DavidsTea closing 82 stores across Canada
Retailer to shutter all 42 locations in U.S.
MONTREAL—Insolvent beverage retailer DavidsTea is closing 82 stores in Canada and all 42 of its stores in the U.S. as it focuses on its e-commerce business and supplying grocery stores and pharmacies.
The Montreal-based company announced Thursday that it is sending notices to terminate the leases at the 124 stores to take effect in 30 days.
It will also seek more favourable lease terms for the remaining 100 stores in Canada and may permanently shut additional locations if landlords are unwilling to negotiate suitable leases.
It had warned in mid-June that it could begin a formal restructuring depending on the outcome of its talks with landlords. The company said at the time that it hadn’t paid rent on any of its stores for April, May and June.
The store closings are part of its restructuring plan after it obtained court protection from creditors under the Companies’ Creditors Arrangement Act and Chapter 15 in the United States Bankruptcy Court for the District of Delaware.
“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,” company founder and interim CEO Herschel Segal said in a news release.
Chief financial officer Frank Zitella said that with the closing of “a significant number of money-losing stores,” it will focus exclusively on e-commerce sale which had a penetration rate of close to 43 per cent in the market before COVID-19.
DavidsTea reported that it lost $23.2 million last year on $146.5 million in revenue. That includes a $4.3 million (U.S.) loss in its fiscal fourth quarter on $54.8 million of revenue. The move by DavidsTea comes three years after Starbucks announced the closing of all of its Teavana brand stores.