DTEA - Earnings call transcript Q2 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon, ladies and gentlemen. Welcome to DAVIDsTEA’s Second Quarter Fiscal Year 2019 Earnings Conference Call. Today’s conference call is being recorded and all lines are in a listen-only mode.

Before we get started, I would like to remind you of the company’s Safe Harbor language. This presentation includes forward-looking statements about our expectations for the performance of our business in the coming quarter and year. statements. in could is differ cause those in contained and to materially statement projected that uncertainties actual such forward-looking this subject presentation risks from Each results to

the today’s statements Additional www.sec.gov DAVIDsTEA’s heading of XX-K, information only and and was the May on Commission with in website. undertake speak no and filed factors as is X, regarding appears XXXX, which Risk in and this our we these discussion Factors date, to any Form Exchange on forward-looking or update Securities The of under available at statements. these obligation revise

which any to filed and Securities Commission is the If measure with used earlier reconciliation comparable Exchange today. directly call, XX-Q, IFRS financial a in measure was financial most detailed will the on non-IFRS be this Form our

As dollar a dollars, are unless in indicated. to Canadian referred reminder, otherwise amounts all

of Segal, Mr. Chairman Now and call over I to CEO to the would Founder, Executive turn DAVIDsTEA. Herschel like Interim

Herschel Segal

everyone, and second quarter Good the us is me XXXX. With and Operating review fiscal Frank CFO. for thank today we Officer joining afternoon, DAVIDsTEA’s results of Chief our you for Zitella, as

quarter results e-commerce wholesale growth very initiatives by future of which and from solid highlight progress DAVIDsTEA benefited and channels combined last our of recent of led identified posted our a year. over team. areas as the channels, XX% solid Both second been Our have growth leadership for

to expectations. say I’m on continuing a to our additional with stores. the work tea to that pleased launching chain, sales our to almost very Canadian of also of After actively grocery major We year are our initiatives surpass performance one continue improve sachets

and within will availability tea sachets drugstore expanded over months. previously of announced, significantly the the As upcoming we the networks have be our supermarket

the looking are opportunities wholesale border. south of We also at

success teas to brand our demand clearly to consumers. that in wholesale channel remain the available date and demonstrates us, in high For our wherever

fall by to all flavors, season. and want and including and team XXXX I’m our of to by and holiday expanded up recently our to wellness collection. leading collection excited a DAVIDsTEA’s truly the employees. others of part of and come, fall leadership of I emphasize dedication collection unveiled work hard new new Again, classic the We new the

inform has progress within Board coupled wish provide profitability to growth. her for you service the going on confidence the and also in DAVIDsTEA Our our time from Anne Darche, return the I well. e-commerce plans channel, we path of with wholesale of thank the want that to forward, advised to We right that are her her and – due one our directors departure Anne directors, to us constraints. and

over that, for Frank I will review initiatives call of our financial turn our with results. And to various the a and

Frank Zitella

Thanks, Herschel, and afternoon, good everyone.

fine delivering best tea In efforts we the half channel. entire concentrated across our XXXX, first on the our the on distribution market of

We also streamlined in-store products our our of experience. portfolio to customers’ improve

is The cash from we quarter to generally to driven our flow position seasonality, second by cash operations. weakest a strong were yet positive maintain able due

compared million last general second from administrative by $X.X significant and expenses. was driven When million. improvement year, compared levels largely cash we inventory positive operations negative a to the flow quarter generated of selling, in and $XX.X reduction to The optimized

seasonality, lower due the While notably factors normal cash sequentially million position was compared year discussed. to $XX.X to declined the due variance to business last negative to when just

Canada. grocery increased distribution demand quarter. channels Sales briefly from and million period chain by increased or for million and specifics for the XX.X%. into X.X% as decreased from of across XXXX. go Sales e-commerce now me primarily the in driven was This wholesale adoption to $XX.X $X.X as $XX.X well million $X some same Let million the increase by online our from greater from

by decreased by mix of declined to same-store our last teas When stores sales remain regards the at under with X.X% compared look stores, to year, up over the quarter retail sales categories, year. stores ended With pressure. you XXX our while accessories million last X.X%. product $X.X We comparable XXX were and by

this starting hoping certainly collections. change new with our to fall trend, We’re

Beau’s golden we to stores will alternatives unique this tremendous is organic week, different announced are concept of London in Last This Canadian be Fog in we London Organic LCBO The the the DAVIDsTEA rich infuses with Earl and areas we’ll exploit potential that grocery of unique different a as brewed lactose our Grey beer of Ontario Fog launch well available at fall how collaboration implementing as Quebec. Together, beer, a Brewing, grocery into with an widely DAVIDsTEA a fully vanilla. and and outlets example brewery. concrete recipe brand. Cream a ale

increased XX.X% to same profit $XX.X Gross million period in the prior year. the by from

of sales. the comparable $X.X is The and primarily decline fixed product to due of to XX, Excluding IFRS in impact profit attributable decreased a deleveraging gross sales mix by negative million. costs $XX million shift a to

XX.X% prior SG&A million from year. decreased by the to $XX.X

Excluding to of the XX.X%. IFRS decrease SG&A would impact of amounted million, a have XX, $XX.X

million. few SG&A decreased streamlining primarily efforts quarters. by $X.X reflects of This cost However, decrease adjusted the past

amounted for a million quarter. compared to quarter EBITDA year prior to negative in the $X.X Adjusted $X.X the million

stock-based for three months and of of Excluding adjusted to contest related the X, million. EBITDA August executive three and stock-based deferred impact proxy IFRS by $X.X costs property to increased review rents ended costs for the of contracts, months August XX ended the XXXX, compensation owners’ and compensation, and the strategic separation and impairment related XXXX, equipment, X, salaries, impact the

loan of over Oink million as than agreement is by to movable pursuant agreement December As outlined Squish, certain repayable doing The facility XXXX. DAVIDsTEA’s loan monthly, company on by Inc., Bank this release, $X under payable our bears interest shareholder company’s at secured of The DAVIDsTEA as of is business the advanced in million. no the owned favor and $X.X Day Oink the which a at loan later shares a hypothec The of of XX, principal prime with Montreal’s is rate press XXXX. company Rainy August X% X, XX-Q and capped loan the rate, a in Investments. Candy into entered with secured

tea In closing, wholesale in and in sachets our we’re the launching coming with ahead, the X,XXX collections, in a several I’m DAVIDsTEA Canada. distribution to the the has be expanded be what weeks months. months stores put upcoming we’ll the for Furthermore, new significantly and team exciting leadership over availability across expanding and the of excited by including wellness in collection. place thrilled plan

we face the better DAVIDsTEA While resonate and with performance, to improving tangible steps challenges, steps taking as We our focused taking concrete and reposition brand new customers. for remain financial DAVIDsTEA we’re on to to company. a growth existing some continue we’re

remarks. This concludes today. Thank our us you for joining

Operator

conference Ladies concludes gentlemen, your and today’s this Thank participation. you for call.

You may now disconnect.

DAVIDsTEA (DTEAF) 18 Sep 192019 Q2 Earnings call transcript