DavidsTea evaluating options, including sale

MONTREAL — Canadian beverage retailer DavidsTea is evaluating strategic options, including a possible sale, and eyeing store closures after a weaker-than-expected third quarter.

“We are disappointed with our third-quarter results, which came in below anticipated sales and profitability,” said CEO Joel Silver in a conference call with analysts Thursday.

The company’s board of directors decided to explore strategic alternatives, like refinancing, restructuring or a merger, in order to enhance shareholder value, the company said. Executives declined to answer further questions, saying it’s early in the process.

The Montreal-based company made the announcement as it reported its losses for the quarter ending Oct. 28 surged 30 per cent to $6.5 million from $5 million a year ago. That equals 25 cents per share compared to 20 cents in the prior year.

Revenues decreased 2.5 per cent to $43 million as same-store sales — a key retail metric for sales of existing stores — fell 6.8 per cent.

The drop came as product offerings in accessories and kits did not excite customers, Silver said.

“Unfortunately, we are still living with some of the past decisions and our new product team will be able to have greater influence on our business with each passing season,” he said. “We know we must do better and we can.”

DavidsTea is gearing up to launch a new online shopping platform during its next financial year, Silver said.

DavidsTea, which went public more than two years ago, said in 2016 it planned to grow to 550 stores, spanning 320 American locations and 230 in Canada.

As of Oct. 28, the company operated 236 stores.