449 |
) |
|
$ |
(16,245 |
) |
Executive
separation costs (a) |
|
123 |
|
|
|
1,112 |
|
|
|
840 |
|
|
|
2,074 |
|
Impairment of property and equipment (b) |
|
725 |
|
|
|
2,658 |
|
|
|
3,285 |
|
|
|
4,971 |
|
Impact of
onerous contracts (c) |
|
1,288 |
|
|
|
(1,138 |
) |
|
|
486 |
|
|
|
(3,913 |
) |
Strategic
review and proxy contest costs (d) |
|
27 |
|
|
|
— |
|
|
|
3,538 |
|
|
|
— |
|
Adjusted results from operating
activities |
$ |
(8,575 |
) |
|
$ |
(6,031 |
) |
|
$ |
(18,300 |
) |
|
$ |
(13,113 |
) |
_________________________
(a) |
|
Executive
separation costs represent mainly salary owed to the former
executives as part of their separation of employment from the
Company. The three and nine-month periods ended October 28, 2017
include $42 and $192, respectively, of non-cash stock-based
compensation expenses relating to the vesting of equity awards
pursuant to the separation agreements. |
(b) |
|
Represents
costs related to impairment of property and equipment for
stores. |
(c) |
|
Represents
provisions, non-cash reversals and utilization related to certain
stores where the unavoidable costs of meeting the obligations under
the lease agreements are expected to exceed the economic benefits
expected to be received from the contract. |
(d) |
|
Represents
costs related to a corporate strategic review process as well as
costs related to the proxy contest which culminated at the
Company’s annual meeting held on June 14, 2018. Costs for the three
and nine months ended November 3, 2018 include nil and $389,
respectively, related to the strategic review process, nil and $868
for incremental directors and officers run-off insurance costs
incurred prior to the annual meeting on June 14, 2018, and $27 and
$2,281, respectively, for costs incurred in connection with the
proxy contest, including nil and $957, respectively, paid to Rainy
Day Investments Ltd., a controlling shareholder, for third-party
costs incurred by it, as approved by the independent members of the
Board of Directors of the Company. |
Reconciliation of Reported Results to Non-IFRS
Results - Adjusted Selling, General and Administration
Expenses |
|
Unaudited and in thousands of Canadian
dollars |
|
|
For the three months
ended |
|
For the nine months
ended |
|
November 3, |
|
October 28, |
|
November 3, |
|
October 28, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
general and administration expenses |
$ |
29,119 |
|
|
$ |
27,035 |
|
|
$ |
84,865 |
|
|
$ |
79,004 |
|
Executive
separation costs (a) |
|
(123 |
) |
|
|
(1,112 |
) |
|
|
(840 |
) |
|
|
(2,074 |
) |
Impairment of property and equipment (b) |
|
(725 |
) |
|
|
(2,658 |
) |
|
|
(3,285 |
) |
|
|
(4,971 |
) |
Impact of
onerous contracts (c) |
|
(1,288 |
) |
|
|
1,138 |
|
|
|
(486 |
) |
|
|
3,913 |
|
Strategic
review and proxy contest costs (d) |
|
(27 |
) |
|
|
— |
|
|
|
(3,538 |
) |
|
|
— |
|
Adjusted selling, general and administration
expenses |
$ |
26,956 |
|
|
$ |
24,403 |
|
|
$ |
76,716 |
|
|
$ |
75,872 |
|
_________________________
(a) |
|
Executive
separation costs represent mainly salary owed to the former
executives as part of their separation of employment from the
Company. The three and nine-month periods ended October 28, 2017
include $42 and $192, respectively, of non-cash stock-based
compensation expenses relating to the vesting of equity awards
pursuant to the separation agreements. |
(b) |
|
Represents
costs related to impairment of property and equipment for
stores. |
(c) |
|
Represents
provisions, non-cash reversals and utilization related to certain
stores where the unavoidable costs of meeting the obligations under
the lease agreements are expected to exceed the economic benefits
expected to be received from the contract. |
(d) |
|
Represents
costs related to a corporate strategic review process as well as
costs related to the proxy contest which culminated at the
Company’s annual meeting held on June 14, 2018. Costs for the three
and nine months ended November 3, 2018 include nil and $389,
respectively, related to the strategic review process, nil and $868
for incremental directors and officers run-off insurance costs
incurred prior to the annual meeting on June 14, 2018, and $27 and
$2,281, respectively, for costs incurred in connection with the
proxy contest, including nil and $957, respectively, paid to Rainy
Day Investments Ltd., a controlling shareholder, for third-party
costs incurred by it, as approved by the independent members of the
Board of Directors of the Company. |
Reconciliation of Reported Results to Non-IFRS
Results - Adjusted Net Loss |
|
Unaudited and in thousands of Canadian
dollars |
|
|
For the three months
ended |
|
For the nine months
ended |
|
November 3, |
|
October 28, |
|
November 3, |
|
October 28, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss |
$ |
(9,061 |
) |
|
$ |
(6,485 |
) |
|
$ |
(20,261 |
) |
|
$ |
(12,410 |
) |
Executive
separation costs (a) |
|
123 |
|
|
|
1,112 |
|
|
|
840 |
|
|
|
2,074 |
|
Impairment of property and equipment (b) |
|
725 |
|
|
|
2,658 |
|
|
|
3,285 |
|
|
|
4,971 |
|
Impact of
onerous contracts (c) |
|
1,348 |
|
|
|
(831 |
) |
|
|
663 |
|
|
|
(3,355 |
) |
Strategic
review and proxy contest costs (d) |
|
27 |
|
|
|
— |
|
|
|
3,538 |
|
|
|
— |
|
Income
tax expense adjustment (e) |
|
(545 |
) |
|
|
(956 |
) |
|
|
(2,179 |
) |
|
|
(1,131 |
) |
Adjusted net loss |
$ |
(7,383 |
) |
|
$ |
(4,502 |
) |
|
$ |
(14,114 |
) |
|
$ |
(9,851 |
) |
_________________________
(a) |
|
Executive
separation costs represent mainly salary owed to the former
executives as part of their separation of employment from the
Company. The three and nine-month periods ended October 28, 2017
include $42 and $192, respectively, of snon-cash tock-based
compensation expenses relating to the vesting of equity awards
pursuant to the separation agreements. |
(b) |
|
Represents
costs related to impairment of property and equipment for
stores. |
(c) |
|
Represents
provisions, non-cash reversals, utilization and the accretion
expense related to certain stores where the unavoidable costs of
meeting the obligations under the lease agreements are expected to
exceed the economic benefits expected to be received from the
contract. The accretion expense on provisions for onerous contracts
is included in Finance costs on the Consolidated Statement of
Comprehensive Income (Loss) for the three months and nine months
ended November 3, 2018. |
(d) |
|
Represents
costs related to a corporate strategic review process as well as
costs related to the proxy contest which culminated at the
Company’s annual meeting held on June 14, 2018. Costs for the three
and nine months ended November 3, 2018 include nil and $389,
respectively, related to the strategic review process, nil and $868
for incremental directors and officers run-off insurance costs
incurred prior to the annual meeting on June 14, 2018, and $27 and
$2,281, respectively, for costs incurred in connection with the
proxy contest, including nil and $957, respectively, paid to Rainy
Day Investments Ltd., a controlling shareholder, for third-party
costs incurred by it, as approved by the independent members of the
Board of Directors of the Company. |
(e) |
|
Removes the
income tax impact of items referenced in notes (a), (b), (c) and
(d). |
Reconciliation of Fully Diluted Net Loss Per
Share, As Reported to Adjusted Fully Diluted Net Loss Per
Share |
|
Unaudited and in thousands of Canadian
dollars, except per share information |
|
|
|
For the three months
ended |
|
|
For the nine months
ended |
|
|
November 3, |
|
|
October 28, |
|
|
November 3, |
|
|
October 28, |
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of shares outstanding, fully
diluted |
|
25,992,339 |
|
|
|
25,890,090 |
|
|
|
25,862,086 |
|
|
|
25,659,164 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss |
$ |
(9,061 |
) |
|
$ |
(6,485 |
) |
|
$ |
(20,261 |
) |
|
$ |
(12,410 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net loss |
$ |
(7,383 |
) |
|
$ |
(4,502 |
) |
|
$ |
(14,114 |
) |
|
$ |
(9,851 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss per share, fully diluted |
$ |
(0.35 |
) |
|
$ |
(0.25 |
) |
|
$ |
(0.78 |
) |
|
$ |
(0.48 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net loss per share, fully
diluted |
$ |
(0.28 |
) |
|
$ |
(0.17 |
) |
|
$ |
(0.55 |
) |
|
$ |
(0.38 |
) |
About
DAVIDsTEA:DAVIDsTEA is a retailer of specialty
tea, offering a differentiated selection of proprietary loose-leaf
teas, pre-packaged teas, tea sachets and tea-related gifts,
accessories and food and beverages, primarily through 238
company-operated DAVIDsTEA stores throughout Canada and the United
States as of November 3, 2018, and its website, davidstea.com. The
Company is headquartered in Montréal, Canada.
Investor
ContactMaisonBrison CommunicationsPierre Boucher
514-731-0000investors@davidstea.com
Media
ContactPELICAN Public RelationsLyla
Radmanovich514-845-8763media@rppelican.ca
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