DAVIDsTEA Inc. (NASDAQ:DTEA) (“DAVIDsTEA” or the “Company”), a leading tea merchant in North America, announces that as part of its restructuring plan under the Companies’ Creditors Arrangement Act (Canada) (“CCAA”), it plans to reopen 18 stores in Canada under new, more favourable lease terms and conditions.
“We believe that a select group of our best-performing stores, complementing our growing online and wholesale business model and supported by an entrepreneurial organization, will enhance DAVIDsTEA’s ability to emerge from the CCAA restructuring process as a more sustainable and resilient organization,” stated Herschel Segal, Founder, Chairman and Interim CEO of DAVIDsTEA. “Today, our customers and stakeholders have a better picture of what DAVIDsTEA will look like in the near future. Our decision to reopen these select stores is consistent with our objective to create a leaner, more efficient company, positioned for long-term growth,” added Mr. Segal.
“COVID-19 and the CCAA restructuring have led to the execution of our business plan at an exponential pace. The plan was always to significantly reduce our retail footprint and the strong performance of our e-commerce and wholesales channels in recent months has provided further validation of that strategy,” said Frank Zitella, CFO and COO of DAVIDsTEA. “We are very pleased that the landlords for these 18 stores have offered more advantageous rent conditions to us in light of the COVID-19 pandemic,” added Mr. Zitella.
DAVIDsTEA expects to reopen the 18 stores by the end of August 2020, conditional upon entering into amended leases for the stores. The 18 DAVIDsTEA stores to be reopened are all located in major shopping malls. Seven of the stores are in Québec, five are in Ontario, with the balance in Alberta, British Columbia, Manitoba and New Brunswick. The proposed new lease terms are expected to give DAVIDsTEA termination rights at the end of 2020, and the flexibility of an option to extend the leases. The Company is sending notices to terminate leases for its other 82 stores, which terminations will take effect in 30 days.
The Company will continue to provide updates throughout the CCAA restructuring process as events warrant.