Tea lovers will have a few less places to shop for their favourite blends, as DAVIDsTEA recently announced plans to close 82 stores in Canada as well as all 42 of their locations in the United States.
Late last week, the Montreal-based company announced plans to restructure under the Companies’ Creditors Arrangement Act. Under the restructuring plan, DAVIDsTEA plans to terminate leases for 82 Canadian stores, as well as all 42 stores in the United States -- all taking effect in the next 30 days. The company also has plans to seek more favourable lease terms for its remaining 100 Canadian stores, but may shut down addition locations if landlords are unwilling to negotiate.
Last month, DAVIDsTEA shared their fourth quarter earnings, reporting a $23.2 million loss last year on $146.5 million in revenue --- including a US$4.3 million loss in its fiscal fourth quarter on US$54.8 million of revenue. The company also revealed that (at the time) it had not paid rent for its store locations for April, May, or June.
Despite revenue losses, the company has reported that e-commerce sales increased by 170.5% and wholesale sales increased by 82.9% compared to the same period last year. These two areas are what the DAVIDsTEA plans to focus its efforts on going forward.
Herschel Segal, Founder, Chairman and Interim CEO of DAVIDsTEA said in a statement, "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."
The closure of 124 stores across North America will see about half the 2500 employees of DAVIDsTea affected, including all 366 employees in the United States.
DAVIDsTEA stores have been closed since March 17 due to the COVID-19 pandemic. The remaining 100 stores will remain closed until further notice, however you can still purchase your favourite teas online.