Earnings Review and Free Research Report: DAVIDsTEA’s Quarterly Sales Jumped 11.2%

LONDON, UK / ACCESSWIRE / September 29, 2017 / Pro-Trader Daily has just published a free post-earnings coverage on DAVIDsTEA Inc. (NASDAQ: DTEA), which can be viewed by registering at http://protraderdaily.com/optin/?symbol=DTEA, following the Company’s reporting of its second quarter fiscal 2017 financial results on September 07, 2017. The beverage Company’s loss widened on a y-o-y basis. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member’s account at:

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Earnings Reviewed

For the three months ended July 29, 2017, DAVIDsTEA’s sales jumped 11.2% to C$45.7 million from C$41.1 million in Q2 2016. The Company’s comparable sales decreased by 0.9% versus a 5.1% comp increase in Q2 2016 as it continues to face a more challenging overall consumer retail backdrop.

For Q2 21017, DAVIDsTEA’s gross profit increased by 1.5% to C$20.2 million from C$19.9 million, while gross profit as a percent of sales decreased to 44.2% from 48.5%. The decrease in gross profit as a percent of sales was primarily due to the planned clearance of seasonal products and deleveraging of fixed costs due to the negative 0.9% comparative sales in the reported quarter.

During Q2 2017, DAVIDsTEA’s selling, general, and administration expenses (SG&A) increased to C$27.8 million from C$22.8 million in Q2 2016. As a percent of sales, the Company’s SG&A increased to 60.9% from 55.5% in the reported quarter. DAVIDsTEA’s adjusted SG&A increased to C$25.9 million from C$22.8 million in the year-ago same period, primarily due to the hiring of additional staff to support the Company’s growth, including new stores, and higher store operating expenses considering 28 additional stores. As a percent of sales, DAVIDsTEA’s adjusted SG&A increased to 56.6% from 55.5% in Q2 2016.

DAVIDsTEA’s recorded loss from operating activities of C$7.6 million in Q2 2017 compared to C$2.9 million in Q2 2016. The Company’s adjusted results from operating activities dropped to C$5.7 million from C$2.9 million in the year-earlier corresponding quarter.

DAVIDsTEA’s adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) was C$2.2 million for Q2 2017, compared to C$0.2 million for Q2 2016. The Company recorded an impairment charge of C$2.3 million in the reported quarter due to underperforming US stores.

For Q2 2017, DAVIDsTEA recorded net loss of C$5.6 million compared to a net loss of C$2.3 million. The Company’s adjusted net loss was C$4.2 million compared to C$2.3 million in the prior year’s same quarter. DAVIDsTEA’s fully diluted loss per common share was C$0.22 in Q2 2017 compared to C$0.09 in Q2 2016. The Company’s adjusted fully diluted loss per common share totaled C$0.16 per share compared to C$0.09 in the year-earlier same quarter.

Store Update

DAVIDsTEA ended Q2 2017 with 236 stores, an increase of 28 net new stores, or 13%, versus 208 stores last year. In Q2, the Company opened 4 new stores in Canada, 1 new store in the US, and closed 1 store in Canada for a y-o-y increase in store operating weeks of 16%.

Cash Matters

As of the end of Q2 2017, DAVIDsTEA’s ending inventory was $28.6 million compared to $25.1 million for the year-ago same period. On a per-store basis, the Company’s inventory increased by 0.5% on a y-o-y basis. DAVIDsTEA noted that its planned seasonal promotional activity enabled the Company to return to a more normal level of inventories, including carryover, compared to year-end. In terms of liquidity, DAVIDsTEA ended the reported quarter with $56.4 million in cash, or a net cash position of $2.19 on a per share basis, with no debt and availability of $20 million under its revolving credit facility.

Outlook

For FY17, DAVIDsTEA plans to open 10-12 new stores in Canada compared to earlier forecast of 10-15 stores and up to 5 in the US. The Company is expecting CapEx for the year to be approximately C$15 million to C$18 million versus the earlier guidance of C$16 million to C$20 million. DAVIDsTEA expects to be free cash flow positive for the full year.

Stock Performance

At the close of trading session on Thursday, September 28, 2017, DAVIDsTEA’s stock price slipped 1.14% to end the day at $4.35. A total volume of 22.89 thousand shares were exchanged during the session. At Thursday’s closing price, the stock’s net capitalization stands at $121.02 million.

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