SA Update on David’s Tea

Posted on January 27, 2021 by Scott Shuda

Good article this morning on Seeking Alpha updating the bull case on David’s Tea (DTEA).

With the continued strong momentum in its e-commerce and wholesale channels, DavidsTea posted another quarter of impressive growth in its two main distribution channels. In the third quarter, sales from e-commerce and wholesale channels increased by 145.5% to $22.1 million from $9.0 million in the prior-year quarter. As part of its formal restructuring process, the company exited all of its unprofitable brick-and-mortar stores except for 18 Canadian stores which were reopened on August 21, 2020. These 18 flagship stores generated $4.1 million in the third quarter, resulting in average sales per store of around $230 thousand over this ten-week period. By comparison, in the third quarter last year, average sales per store over the usual 14-week period have been approx. $130 thousand. Thus, sales per store in 2020 increased by 75% despite a shorter comparison period of 4 weeks. Against the background of the current COVID-19 pandemic, these results from its reopened stores are quite promising.

The Breakout Investor network has been closely following events involving the Canadian retailer. Join us on the Breakout Investor Platform for discussion and analysis helping you to establish an investment position Ahead of the Curve.

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