DavidsTea swings to $2.6-million profit in second quarter despite store closures

MONTREAL – DavidsTea Inc. swung to a $ 2.6-million profit in its latest quarter despite a 41 per cent decrease in sales during the COVID-19 store closings.

The insolvent Montreal-based beverage company says it earned 10 cents per diluted share for the period ended Aug. 1, compared with a loss of 44 cents per share or $ 11.3 million a year earlier.

Excluding one-time items, including $ 3.2 million in restructuring costs and a Canadian government COVID-19 subsidy, DavidsTea says its adjusted loss was reduced to $ 1.72 million or six cents per share, from a loss of $ 6.3 million or 24 cents per share in the second quarter of 2019.

Sales plunged to $ 23 million from $ 39.2 million in the prior year’s quarter but were up 35 per cent from the first quarter.

Sales came from a 190 per cent increase in e-commerce and wholesale revenues.

After the quarter-end, 18 stores reopened in Canada. The company also received court protection from its creditors while it restructures to a digital-led operation.

“Second-quarter results reflect the solid performance of our online retailing and wholesale distribution activities as we accelerate our transformation towards a digital first strategy,“ said chief operating and financial officer Frank Zitella.

This report by The Canadian Press was first published Sept. 21, 2020.

TORONTO STAR