DTEA - Earnings call transcript Q2 2021

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Operator

Good afternoon, ladies and gentlemen. Welcome to DAVIDsTEA’s Second Quarter 2021 Earnings Webcast. Today’s webcast is being recorded and is 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 Form the XX-Q any Financier Additional Commission the heading will speaks DAVIDsTEA’s Form to XX-K information report website. and today only our detailed ended with of with filed IFRS year any non-IFRS and these Autorite Autorite to both quarterly is we The the discussion today’s XX, and fiscal comparable factors on financial Securities the of measure regarding obligation this appears and United statements. for on Risk reconciliation date in States If in in de our XX-Q. a Maucher with measure this call, as these our Factors undertake filed States the Commission Form XXXX both our financial Maucher Financier and revise Securities January de forward-looking used and under directly and or Exchange with on United most be no statement update in Exchange

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

and to to Sarah of Officer I call Now, Executive Officer would turn the Chief Segal, like over Brand Chief DAVIDsTEA.

Sarah Segal

Good our for results seasonality quarter is President, Operating our second and Chief quarter. you Thank weakest all I me DAVIDsTEA’s Zitella, pleased of quarter. for second afternoon, by point thank operator. everyone and the From joining Financial you, Frank joining generally us. view, is Also the am a Officer.

first increase continue investments we of some pursue engagement weight with the the are our to also brand. grow strategic we and reflect key results the Our customers making as strategy, digital of

pharmacies, in ready and within American consists of changes while reach and arrangement DAVIDsTEA to more our a this expand provides this continue of filters retail the aimed opportunity showcases audiences and to concept and possible, of each consumers of convenient new, the expanding tea accessible retailers. Following in putting concept local The most our reach ways since while to to North steep of needs for We amazing consumers. a This of and mocha, in Based was further March, loose-leaf see rapidly exile expanded extensive locations personal place The we grocery assortments sachet, to significant within benefits a We with and this in success retaining a on gifting consumption of partnership health exciting and expanded in have Rexel dramatic in this XXX will tea. access and are a greater of our Already over opportunities many partner new traditional store for within for other strategies and to DAVIDsTEA shelves. footprint and past In over with started channel type tins and sampler five a now of leading pharmacy attracting products Canadian the Rexel local wellness X at of XX stores includes the drugstore started be stores, to foot our customers concept pharmacies, fall, the XX existing and community stores. trial lovers to the to June. initiatives store their new and date. as as even want to concept another essential new two to be SKUs. operator. store customers in meet trial convenience with to our loyal can of pack, collection now we but a business, XXXX, tea year

and Herbal strong most Earl Mocha Pumpkin to we unique spice pumpkin we many and always featuring spice-inspired with blends. been proudly Tea, recently front, extensive a years, celebrate product best-selling introduced the Gray, has we Pumpkin Fall Chai. year, blends Pumpkin This tradition collection the On launched White complete innovation our tea our for fall season.

is most our year. launch the We also Days anticipated holiday our collection. launched biggest XX of of unquestionably calendar Tea

to this year, iconic calendars three already flagship in DAVIDsTEA and are excited available We holiday offer our online stores.

of mocha countdown, We countdown free and based are created caffeine which proud on our fan requests. unique we

blends. In teas for expanding our to are a our to focused herbal mission of tea our Garden with ranging addition, we loose-leaf on origin Cup from having our fulfilling single crafted everyone, collection signature

have also growing of world. loose-lead selections one in We and the organic tea largest of the

in increasing use we on innovation connect and period as to nearly that sleep, as quality wellness and XX focus of are flavor our a relief, After brand an we customers to the in cold space. variety, needs we can past creativity months, blends both both over ways. and and create new the With strong tastes audience well dramatic focus ensure eager address as of on of ingredients, address immunity with specialized the organic digestion, of wide continue number and creativity, positioning, and especially Our our business a transformation to ingredients drives of our the tea consumers. our functional to changes

digital offer an DAVIDsTEA and which tea customer platform, online. have customer we and a We experience, and to improve we continue want distinctive as brand expand community service continually build to exceptional our options

bring X,XXX as We and stores that continues have Canada, our this supported XX to by and digital-first pharmacy to the also includes grocery experience tea DAVIDsTEA across partner We in stores many want flagship matters, ways human strategy to connect, lovers connection know the retail and to which the still is life. channel.

tea our of discuss financial a and steady company. for as to of more and the turn in sharing more We traditions world wellness the I results core that space. around expand tea growing with place the in tea unique DAVIDsTEA’s health supported the of blends unique demand to at will community approach, people benefits, sense become the are marketplace detail. the offering over understand and the most and wellness and global call associated truly now by Frank foundation the This is traditions of scale laying to the to

Frank Zitella

Thank you, afternoon Sarah good and everyone.

original the shareholder, building the can this creativity that Canada. Company. team also and of all. proud retail fulfill acknowledge of Board to tea for DAVIDsTEA and of help to are and years as would will and have without the in a that Segal, and steadfast is And director celebrated his strategic we that has be There thanks his the so Segal and ambition company. DAVIDsTEA’s her our today a immediately. pleased continuing of On just no Co-founder making continues tea amazed we vacancy, continually year I’m a to industry to helping knowledge adviser. brings DAVIDsTEA change proud the transformation, have want to mission effective guide the the on heartfelt I invaluable count XX earned a in created the Herschel contribution give from deep and contribution Silverstone of behalf and recognized fun of belief trusted to brands strong of have tea excellence anniversary. to the for global the has mission belief in appointed over accessible drive Jane DAVIDsTEA the our we of as to Chair, one experience ever. to tea We the of and principal After as power continue and Board build, and world. I’m Directors, most and XXth as be the the and our last growth leadership, whose able to retirement Jane support guide He to in whole be turnaround we original Board that of fill Board the Herschel by Board as the becoming been

journey truly it’s and a Our team transformational continues effort. been

yet thank and team common every members to of one team. and all their come. to believe We DAVIDsTEA, that a and share each for our of associates love best Our the we commitment knowledge passion, them, is

us, the team and can process management DAVIDsTEA now towards brand. energy behind fully dedicate With and of time full value unleashing its the CCAA the potential the

investments We a and and in The sales includes surge contribution lovers. reflects accuracy of our to this purchase delight improving our transition be to will us Canada. both creating loyal our XX a provide omni-channel the and sales with connection want that of making first our product a with future technology more customers frictionless and perspective, ultimately, to and second continue and tea the and to strategy, our helping to which service online customers from quarter speed flagship customer year’s a meaningful stack able fulfillment consumers last digital in addition distinguish engaging, back are the to support in personal personalized we’re capabilities. pandemic-fueled further and key of new factors Looking an year, excellence acquiring distribution and strategic our decline in stores to experience, us sales in

operations necessary to digital-first to investments results our accelerate impacted also were our Our by transformation a in company.

in $XX.X year. the and compared year demand year by decreased stores from million wholesale more sales an $X.X pent-up million, wholesale in sales to represented Now, sales XX.X% E-commerce business. on million $XX.X of opened since year initial $XX favorably compared looking for the at detail, the quarter. side closure channels of all stores of QX XXX% our and prior Sales e-commerce the decreased the by or to of Brick-and-mortar sales no $X.X million to the sales year created quarter in last the quarter. million prior XX.X% XX.X% to quarter prior were from last results e-commerce

and prior sales, expenses the For lower lease primarily substantially quarter. delivery the to million profit down the costs offset previous due X.X% to million, year quarter, or gross which was $X.X from year and was $X by compared lower lower distribution

of profit quarter and to digital-first results software year. continue to up million the our increase an or by As last SG&A to was pursue quarter, million, million compared adjusted for while in XX.X% expense, XX.X% online we $X.X a strategy. costs marketing increased $X.X and sales, SG&A to percentage the from for as staffing $X.X XX.X% And increased gross

million recognized $XX.X to subsidies under the year. in $XX.X of our of and from included activities, which in and response was marketing by confident $X.X our up year partially large, gain of $X.X offset from implementation restructuring we property transformation and EBITDA the for a from compared increased to costs, realign and decrease impairment addressable and costs, model reflects wage to sales, XX.X% an growing the Adjusted quarter. The percentage million delivery stock-based finest prior and last e-commerce from online year’s As efforts EBITDA equipment expense, is we government of in distributor decline adjusted software last in QX by to staffing continuing a impact In million, the sales $X business an QX, to which economic QX improved of of SG&A EBITDA, planned $XX.X Canadian million of compensation plan negative the non-cash plan in million assets, surge compromise and of With in quarter, subject from online in the primarily received $X.X was XX.X% COVID-XX settlement pandemic-fueled sales, in structure. XXXX. million and and adjusted right-of-use increases tea are the liability wholesale million excludes a cost the the of market, the accessories. distribution of

of a As million position at cash $XX July million. of working XX, and capital XXXX, we had $XX.X

to our wellness completion towards in our innovative we healthy of CCAA as innovation, growth. right to and the a meet drive the greater cash is inspiring proceedings, capital we business all conclusion, investments make needs sustained working company, In to our most grow tea the vision profitable and strategic world’s support With have sustainability. with connection become matters continuing position

Our blends pillars a unique with an teas, of success of high-quality in-store exceptional and innovative and by exceptional experience. combined the was past supported brand

and customer supported replicate in world to digital other technology success with engagement. retailers, that Our best-in-class right is and through the partnerships goal the by

more before, responsive As more look be forward that and focused market-driven DAVIDsTEA of leaner, becoming agile a on growing is revenue. rebuilding. year indicated a will We to and XXXX

are strategic to fulfillment Our our drive innovations continuing our surprise that world-class the towards that by and investments quality in directed sustained is through we create customers growth products making establishing profitable by for right demand we us joining Have for DAVIDsTEA. about our Q&A thank short, for the you This future event] to of remarks, session this and thrilled wonderful day. bring In the marketplace. concludes [No a today.

DAVIDsTEA (DTEAF) 15 Sep 212021 Q2 Earnings call transcript