DAVIDsTEA Inc.

Q2 revenue was not stated as a single consolidated figure, but segment/channel figures were given: Canada sales rose 5.5% to CAD 10.5 million, U.S. sales fell 15.2% to CAD 1 million, brick-and-mortar sales increased 9.6% to CAD 5 million, online sales increased 1.1% to CAD 5.2 million, and wholesale sales declined 8.8% to CAD 1.3 million. Gross profit increased 9% to CAD 7.1 million and gross margin expanded 320 basis points to a record 61.9%. EBITDA was CAD 0.2 million, adjusted EBITDA was CAD 0.5 million, and net loss narrowed to CAD 1.2 million from CAD 1.6 million a year ago. Guidance-wise, management expects the Chicago fulfillment transition to improve U.S. sales for the balance of fiscal 2026, expects the Montreal consolidation to produce full run-rate benefits beginning in Q3, and continues to target 25 locations by year-end; looking to 2027, management said initial planning suggests a store expansion similar to 2026, subject to market conditions and funding capacity.

Sarah Segal framed the quarter as strong relative to the seasonally weakest period of the year, emphasizing that the company delivered higher brick-and-mortar sales and gross margin expansion despite a challenging consumer backdrop. She highlighted the store-led growth strategy, saying new locations are producing strong early performance and creating spillover benefits for online and wholesale channels. Her tone was confident and strategic, with an emphasis on brand strength, product innovation, ethical sourcing, and expanding the footprint in Canada.

Frank Zitella focused on the financial mechanics behind the quarter: Canada sales up 5.5% to CAD 10.5 million, U.S. sales down 15.2% to CAD 1 million, brick-and-mortar sales up 9.6% to CAD 5 million, and gross profit up 9% to CAD 7.1 million. He pointed to gross margin expansion to 61.9% from lower unitized freight and inbound shipping costs plus the internalized fulfillment model, and noted SG&A fell to 59.8% of sales from 60.9%. He also discussed liquidity and seasonality, saying working capital was CAD 17.1 million and cash was CAD 10.2 million at quarter-end, versus CAD 17.7 million and CAD 16.5 million at fiscal 2025 year-end, with cash typically deployed ahead of the Q4 peak.

This was a prepared remarks call with no analyst Q&A included in the transcript. Management’s key investor-facing answers were embedded in the remarks: the U.S. decline was tied to trade tensions and tariff-related cross-border e-commerce pressure, and the new Chicago logistics setup is intended to reduce friction and improve U.S. sales. They also said the Montreal consolidation is complete and should deliver full run-rate benefits beginning in Q3, while store expansion plans for 2027 remain in planning and depend on market conditions and funding.