DAVIDsTEA Takes Steps to Optimize Store Network
July 09 2020 - 5:20PM
DAVIDsTEA Inc. (Nasdaq:DTEA) (“DAVIDsTEA” or the “Company”), a
leading tea merchant in North America, announces that further
to obtaining an Initial Order pursuant to the Companies’ Creditors
Arrangement Act (Canada) (“CCAA”) from the Quebec Superior Court in
order to implement its restructuring plan, the Company is sending
notices to terminate leases for 82 of its stores in Canada and all
42 of its stores in the United States. The lease terminations will
take effect in 30 days.
“With the upcoming closure of 124 unprofitable
stores across North America, we are certainly making good progress
in creating a stronger business model for the future and ensuring
the long-term success and sustainability of DAVIDsTEA and our
beloved brand,” stated Herschel Segal, Founder, Chairman and
Interim CEO of DAVIDsTEA.
“Today, we are moving forward with the closure
of a significant number of money-losing stores. With all our stores
closed in the U.S., we will focus exclusively on our very
successful e-commerce sales which had a penetration rate of close
to 43% in this market prior to COVID-19,” said Frank Zitella,
CFO and COO of DAVIDsTEA. “With regards to our brick and mortar
network in Canada, negotiations with landlords for our remaining
100 stores have started and, at this time, the outcome of these
discussions remains uncertain. To the extent we cannot reach
agreements with the landlords on more favorable lease terms, we may
terminate the leases and permanently close additional stores.
However, we are fully committed to continuing to serve our loyal
tea-loving customers with passion and ensuring that their favorite
blends of tea are available online and in grocery stores and
pharmacies, both during and after this restructuring process,”
added Mr. Zitella. All 100 remaining DAVIDsTEA stores have
been closed since March 17, 2020 due to the COVID-19 pandemic,
and will remain so until further notice.
As previously announced, DAVIDsTEA’s
restructuring efforts are focused primarily on exiting unprofitable
stores and right-sizing its Canadian brick and mortar footprint, in
the context of an increasingly challenging retail environment,
further exacerbated by the COVID-19 pandemic. DAVIDsTEA’s objective
is to create a leaner and more efficient company and to accelerate
its transition to an online retailer and wholesaler of high-quality
tea and accessories, better positioned for long-term growth.
DAVIDsTEA also announces that the United States
Bankruptcy Court for the District of Delaware today entered an
order in favor of DAVIDsTEA and its wholly-owned U.S. subsidiary
under Chapter 15 of the United States Bankruptcy Code.
The Court order provisionally recognizes the proceedings under the
CCAA and enforces the initial order issued yesterday by the Quebec
Superior Court, in effect providing protection to DAVIDsTEA and its
U.S. subsidiary from creditor action against its U.S. assets.
A copy of the Initial Order and related
documents are available at www.pwc.com/ca/davidstea. The Company
will continue to provide updates throughout the restructuring
process as events warrant.
Cautionary Forward-Looking
Statements
This press release includes statements that
express our opinions, expectations, beliefs, plans or assumptions
regarding future events or future results and there are, or may be
deemed to be, “forward-looking statements” within the meaning of
the Private Securities Litigation Reform Act of 1995 (the “Act”).
The following cautionary statements are being made pursuant to the
provisions of the Act and with the intention of obtaining the
benefits of the “safe harbor” provisions of the Act. These
forward-looking statements can generally be identified by the use
of forward-looking terminology, including the terms “believes”,
“expects”, “may”, “will”, “should”, “approximately”, “intends”,
“plans”, “estimates” or “anticipates” or, in each case, their
negatives or other variations or comparable terminology. These
forward-looking statements include all matters that are not
historical facts and include statements regarding our intentions,
beliefs or current expectations concerning, among other things, our
restructuring process, the COVID-19 pandemic, our strategy of
transitioning to e-commerce and wholesale sales, future sales
through our e-commerce and wholesale channels, the closing of
certain of our retail stores, future lease liabilities, our results
of operations, financial condition, liquidity and prospects, the
impact of the COVID-19 pandemic on the global macroeconomic
environment, and our ability to avoid the delisting of the
Company’s common stock by Nasdaq due to the restructuring or our
inability to maintain compliance with Nasdaq listing
requirements.
While we believe these opinions and expectations
are based on reasonable assumptions, such forward-looking
statements are inherently subject to risks, uncertainties and
assumptions about us, including the risk factors set forth in our
annual report on Form 10-K for the fiscal year ended
February 1, 2020, filed with the United States Securities and
Exchange Commission and with the Autorité des marchés
financiers.
About DAVIDsTEA
DAVIDsTEA is a leading online retailer and
growing mass wholesaler of specialty tea, offering a differentiated
selection of proprietary loose-leaf teas, pre-packaged teas, tea
sachets and tea-related gifts and accessories through over 100
company-owned and operated retail stores in Canada, as well as its
e-commerce platform at www.davidstea.com. A selection of DAVIDsTEA
products is also available in over 2,500 grocery stores and
pharmacies across Canada. The Company is headquartered in Montréal,
Canada.
Investor Contact |
Media Contact |
MaisonBrison Communications |
PELICAN PR |
Pierre Boucher |
Lyla Radmanovich |
514-731-0000 |
514-845-8763 |
investors@davidstea.com |
media@rppelican.ca |
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